The group that represents many Michigan restaurants and hotels is painting a bleak picture of the business environment those establishments find themselves in as the COVID-19 pandemic grinds on.
The Michigan Restaurant and Lodging Association cites the results of a survey done nationally, with Michigan numbers extracted and analyzed by the group. The MRLA says demand for In-Dining is down, expenses are up and profits are eroding, compared to just a couple of months ago when customers seemed to be returning from the pandemic hiatus.
“As we approach Michigan’s fall and winter seasons and see consumer trends move away from in-person dining due to colder weather outdoors and concerns about the Delta variant, the recoil impact to the restaurant industry will be harsh, swift and very concerning,” said MRLA President & CEO Justin Winslow. “Less than one in three operators are doing better than they were pre-pandemic with business conditions being worse now than they were three months ago. These trend lines tell us that we are moving away from a desperately-needed resurgence as we approach the winter season.”
Survey highlights include:
- 22 percent of operators reported a same-store sales decline between August 2020 and August 2021.
- 61 percent of Michigan operators say their sales volume in August 2021 was lower than it was in August 2019. Only 29 percent reported higher sales compared to August 2019.
- Many Michigan operators also reported a deterioration of profitability during the past few months. 49 percent of operators say their restaurant is less profitable now than it was three months ago. Only 12 percent of operators say their restaurant is more profitable now than it was three months ago.
- 43 percent of Michigan operators say business conditions for their restaurant are worse now than they were three months ago. Only 15 percent say business conditions improved during the past three months.
- The Delta variant negatively impacted the restaurant industry in recent weeks. 58 percent of operators say their restaurant experienced a decline in customer demand for indoor on-premises dining in recent weeks as a result of the increase in coronavirus cases due to the Delta variant.
- 17 percent of operators think it will be 7 to 12 months before business conditions return to normal for their restaurant, while 55 percent think it will be more than a year. An additional 17 percent of operators say business conditions will never return to normal for their restaurant.
- 87 percent of Michigan operators say their restaurant currently does not have enough employees to support its existing customer demand.
- 54 percent of operators that are understaffed say they are currently more than 20 percent below necessary staffing levels with 89 percent of operators saying they are more than 10 percent below necessary staffing levels.
- 90 percent of operators say their total food costs (as a percent of sales) are higher than they were prior to the COVID-19 outbreak. Only 2 percent say their food costs make up a smaller proportion of sales.
- 83 percent of operators say their total labor costs (as a percent of sales) are higher than they were prior to the COVID-19 outbreak. Only 10 percent of operators say their labor costs declined as a percent of sales.
“It’s important to remember as we return back to our offices, our family gatherings, and other business as usual settings, that the impact of this virus and lack of state and federal support are still threatening the viability of our community restaurants,” added Winslow.
The survey was conducted September 7 – 15 by the National Restaurant Association (NRA) and included responses from 4,000 restaurant operators nationally. The above data reflects Michigan-specific responses extracted from the NRA survey. 131 Michigan operators were represented in the survey results.
