SALT LAKE CITY — A recent study by an Arizona marketing research firm indicates Utah consumers are spending more today on restaurant food than last January before the pandemic struck.
Phoenix-based Zensearch reported this week that despite the financial and economic challenges posed by the coronavirus outbreak, consumers in the Beehive State are currently spending 24% more at restaurants than they did at the beginning of 2020 before the pandemic caused major shutdowns across the country and around the globe.
Additionally, the report showed restaurant spending nationwide declined just 1% from the same period, with many states also experiencing restaurant spending hikes since the start of the outbreak.
While the study paints a rather rosy portrait of the current situation in retail dining, an industry executive in Utah is not at all convinced about the veracity of the report.
Melva Sine, president and chief executive officer of the Utah Restaurant Association, was pointedly critical of the study’s findings, expressing deep concerns regarding its conclusions.
“We know that’s not true. We know we’ve lost 450 restaurants in Utah,” she said. “That’s verified by all the distributors who can say there are so many accounts we have closed.”
However, Sine noted that fast-food establishments have reported better revenues than traditional sit-down restaurants.
“The unique thing is that the industry in quick-service dining is doing really well. Go to any quick-service restaurant, chain or non-chain, and they are doing amazing,” she said. “From what we’re hearing from the quick-service restaurants in the state, they are holding their own.”
She said most quick-service restaurants did not have to apply for the federal paycheck protection program money, while others did apply for funding to provide personal protective equipment. Contrarily, dine-in eateries have felt a hugely detrimental impact on their business over the past several months.
Sine said data from the Utah Office of Management and Budget indicated that restaurants saw a 34% decline in receipts in the first two quarters of 2020. However, she noted that fast-food retail is designed to meet the needs that have resulted because of the social distancing requirements created by the pandemic.
“That’s their model, 77% to 80% of a quick-service restaurant is through the window anyway,” she said. “Yes, they have their dining rooms for those customers who want to, you know, go in and have an experience in the dining room, and a few of them have takeout. But for most, their business through the drive-thru window is probably 97% now rather than 77 or 80%. So for them, the model of adaptation didn’t exist, they were ready to meet that model.”
Sine pointed out that prior to the pandemic, an estimated 111,000 people were employed in the Utah restaurant industry.
“We were the state’s second-largest employer and the largest private-sector employer,” she said. “Then by the end of April, we were down to 63,000 employees. By the end of September, we had built the industry back up to 93,000 (employees) with restaurants being limited to 6-foot distancing — which means only about 40% occupancy.”
She said losses for the state’s restaurant industry are estimated to be in the $2 billion range — about a 20% drop.
Considering all the economic chaos wreaked by the pandemic, she said it may be a long time before the industry is again on solid financial footing, even with the recent signing of the latest federal stimulus package.
“We’re still hopeful. We’re encouraging restaurants to do everything they can (to stay open),” she said. “It’s a nightmare to try and keep inventory. Inventory is very expensive and it’s 33% to 40% of restaurants’ revenue. If you buy inventory and then people don’t show up, you can only keep the food for so long in order for it to be fresh and of good quality.”
She said with so much uncertainty still prevalent regarding the public health issues surrounding the pandemic, it is hard to know when the Utah restaurant industry will be able to move toward recovery. For the time being, the hope is to keep as many establishments as possible afloat until the public is able to return to some of their normal social activities, including dining out and enjoying a meal at their favorite eateries.
“As far as the light at the end of the tunnel, right now I can’t see that far,” Sine said. “I can see the end of the tunnel, but I’m waiting to see if we see daylight and how close we are.”
Top states for percent in rise of restaurant spending
Washington — 26%
Utah — 24%
South Dakota — 20%
Alaska — 19%
Alabama — 18%
Nebraska — 18%
North Dakota — 16%
Indiana — 15%
Montana — 15%
Kentucky — 14%
Delaware -— 14%
Wisconsin — 13%