Each December, we offer our predictions for the upcoming year. This year, we thought we’d take some inspiration from the title of the 1966 classic Clint Eastwood film, The Good, The Bad and The Ugly to classify what we think the coming year will deliver.
The Good, because even in despair there will be some positives, such that they are; the Bad, because YES, there are some less than stellar things that are likely to happen next year; and finally, the Ugly is already here, but it will get much-much worse without some serious help.
Going in order, let’s discuss the what restaurant operators can expect in 2021…
The Good
To start, 2021 promises to be the year of outdoor dining. I have often marveled at how Europeans can happily stand outside in single digit temperatures (ok, it’s in Celsius, but still) and enjoy a beer or a cup of coffee with friends. We have seen the lightning speed with which municipalities have moved to facilitate outdoor dining on sidewalks, in alleyways, and in parking lots to ensure restaurants weren’t permanently crushed by indoor dining bans. This winter will prove challenging, but after this experience, you can bet your guests will be happy to dine outdoors the instant temperatures rise even a bit this spring.
The speed with which operators have been forced innovate will also continue into the New Year. From turning their restaurants into de facto grocery stores to creating “buy a meal for a front-line worker” programs, our industry has expanded the markets they can reach to both stay open and serve their communities. There will be no shortage of heroic and selfless acts from restaurants as the next and worst few months of the pandemic roll over us all.
Which leads to the biggest good news item of them all -- the arrival of multiple vaccines with very high efficacy rates. This effectively means the end of this nightmare is likely in sight in 2021. With some experts saying we may reach herd immunity by the end of second quarter 2021, it means things will be getting much better long before that. We predict that by the end of March, the combination of warmer weather and wide-spread vaccination will mean the beginning of the new normal. Think about what July was like and that is what we will likely see starting in early spring. Unfortunately, to get there, things are going to get very bad, very bad indeed.
The Bad
Let’s face it, as of this posting more than 300,000 Americans have died from this disease (as of writing this post on 12/16) and nearly 18 million have contracted the virus. If that’s not bad enough, the numbers are accelerating. We might long for the days of spring 2020 when we had 30-40 thousand cases a day as we enter 2021 at over 250k daily or nearly 6x as bad -- and climbing.
This is exactly why the vaccine appears to be our only hope of beating the disease, but that won’t stop 300-400,000 from dying before we achieve herd immunity. This means a total of nearly 1 million Americans will ultimately lose their lives to this disease and millions more will have long-term health consequences from the virus. That is going to leave a scar on our culture that won’t fade for years to come.
In fact, that scar is likely to also be the cause of other problems for our industry in 2021. For example recruiting will become difficult.
Sure, millions of folks in our industry are out of work, but the memory of how poorly front-line workers and restaurant staff fared in the face of COVID-19 won’t disappear overnight. There is a cynical argument that with so many restaurants closing, the pool of talent has gotten much deeper. However, if the pandemic has proven anything, it’s that restaurants can be dangerous places where infectious disease is concerned which will make recruiting the best people even harder.
While you will likely rely on your prior employees to re-staff your restaurant when COVID-19 abates, they might not be there in numbers sufficient to run your restaurant. That means recruiting will be an unintended problem you are likely to face during the first six months of 2021 -- and likely beyond, as people find other industries where they will feel safer.
The Ugly
Now on to what the worst that 2021 will bring. You’re likely asking what could be uglier than one million dead Americans and it would be fair to pose that question, but that is happening whether you work in the restaurant industry or not. Specific to our industry the real ugly will be the 30% of independent and small chain operators that don’t survive the winter. In fact, if you isolate the closures to just full service and casual dining restaurants percentage number will be even higher.
Again, the cynic in you might think that this will at least give you leverage to get a better lease deal with so many restaurants unlikely to survive creating tons of available space. The problem with that thinking is it ignores the fact that the actual value of commercial real estate is driven by how much revenue it can produce. If your location is in a busy district, you benefit from that concentration. Eliminate one third of the restaurants near you and you will actually see your sales drop because people stop going to that area when there are fewer outlets from which to choose.
Many industry observers have commented that we had an oversupply of restaurants and that a correction was overdue. Well that correction came in 2020. In the upcoming year we will see the consequences of that correction. Whether it’s diners that are still anxious about eating indoors or a recovery that is slow to pick up steam, 2021 is going to usher in more misery before it gets better.
The Sequel
While The Good, The Bad and The Ugly never had a sequel, Clint Eastwood made plenty of other spaghetti-westerns back in the day. For our purposes, we hope the 2021 sequel to the chaos of 2020 is a happier and more hopeful version. While we can’t guarantee it, we do guarantee that people will still want to gather to play and celebrate. With any luck you’ll still be there to provide them with a place to do just that.
Good luck and stay safe!
