How will Omicron affect the restaurant industry?
According to OpenTable, reservations at dine-in restaurants in the U.S. have been declining since the end of November. Reservations were down 8% on 12/18, for example. In New York City, reservations for seated diners on 12/17 declined 34% compared to the same day in 2019.
Much is unclear about the effect of Omicron, but its effect on restaurants is becoming apparent.
This is obviously not good news, and as someone who’s worked in restaurants for over a decade, I understand how frustrating, disheartening and demoralizing this is.
As the pandemic becomes endemic, what changes do restaurants have to make to survive? How many more people will quit? Are we leaving essential workers on the front lines to get sick and die while the rest of us work from home?
I, like most people these days, have been feeling a bit down, tired. And I understand there’s comfort in the familiar, and change is hard.
According to Esther Perel, bending is what we’re called to do when we can’t change our circumstances, but can only change how we react to them. Others call it “pivoting” or “adaptability.” I call it a change in perspective. Esther says it’s an essential part of resilience.
“Adaptability is the conversation within us between stability and change, between continuity and innovation. It is the marriage of our fundamental needs for security and adventure. Adaptability is our ability to bend and come back to center over and over again, increasing our flexibility each time, whether we’re in our daily stretch or the fight of our lives. And the more we practice becoming adaptable, the more we can tolerate change and harness its power.”
My frustration with the restaurant industry, and the reason why I decided to leave, was the fierce resistance to change. The unwillingness to acknowledge that, just maybe, the current system doesn’t work.
In an interview from September, Amanda Cohen predicts the end of independent restaurants. There’s a lot of data out there supporting this prediction. Pre-pandemic, chain restaurants were growing at twice the rate of overall population growth — that statistic still feels right.
One secret of the industry is, even though a lot of restaurants have closed since the pandemic started, a lot have opened. Some chains are growing quite rapidly (Blank Street, Tacombi, Dig, Fieldtrip, Hand Hospitality). This is a continuation of a trend that began in the early 2000s, when banks and private equity firms started pouring billions into the industry as they sought out tangible businesses.
There’s good reason for this. As Americans work longer hours, they’re spending a growing share of their food budget going out to eat. Millennials, in particular, spend more money eating out compared to other demographics.
But people are spending their money across a larger number of restaurants, so profits are split into smaller individual pieces. Restaurants end up cannibalizing each other’s business, but this doesn’t stop expansion.
What consumers truly value can be difficult to pin down and psychologically complicated. Independent restaurants focus more on the emotional, experiential and transcendent components of dining (hospitality, affiliation, belonging, exclusiveness, comfort, excitement + attractiveness), while chain restaurants focus more on the functional and operational components (convenience, saves time, costs less).
Even if there isn’t an official shutdown, I predict a bleak winter for the industry. Inevitably, there will be new cries for a bailout. But is that the right thing to do?
The experiential component of dining is too consumer-centric and not focused at all on the happiness of employees. And this feeling (entitlement to service) is only reinforced by most restaurant owners.
By bailing out owners you’re only giving them a reason to keep things the way they are. And judging by the amount of people leaving the industry, the job needs to be fundamentally transformed.
My only question is: how much has to happen before restaurants want to change? Last December, Alan Sytsma, the editor of Grub Street said:
“My fear is that certain behavior is so ingrained in the industry that, as restaurants reopen, there will simply be a return to the way things were. In reality, I think it will be up to diners to support those businesses that have taken stock of the restaurant world’s many existing problems, and have taken actionable steps to correct them.”
And this is exactly what has happened. Restaurants, like the rest of us, just want to “go back to normal.” But that means going back to a sub-minimum wage, no health insurance, customer abuse, wage theft and nothing in the way of collective bargaining power.
Change will not come from inside the industry. It will only happen because external factors will become too powerful to ignore.