Omicron variant, vaccine mandates hurting US foodservice industry

The U.S. restaurant industry is once again asking for more government funding as it faces the COVID-19 omicron variant, along with vaccine mandates and high labor and food costs.

More than 90,000 restaurants and bars have closed since the start of the pandemic, and more than 86 percent of restaurant and bar owners said they are concerned they will close without another round of grants via the Restaurant Revitalization Fund, the Independent Restaurant Coalition, an industry trade group, said in a press release.

“Restaurants and bars are struggling to survive 20 months of debt [and] rising supplier costs, and the omicron variant threatens to push more restaurants and bars into permanent closure,” it said.

Americans’ concerns over the omicron variant have resulted in a significant downswing in restaurant table reservations, according to OpenTable. Reservations have plummeted 48 percent in New York City; 39 percent in Chicago; 34 percent in Baltimore; 29 percent in New Orleans; and 21 percent in Denver compared to the same timeframe in 2019.

Sixty percent of adults had already changed their dining habits due to the delta variant, and with omicron cases now publicly acknowledged in many U.S. states, the impact could be devastating, IRC said.

“The omicron variant threatens to inflict the same hesitancy amongst diners around the country,” IRC said.

COVID-19 vaccine mandates in some U.S. cities are also hampering restaurant sales, according to the IRC. In New York City, Mayor Bill de Blasio’s recently expanded vaccine mandates for employees and customers at indoor dining, fitness, entertainment and performance venues have already been felt by the service industry, NYC Hospitality Alliance Executive Director Andrew Rigie said in a press release.

Starting 14 December, children ages 5 to 11 will need to show proof of one vaccination dose to enter those venues and, starting 27 December, New Yorkers aged 12 and older will be required to show proof of two vaccine doses, instead of one, except for those who have received the Johnson & Johnson vaccine.

The vaccine mandate poses additional challenges “for an already beleaguered restaurant industry in need of tourism support and revenues this holiday season,” Rigie said.

“U.S. families visiting New York City for scheduled holiday vacations may not be able to meet the vaccination requirements for children or themselves in time, and children aged 5 to 11 across the globe aren’t universally authorized to get vaccinated,” Rigie said. “Given the rapidly approaching holidays and considerable impact of the 14 December deadline, the proposal should be delayed until next year.”

Restaurants also continue to be plagued by higher food and packaging costs.

The U.S. Bureau of Labor Statistics found that “food at home” prices on meats, poultry, fish, and eggs rose 10.5 percent over the past year. And prices for food away from home also soared 4.7 percent during the past year, according to the BLS.

Foodservice companies are also taking a hit with rising seafood prices. Seventeen percent of restaurant operators report that they realized a “big increase” in seafood prices over the past three months and 57 percent said they had general seafood price hikes, Datassential CEO Jack Li said in a recent webinar.

Thirty-eight percent of restaurant operators said they are “taking the hit” and absorbing the price increases on seafood, while 43 percent are passing along costs to their customers by raising menu prices, Li reported.

As a result of supply chain challenges, 75 percent of restaurants have made menu changes, with 95 percent of restaurants experiencing significant supply delays or shortages of key food items in recent months, according to a recent National Restaurant Association survey.

Adding further, the Bureau of Labor Statistics November jobs report indicates that restaurant and bar employment is down more than 750,000 jobs since the start of the pandemic.

“Tens of thousands of restaurants are in danger of closing permanently leaving hundreds of thousands of jobs unfilled this winter,” IRC Executive Director Erika Polmar said in a press release. “Slow growth for restaurant and bar jobs in [the] employment report shows that we can’t build back better without a vibrant restaurant industry.”

The IRC is pushing for passage of the Restaurant Revitalization Fund Replenishment Act, which would provide an additional USD 60 billion (EUR 53 billion) in funding to the Restaurant Revitalization Fund, the IRC said.

The bill has gained bipartisan support in Congress, with at least 223 members of the House of Representatives and 43 members of the Senate indicating their support.

Photo courtesy of CHOONGKY/Shutterstock