Companies in the restaurant and bars industry are involved in offering snacks, meals, and beverages to customers for on-site or off-site eating.
A restaurant is commonly referred to as a business that caters to customers with food and drinks, while meals are usually served and eaten on the premises, though most restaurants are also engaged in take-out and food delivery services.
Based on appearance and offerings, restaurants vary greatly, including having a broad range of service models encompassing low-cost fast-food restaurants and cafeterias to expensive luxury establishments.
Some of the famous names in the industry include Darden Restaurants, McDonald's, Starbucks, and Yum!
The Covid-19 pandemic in March of 2020 delivered a devastating impact on the restaurant industry in the United States, rendering the industry into $225 billion in losses.
There are nearly 658,000 establishments included in the US restaurant, bar, and food services industry generating combined yearly revenue of approximately $678 billion.
The country’s restaurant and bars industry has gone through a steady growth over the past few decades, regardless of how they coped with the challenges posed by the coronavirus (COVID-19) pandemic. The full-service restaurant industry in the U.S. has achieved a growth of more than 80 billion U.S. dollars in 2020.
The hospitality sector in the United States is one of the biggest employment-generating factors in the country, say millions of people rely on the sector for employment.
However, the condition of employment in the restaurant industry deteriorated in 2020 amidst lockdown-induced measures, causing the closure of many nationwide restaurants during the health crisis.
According to the National Restaurant Association, the restaurant industry in the United States was projected at $899 billion in sales for 2020. The estimate surfaced before the pandemic crisis that caused closure of eateries, from expensive hotels to family diners across the United States.
The real state of the restaurant and bars industry in the United States is that close to 99% of companies are family-owned small businesses with less than 50 employees.
As of February 2020, the industry as a whole employed over 15 million people which portrays 10% of the workforce. The industry is said to be the second-largest private employer with 15.6 million workers.
The figure simply represents the glaring fact that the employment reduction suffered by hospitality is more serious compared to other industries, such as manufacturing, healthcare, and retail.
For example, throughout August 2021, 5.6 million people said the pandemic was the reason they were not able to work.
In a survey by Joblist, most hospitality workers expressed their unwillingness to return to the industry as they demanded a different work setting, better benefits, higher pay, more flexibility, and remote work.
The restaurants and bars in the United States have resumed their operations in most areas of the country, as per the guidelines issued by the Centers for Disease Control and Prevention (CDC).
The restaurant operators must maintain requisite ways to minimize the risk for employees, customers, and communities, to contain the spread of the COVID-19.
Restaurants and bars are legally obliged to ensure that the guidelines or CDC considerations for ways to ensure the safety of the people are implemented in manners best suited to their business interests while fulfilling the needs and circumstances of the local community.
These considerations that businesses must comply with are a supplement, not a replacement of health and safety laws and regulations concerning state, local, and territory.
The restaurant and bars industry across the United States undergo the intensity involving delivery.
In the pre-Covid era, the concept of delivery for restaurants was limited to certain types of cuisine, like pizza and Chinese food. Today the status-quo has changed, with almost all the customers wanting the restaurant to deliver.
The contribution of off-premise sales is roughly 10–11 percent of the industry's total sales, meaning businesses that know how to crack the delivery code would make a lucrative business.
There are also brands focused on ramping up their delivery strategies, encompassing forming up delivery-only kitchens to the stores dedicated to delivery and to-go orders.
The restaurant operators also understand that fulfilling the tangible pressure of delivery would affect their staffing levels and store traffic.
This means adapting to technology solutions to help them forecast sales and optimize their labor costs and boost sales.
The labor compliance for restaurant operators in the United States grew more complicated, considering the risk of penalties involved since 2017.
Various States, cities, and municipalities across the country have labor legislation favoring a “predictive and secure” scheduling model.
The restaurant operators unable to manage scheduling in advance find such laws challenging with potential financial impact to the bottom line of their business.
