Many Restaurants Believe Another Pandemic Will Happen Soon

    Forty-five percent don't feel very prepared for a future crisis. 

    Guests sit at a table inside a restaurant.
    Unsplash/Vanna Phon
    Survey respondents selected food safety and employee health as the two most important areas for future industry education and preparedness.

    The far-reaching and disastrous effects of COVID-19 have sobered food and beverage executives across the country. 

    Among a survey of 325 senior-level North American executives at leading food and beverage manufacturing companies, retailers, distributors, and other supply chain partners, 78 percent are actively preparing for a future global pandemic, according to a study by AIB International and Research Strategy Group. Thirty percent expect one in the next four years and 50 percent think one will happen within the next decade. The survey showed CEOs from companies with higher annual revenues and those in food processing/manufacturing are more likely to believe a pandemic will happen in the next four years. 

    Still though, 45 percent of respondents said they don’t feel very prepared for a future pandemic. 

    “Even after the past year of disruption, almost half of respondents indicated they are still not adequately prepared with a plan for the future. Combined with the fact that 30 percent believe another global pandemic will occur in next four years—and a full 50 percent say within the next 10 years—that lack of preparedness is startling,” said Anne Coulter, Research Strategy’s managing director, in a statement. 

    There’s reason for the cautionary attitudes. Between March 2020 and April, restaurant and foodservice sales were down $280 billion from expected levels, said the National Restaurant Association. Also, 110,00 brands have closed permanently or long-term. Several concepts, from Golden Corral franchisees to Chuck E. Cheese, have been forced into bankruptcy because of the pandemic’s effect on business. 

    READ MOREWhy the Hiring Crisis is a Moment of Reckoning for Restaurants

    The pandemic has also triggered a labor crisis that’s hitting nearly every brand, even the big players like IHOP, Applebee’s, Taco Bell, and KFC. A good portion of operators attribute this to the enhanced weekly unemployment checks. The CARES Act in March 2020 gave individuals a $600 weekly boost. A year later, the American Rescue Plan called for $300 weekly boosts until the beginning of September. In a survey of more than 360 operators, Black Box Intelligence found that more than 57 percent blamed higher unemployment as the main driver behind the crisis. The next closest was “better quality of life in another industry” at 20 percent. 

    So it’d be fair to say that COVID has shaken many industry vets to their core. Sixty-one percent of respondents to the AIB and Research Strategy survey said their company didn’t have an adequate plan in place when COVID started, and 62 percent said they were not “very prepared.” Operators with revenue of less than $250 million said they didn’t feel as prepared as larger companies. 

    The respondents selected food safety and employee health as the two most important areas for future industry education and preparedness.

    “This research highlights the dramatic impacts felt by so many companies in the industry due to a lack of preparedness. Despite the understandable ‘crisis fatigue’ from grappling with COVID-19 over the past year, it’s clear that now is time to prepare for the future and elevate critical planning to a best-in-class standard,” said Steve Robert, AIB’s global vice president of  Product Innovation, in a statement. “Should a future pandemic occur, improved preparedness will help offset some of the costs and disruption that so many operations have realized over the past year.”

    The good news for restaurants is that sales are on the upswing as vaccines increase and jurisdictions begin to loosen restrictions. For example, New York City is planning to lift capacity limits on May 19 and California hopes to do the same on June 15. Additionally, the week ending April 25 was the sixth consecutive week that two-year comp sales growth was positive, according to Black Box. 

    Brands are also getting closer to direct grants from the $28.6 billion Restaurant Revitalization Fund. Within the first two days of opening the application portal, 186,200 restaurants, bars, and other eligible businesses have applied. Over half of these applications (97,600) came from businesses owned and controlled by women (46,400), veterans (4,200), socially and economically disadvantaged individuals (30,800), or some combination of the three (16,200). Over a third of these applications (61,700) came from businesses with under $500,000 in annual pre-pandemic revenue.