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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 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 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 Funderial 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.
Funderial 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 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 Funderial 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.