The ideal way of handling these laws is technical assistance using features like manager alerts to potential compliance violations, and constant electronic documentation.
The restaurant operators depend on intelligent forecasting technology to be able to stay ahead of the curve and thrive.
A good thing about new-age forecasting technology tools for restaurant operators is that they are easy to handle and can be learned to streamline business tasks, efficiently.
Moreover, these tools reduce human error, helping restaurant managers how to rationally make adjustments according to weather, traffic, or limited time offers.
The restaurant chains have emerged as a viable business opportunity for private equity firms over the last few years. And there are some reported incidents of business acquisition in the industry.
For instance, Buffalo Wild Wings Inc. was purchased by Roark Capital Group for $2.4 billion. In a similar instance, NRD Capital was acquired by a casual dining chain Ruby Tuesday .
Restaurants can’t afford to replace a manager easily, considering it drains roughly $15,271 of the budgetary capacity of their business. Retaining managers is one of the most concentrated focuses of restaurants to ensure a successful restaurant operation.
This means good managers with institutional knowledge about stores’ performance are important resources for restaurant businesses. This also indicates a restaurant’s costly financial burden when unit-level managers leave their jobs within a year.
Hence, the status-quo of the restaurant industry is that restaurant operators are retaining their managers by providing them with user-friendly and scalable systems to help them become great managers in their jobs.
The Covid-19 impact that the hospitality and food service industries went through was arguably more intense than all the industries that were impacted by the viral disease.
Restaurants, in particular, faced immediate closure of their operations thereby rendering millions of people into the state of unemployment, while the restaurant owners, who were already under slim profit margins, were on the brink of shutting down their business for good.
Under such troubled times, the restaurant and bars industry need to tackle some very key challenges, such as –
Issues like labor shortage and supply chains are some of the barriers that the industry players must handle efficiently.
The challenges posed by the pandemic don’t mean to portray that the future growth of the restaurant industry is bleak. That would be quite an understatement for the industry that is the second-largest in terms of employment in the U.S.
The US restaurant industry is a multi-billion-dollar business industry. The industry made sales worth $860 billion that represented a $2.5 trillion economic impact and around 4% of the US gross domestic product, with over one million restaurant locations across the country and 15.3 million industry employees.
Even though the pandemic delivered a massive impact on the economic health of the restaurant and bars industry in the U.S., it goes without saying that both restaurateurs and consumers optimistically look for speedy industry recovery.
The onset of the Covid-19 pandemic led to ravaging the restaurant and bars industry in the United States in an unprecedented way.
The government restrictions that followed resulted in massive unemployment of workers and loss of income for restaurant owners, with most of them facing an imminent threat to the continual survival of their business.
The situation was so catastrophic that as many as 75% of independent restaurants demanded relief measures from federal governments within a week after the first closures, saying they could not continue their business more than a few weeks.
In America, the incident of restaurant closures emerged on March 15 when Ohio governor, Mike DeWine ordered all the bars and restaurants in the state to shut down their dining rooms and bars. Soon after that, most other states followed the suit.
According to industry experts, by March 23, 2020, nearly 15 million workers were out of jobs due to restaurant closures. To add fuel to the fire, even insurance companies turned a blind eye to the plight of restaurant businesses by refusing to cover their financial losses via business interruption policies.
The closure of restaurant businesses prompted industry experts to warn that small business owners would be out of business if government aid were not provided to them. The pandemic was a traumatic event for restaurants, bars, and the industry in general.
According to an expert from the National Restaurant Association, the closure of restaurants and bars was a “perfect storm” for the industry. The New York Times reported in its March 20 report, saying that the industry experts predicted the downfall of two-thirds of restaurants and 75% of the independent restaurants due to closures.
Some notable closings due to coronavirus laws in America were McDonald's that shut down 50 of its restaurants, Starbucks limited its company-operated stores in the United States to drive-thru and delivery orders. Most notably, Souplantation closed all restaurants and laid off staff for good due to pandemics.
