As COVID-19 pandemic approaches 2-year mark, experts weigh in on future of restaurants

The Covid-19 pandemic has continued to be a challenge for the restaurant industry.

Omicron, the most recent strain of the virus, has been the latest threat to restaurants due to high transmissibility resulting in an explosion of case numbers. The timing was bad as well . Omicron hit the industry hardest during the holiday season, when restaurants rely on increased foot traffic to start the new year.

However, as a whole, the industry is in a better place now than it was a year ago, said Kelsey Erickson Streufert, chief public affairs officer for the Texas Restaurant Association.

As has been widely reported, one of the biggest challenges associated with the pandemic has been the workforce shortage, Streufert said. According to Streufert, 78% of Texas restaurant operators report they do not have enough employees to meet the existing customer demand.

“So when you add a highly transmissible Covid variant on top of that, that’s where you see restaurants really struggle to stay open, keep normal hours and provide the customer service that they want to provide,” Streufert said.

Many industries are facing a workforce shortage, but Streufert said the restaurant industry was one of the hardest hit, losing 700,000 jobs across the state — equal to 60% of the workforce. Workforce shortages have hit all points in the industry, from the farm to transportation to the table. A silver lining is that wages have doubled in the hospitality sector.

“It’s going to take some time to refill those roles, particularly when so many of those folks had to move on to other jobs when we were shut down,” Streufert said. “So now we have to not only bring people back but really bring new people into our industry.”

These new workers could be early-career individuals, but they could also be retirees looking to have something to do a few days a week, Streufert said. Individuals in the Deferred Action for Childhood Arrivals program and immigrants who want to come to the U.S. are also something the Texas Restaurant Association supports because they are needed not only in restaurants but in the whole food supply chain, Streufert said.

Some of the issues causing a workforce shortage are systemic and beyond the control of the industry, like making sure there are steady school schedules for working parents.

The supply chain issues plaguing almost every industry have also hit restaurants. Unfortunately, the issue isn’t going away anytime soon, said Jason Baker, principal at Houston-based commercial real estate firm Baker Katz.

“The winner (in all this) is those who are able to meet the convenience whim, and that, again, is mainly going to happen through fast-casual restaurants and fast-food restaurants.” Baker said. “On the full-service side, I don’t think this is going away anytime soon… It would not surprise me at all for us to get to the end of this year and still be talking about supply chain issues.”

Baker said he thinks that, overall, people realize that omicron is more contagious, but the challenge is trying to figure out where to place employees who are healthy enough to work while others are sick. In the near term, restaurants should consider alternatives such as curbside and delivery, he said.

“The better operators right now will tell you some of their biggest challenges in addition to labor costs and food costs is just keeping their employees and their staff healthy.” Baker said. “So part of it is a cost issue, but part of it is also a health issue.”

As costs increase for restaurant operators, some are absorbing the hit while others are passing along the costs to customers. According to Streufert, 93% of Texas restaurant operators have said food costs have increased since the beginning of Covid-19 outbreak, and 83% report that labor costs have increased. Those are the two main costs in restaurant vusiness.

“I don’t think we’re going to go back to where we were before the pandemic with some of these prices, but I think things will normalize. Over time, we will see a little bit of a smoothing effect,” Streufert said.

Meanwhile, there are still talks of providing more money for the Restaurant Revitalization Fund to get assistance to restaurants in need. Because the program was underfunded, only about 35% of Texas restaurants that were eligible and applied received grants, which left over 12,000 local restaurants without funding.

Streufert said the Texas Restaurant Association’s recommendation for businesses is to post the “Texas Restaurant Promise,” a document that covers the industry’s set of best practices and guidelines from the CDC and other authorities for clear communication between the customers and businesses. Additionally, Streufert said restaurants have to provide multiple ways to interact with consumers. He recommends continuing to offer safe, on-site dining as well as curbside, delivery, meal kits, gift cards and other methods to allow the community to support restaurants in whichever way they’re most comfortable.

by Savannah Mehrtens – Reporter
Houston Business Journal
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