The American restaurants trace back to the 19th century when dining restaurants became popular as a part of the landscape for the aristocratic Europeans and upper-class Americans. The evolution of restaurants continued through the 20th century’s major incidents like world wars and the Great Depression.
During 1950, there was significant progress made in fast food. In 1960, there was notable development of casual family dining and chain restaurants. During the 19th century, due to technological advancements that produced railways and steamships, traveling became easier, and the number of people traveling greater distances grew significantly.
As a result of the rapid growth of travel, there was an increased need for restaurants, and soon a new style of dining came into trend in the United States, and Europe. Customers had their food at private tables, selected their meals from a menu, and paid for the meal they had.
The restaurant industry went through its biggest change during the 20th century with the advent of McDonald's. Through initial struggling days, the McDonald brothers were successful at serving quality and less costly food. Later, the concept of franchising set a precedent for fast food chains in America, transforming the landscape of dining in the U.S.
In the U.S., rules, and regulations related to restaurants are monitored by various regulatory government agencies. The chief among them are –
There are several industry classifications of restaurants, based on pricing, menu style, preparation methods, and the way the food is served to the customers.
The National Restaurant Association, in its 2021 State of the Restaurant Industry Report, has pointed out that the pandemic will continue to overshadow the restaurant industry’s current state of economy, workforce, and sales of food and beverages. However, the report has also highlighted some of the key indicators and trends that will optimistically influence the industry.
The restaurant industry in the United States suffered $225 billion in losses to the COVID-19 pandemic, in March of 2020.
The US restaurant industry comprises two key concepts – full-service, and limited service.
According to country’s National Restaurant Association, the full-service restaurants encompass the following parts –
Whereas limited-service restaurants consist of –
Other types of -foodservice establishments include –
In the restaurant industry, gaining a competitive advantage is very hard, given how it is oversaturated.
Moreover, key industry trends, including behavioral shifts of consumers and unrelenting desire for unique restaurant concepts have already caused a pervasive dominance across the industry market, shaping it to a new direction of growth.
In the context of the Covid-19 pandemic, the industry experienced an unprecedented radical change in consumer preferences, not to mention how the infectious disease devastated the industry, plummeting the sales by $240 billion to a pre-pandemic forecast by National Restaurant Association, 2020.
The current status of the industry is such that nearly 25% of the restaurants have gone out of business for good, in which some were well-established brands.
48% of the restaurants currently open opine that they would pivot near time soon.
However, as per the National Restaurant Association, 2020, the industry would pick up speed and reach $1.2 trillion by 2030.
One of the most notable features of the restaurant industry is that it is incredibly adaptive to innovative ways that lead them to improve on-site and off-site experiences for their customers.
We are listing some industry trends that will influence the restaurant industry because of the relevancy and quotient of the change they introduce to the market.
Though the restaurant industry was focused on safety standards in its service, it has become even more imperative in the aftermath of pandemic effects.
Now the focus has shifted to adopting contactless tech to better customer experience and meet the changing safety guidelines.
Contactless ordering and payment options, like QR-code menus and touchless payments are here to stay and will become more mainstream.
Contactless tech, including contactless on-site payment, will soon become vital parts of 76% of the restaurateurs.
Industry experts extoll contactless tech based on how it saves restaurant money, improves the customer experience, minimizes errors, and also increases employee tips.
Diversifying revenue streams is a key survival strategy that most restaurants are adopting.
Revenue streams can be diversified by pivoting primary offerings and expanding to other verticals, like retail.
Restaurateurs who are reluctant to opt to adopt new verticals are still embracing the changes, starting from reinventing their menus.
It can be asserted by the fact that nearly 92% of restaurateurs will possibly redesign their menus, while 48% of restaurateurs plan to trim menu items or permanently change their menus.
The need to diversify revenue streams arose followed by the pandemic, as the tactic offers insurance against unforeseeable risk like Covid-19.
In fact, today’s restaurant businesses rely heavily on new business models and revenue streams to survive and thrive. Moreover, even customers like such sorts of identity experiments which means restaurateurs can spice things up if it may generate more revenue for their business.
The pop-up restaurants cater to local tastes on an ad hoc basis. The main benefit of these types of restaurants is that they can easily test out new concepts in diverse markets. With social media campaigns, they can also broaden their customer base, save a big deal on start-up costs, including rent.
Amidst experimenting with new menus and other channels, the restaurants must deal with another new need such as streamlining the kitchen, a priority to improve customer experience across channels.
In this context, kitchen automation technology is paving the path for more streamlined kitchens for restauranteurs. The use of such kitchens means infusing confidence in your business to try out new concepts taking precedence in the industry.
Plant-based foods are popular among American consumers, based on the fact that they spent nearly $1.9 billion on such diets. This explains why chain restaurants are including vegan dining options in their menus. in fact, restaurants serving vegan-specific diets are growing in popularity.
National Restaurant Association surveyed 6,000 restaurant operators and 1,000 consumers, the demonstrated resilience of restaurateurs, novelty, food, and menu trends that would stick around.
Full-service operators are shortening inventories and redesigning menu items they could prepare well with a smaller staff. The trend is keeping the menu tripped in the coming months.
In a pre-pandemic era, the full-service restaurant traffic was on-premises. Post-pandemic, most restaurants suspended their on-premises dining. Now the focus has shifted to off-premises, via takeout and delivery.
More than half of adults surveyed favored the purchase of meal kits from their favorite restaurants. Now 75% of both millennials and Gen Z adults are fans of meal kits with pre-measured ingredients and instructions to cook restaurant meals at home.
More than half of consumers surveyed said they would likely buy grocery items if available for sales at their favorite restaurants.
Menus that offer a good selection of comfort foods (burgers, soups, pot pies, sandwiches, noodle dishes, etc.) influence the restaurant choice of consumers, reveled in the survey.
Just as comfort foods influence the restaurant choice, so do healthful menus.
Restaurants are shifting their focus on establishing strong community ties by investing in more community service facilities.
The franchising industry in the U.S. involves a company licensing the use of its brand, products, and processes to a separate business entity.
According to that arrangement, the associated businesses operate under the name of the largest brand.
In this context, quick service restaurants account for the largest segment of the franchising industry in the country, with more than 241 billion dollars of the overall economic output of the industry, followed by business services generating close to 121 billion dollars.
Food franchises are the bedrock of the entire franchise industry, accounting for around 30% of the entire franchise establishments across the United States, and about 60% of the direct employment by franchises.
The food industry dominates the area of franchising, as it is often viewed money-spinning business area with higher demand. Besides, it is an investment-demanding market, with expected costs ranging from thousands to millions of U.S. dollars.
The various concepts involved in food franchise include hamburgers, pizza, basked food, sandwiches, and coffee, etc.
Before you make up your mind to buy a food franchise, make sure you’ve conducted proper research as well as carefully reviewed a franchisor’s status-quo using Franchise Disclosure Document (FDD).
It will help you make an informed decision as to the procedures and costs involved in that franchise.
While FDD may enlighten you about most preliminary and current costs associated with the franchise, there are some underlying costs related to business ownership not listed there on FDD, say, for example, employee wages, utility costs, and others.
The National Restaurant Association is the world’s largest foodservice trade association, representing and advocating more than 500,000 restaurant businesses. The service of the association to its members is providing safety to the restaurant and foodservice industry in America and advancing it. Another division operated by the association is the National Restaurant Association Educational Foundation. Founded in 1919, it is situated in Washington, D.C.
The Bread Bakers Guild of America was established in 1993 as a non-profit alliance of professional bakers, home bakers, educators, suppliers, technical experts, and farmers, among others, including bakery owners and managers.
Producing the highest quality baked goods concludes the principle and practice of the group, thanks to its iconoclastic, independent, and creative members promoting baking education and taking pleasure in the lively exchange of ideas. The group consists of 2,500 members from across the U.S.
The Society for Hospitality and Foodservice Management location was founded as a non-profit organization providing higher education through scholarships and student outreach programs.
The mission of the organization is to ensure the consistent development of key industries responsible for driving productivity and morale for many American workers daily. It is committed to developing the next generation of diverse hospitality professionals.
Council of State Restaurant Associations is committed to fostering goodwill and promoting the success of its members.
One of the principles of the association is to broaden the restaurant industry’s understanding of the significance of state restaurant associations. It has a role in maintaining good rapport and working relationships with business organizations.
New York state restaurant association is committed to representing the restaurant industry based in New York.
With its prompt advocacy efforts meted out to protect the business of the restaurant industry, the association ensures that things are not problematic for restaurant owners and operators.
Independent Restaurant Coalition was formed during the pandemic crisis as a US trade group by independent restaurateurs and chefs with the purpose to foster a sustainable future for independent restaurateurs, their workers, and the communities they serve. The group lends voice to the needy restaurateurs, providing them a roadmap to resources and ensuring the potential for profit in their business.
Specialty Food Association was formed in 1952 as a not-for-profit organization. It is a membership-based trade association in America, advocating 3,000+ member companies. The association’s intent is to foster trade and commerce in America’s food industry.
The Washington Restaurant Association was established in 1929. It is a state restaurant industry association based in Washington, United States, representing more than 6,000 members of the hotel, restaurant, and hospitality industry.
Tilman Fertitta, born in Galveston, Texas in 1957, is an accomplished, billionaire businessman. He is one of the most recognizable personalities in the field of dining, hospitality, entertainment, and gaming industries. Also a television personality, Tilman is the chairman, CEO, and owner of Landry's, Inc. Besides, he is also the owner of a Houston-based professional basketball team, Houston Rockets.
Tilman is also recognized as the world’s richest restaurateur and also happens to be the sole owner of Fertitta Entertainment that owns Landry’s, a restaurant giant. Currently, the restaurant owns and operates over 600 restaurants and entertainment destinations in 36 states. Tilman is also one of America’s largest employers, with more than 50,000 employees. His restaurant, Landry’s houses an eclectic variety of eateries, along with 60 different restaurant brands and award-winning concepts.
As an innovative visionary, Tillman has commendable leadership skills which helped Landry’s thrive in the competitive business world of the foodservice industry. Today the company owns and operates more than 500 restaurant/entertainment/gaming/hospitality locations. Tilman also owns and operates various gaming, hospitality, and entertainment destinations, including Golden Nugget Casino and Hotel brands. His online gaming hub, goldennuggetcasino.com is recognized as the top iGaming operator in the U.S. Tilman is America’s one of the most influential business figures. He was listed at No. 158 on the Forbes 400 list of the wealthiest Americans.
To stay competitive and thrive, restaurant and bars owners depend on working capital.
In fact, the restaurant business loans offer you timely working capital, helping you cover various types of expenses that your business may need for its better functioning.
In a crisis like Covid-19 that ravaged many business establishments from across the world, business loans have come as one of the most dependable sources for adequate financial assistance to your business and surviving it through the crisis.
When it comes to availing restaurant business loans, the interest rates, repayment terms, loan amount, etc. will be influenced based on your credit scores, and financial condition.
While you can get your business funded easily within a few days from an online alternative lender, traditional bank lenders, on the other hand, have so many formalities for a borrower that prolong the duration of taking a loan, say for more than a week.
Make sure you’ve outlined your business plan for using the loan before you search for a lender. This is essential, considering most traditional lenders will ask for your business plan to get the idea of whether or not sanctioning you the loan would serve their business interest.
A well-prepared business plan is a reflection of how seriously you are committed to your business and that the loan you will take will be used to materialize the business plan.
The market is replete with various options for restaurant business loans today. Therefore, choosing the one may often seem a cumbersome exercise for a borrower.
Besides, finding a restaurant business loan could be harder for someone with poor credit standing, something that most traditional lenders have stringent evaluation processes.
Point is, traditional lenders will hesitate in considering loan candidacy of newly established companies, or applicants with poor credit scores, or someone whose credit standing is below their review criteria.
Moreover, you need to understand the fine prints of the application requirement for your restaurant business loan and arm yourself with proper documentation.
When you consider this option, understand that it varies from bank to bank and the type of business you are doing. The process to acquire the loan is lengthy and may take days ranging from 14 to 60 days.
Choose this financing option if your restaurant project has a flexible timeline, or apply for it well in advance so that you get the finance for your restaurant business when you require it.
Another term for this loan is collateral (business or personal) that you need to put up to your lender. The good thing about putting up collateral is it helps you find a business loan at cheaper interest rates, thus reducing your cost of funding.
Alternative loans are offered by banks and non-banking institutions. Such options are in demand, considering they help you with necessary working capital or funding through various lenders or from their own in-house financing model so that you can get the necessary funding to start your restaurant business.
Alternative lenders like Imperial Advance can offer you more flexible repayment options for your restaurant business loans regardless of poor credit scores.
This financing option is quite popular, given the amount of loan you get in the not-so-lengthy application process. The SBA is not directly involved in lending small business loans; it depends on a vast network of partner lenders to help you gain access to financing options based on your credit scores, financial condition, and other considerations best suited to their terms and conditions.
Read the terms and conditions of SBA loans before you consider choosing this option for your restaurant business loans.
In this option, the lender will pay you an up-front lump sum against a certain percentage of your future sales. This sort of financing option has been useful for businesses like restaurants whose revenue comes from credit and debit card sales.
Merchant cash is classified into two structures, first, you get an upfront sum of cash money against a percentage of future credit and debit card sales. Second, the upfront cash is to be repaid by paying fixed daily or weekly debits from your bank account withdrawals (ACH).
Fund your business expenses or address unforeseeable emergencies, or buy equipment. The loan you get has a fixed credit limit, allowing you to make multiple draws as needed within the credit limit.
Basically, this financing option gives your restaurant business the flexibility of when you need the working capital and how much. You can use a business line of credit to strengthen your credit standing as well.
Equipment financing is a viable financial solution to purchase expensive equipment for your restaurant business. The fund you receive should be repaid in monthly increments (plus interest).
You can also get a loan against paid-off equipment to bankroll your small projects within your restaurant business.
Choose this financing option if you require additional capital to fulfill the orders already taken. This will help your business scale to meet the demand from customers.
Because of problems associated with loan acquisition from the lenders with strict eligibility criteria, most borrowers turn to alternative lenders, someone with relatively more flexible funding criteria.
Imperial Advanc has been an excellent resource for lending. Since 2010, this BBB Accredited Business remains a leader in the lending market assisting over $1 billion dollars in lending to small to midsize businesses providing them with flexible lending /repayment options specific to their needs.
For any small business to run successfully, timely financial assistance is one of the most important things to manage cash flow, cover daily operational expenses, including but limited to equipment expenses, including new equipment upgrades, maintaining older equipment, expanding the business development marketing/advertising, refinancing existing debts, payroll, etc.
This is where loan companies like Imperial Advance come into the picture, extending a broad variety of loan options for small and medium-sized businesses, at attractive terms through in-house financing models, as well as the offer from our trusted lending partners across the United States.
To help you operate your restaurant business and maintain its sustainable growth, we have a host of unique financing options at affordable rates and easy terms, with instant approval timespan, and quick turnaround funding .
We are fully aware of the dire financial need a business owner experiences. In critical times like the Covid-19 pandemic that forced several restauranteurs to shut down their operations due to lack of funding and lockdown restrictions, our well-timed funding assistance will help your business survive and thrive in troubled times like the pandemic.
