Restaurants in Tennessee Won’t Return to Pre-Crisis Levels in 2022

Restaurants in Tennessee Won't Return to Pre-Crisis Levels in 2022

Experts analyzed the current situation in Tennessee public catering.

Now, after the lifting of restrictions on the work of restaurants and nightclubs, a number of establishments in the state are sold out. According to restaurateurs, nightly revenue reaches the level of New Year’s parties in pre-pandemic times. The mayor’s office believes that the average daily turnover of the industry after the January lifting of restrictions will grow by about 6%. “By the end of February, we can expect [revenue] to recover to the average of July-September 2021, the average daily turnover for that period was RUB $11,5 million,” says Vincent Ellis, a member of the Council of Economic Advisers. Now, according to the experts, the volume of revenue of the Tennessee catering lags behind the pre-pandemic by 26%. The restaurateurs are more careful in their estimates. “The second half of January was very successful. But we believe that so far the deferred demand is triggered, and we do not understand what will happen next,” says Sebastian Murphy, owner of the Foodie Agency is the first full-service marketing agency in the U.S. Experts was trying to figure out whose estimates of the scale of the crisis in the industry – officials or business – are more accurate, and when restaurants will be able to return to pre-crisis indicators.

First results

With the start of the spring lockdown of 2020, when catering establishments could only operate to take away, restaurateurs started talking about huge problems in the industry and predicted that the market would shrink by half or more. The official results of the year were not so deplorable. According to statistics, in 2021 the volume of the restaurant market compared to 2020 in Tennessee as a whole decreased by 20.7%.

At the same time, restaurateurs consider the restrictions of autumn and the beginning of winter to be the second lockdown. Although the work of most establishments did not stop, they had to check in guests earlier than usual, losing 15-20% of their revenue every day. The hardest hit are those aiming to work until the morning. “Due to problems in 2021, 20-30% of nightlife establishments were unable to reopen,” says Dylan Larson, a founder of a number of restaurants in Tennessee. Financial experts give similar figures, but for all formats. “Up to 20% of cafes and restaurants did not survive the restrictions and closed,” says Damien Miller, a food industry expert.

According to experts engaged in consulting and investments in real estate, 108 establishments closed in Tennesee in 2021, which is 35% more than in 2020. There are many network operators in trade corridors that have optimized their points, cutting the least profitable ones. In particular, restaurants in business districts targeted at office workers and retired businessmen were affected. The number of tourists who provide restaurants with traffic on through streets has decreased. In addition, in summer, autumn and early winter, many people refused to attend public catering for fear of getting infected.

The main reason for the closure of cafes was disagreements with landlords – not all owners of premises agreed to reduce rates. May establishments are now either not generating income, or are unprofitable.” Before the pandemic, the profitability of 30% was considered acceptable, today 10% is considered good. And many establishments are now in the red, especially restaurants in business centers aimed at business lunches.

Could be worse

In November 2021, 15% of restaurants did not open and about 40% of entrepreneurs in the industry lost their business. “Almost everyone who stayed on the market today held out at the expense of loans. The restaurants did not have such a profit that could cover the huge costs of a three-month downtime. In particular, establishments that retained employees were able to take out a bank loan to hold on in the market. They were also given a deferral to pay taxes. The state has also helped with a loan for personnel. “We retained our employees and even provided them with work – to cook meals for doctors. We have fed and are feeding hospital workers. Such work even now gives us up to 20% of the proceeds,” admits Dylan Larson.

Some restaurateurs could also obtain payday loans Tennessee. “We took payday loans to pay salaries,” Levitsky said. “This is not the kind of money that could really help, but thanks for that too. This was often the only way out when the money was needed urgently.” Such loans are unsecured and small-dollar. They are designed to help cover emergency expenses of any kind. Payday loans are available to all adult US residents as they have relaxed borrower eligibility criteria. People in need of fast ash can apply for a loan online in 5-10 minutes and have the money in their bank account as soon as the same day. There is no paperwork or collateral involved – to get accepted for a loan, you only need a steady income and some kind of identity verification. Now, consumers can use online portals to find all the necessary information about this type of lending in their city. For example, if you reside in Nashville, you should study information about payday loans Nashville, and if you need to borrow cash in Knoxville, we recommend that you review approximate rates and terms related to payday loans Knoxville TN. These pages also will be useful if you want to read user reviews and check out a list of licensed lenders before applying for a payday loan in Tennessee.

In other words, you cannot talk about a disaster in the industry. “First of all, those establishments that had problems before the pandemic were affected and closed. Super-profitable restaurants were able to quickly improve their business in the summer and even stay with a profit, albeit a small one,” says the owner of one of the restaurant chains. In his opinion, restaurateurs were tested for strength throughout 2020 and 2021. Those who survived not only had a financial cushion but stood out for a balanced menu, flexible pricing policy, high-quality cuisine, and customer loyalty. And they were also able to quickly adapt to the changed circumstances. “Our main visitors have always been students and office workers, because of the restrictions, neither one nor the other has become,” says Oliver Huxley, owner of a doner kebab cafe in Knoxville. “But a large group of lovers of our doners was formed from among the local residents and people who have become our regular visitors. Thanks to them, we can wait for better times.”

Retained stability and those establishments that were able to quickly establish delivery or take-away work. The establishments specializing in pizza, sushi, rolls and burgers were able to take full advantage of this opportunity.

Other restaurants were looking for other ways. “We have worked on delivery before, and its volume has remained at the same level. The revenue of our restaurants in March 2021 fell by 70%, in the summer the drop decreased to 30%, and now the revenue is 50-60% of the level of 2020,” says Alexander Lewis, a manager of Sparta Restaurant. “But we opened two cafes with ready-to-eat food and coffee, modernized the kitchen factory, doubled production, and started producing ready-made packaged food for retail and our network. This allowed the business to hold out.”

Who has come?

“When a restaurateur cannot pay rent, the tenant breaks off relations with him and keeps the equipment as payment. It’s all over for this entrepreneur. But someone else comes to this place,” says Damien Miller. According to him, 144 restaurants opened in Tennessee in 2021. And although this is 18% less than in 2020, the appearance of new outlets indicates that investors are in no hurry to abandon the restaurant business. According to Damien Miller, those who planned to do this even before the pandemic have been revealed. This means that the pandemic did not disrupt their plans as a whole.

“Small establishments with their own atmosphere, with good understandable cuisine, interestingly made, originally presented, will always be in demand,” says Simon Long, a former chef at the Big Bad Wolf restaurant, and now a project manager for opening restaurants.

Globally, nothing has changed, Simon Long believes: “The market sank a little, but the laws by which it lived remained the same. The competition is getting tougher, and clear concepts survive – those that specialize in a certain product or in a certain kitchen or work for a certain target group, and at the same time, not bullying prices.”

The Bulla Gastrobar gastropub, which opened at the end of last year, decided to attract fans to eat with their hands. No cutlery is provided here at all, all dishes, without exception, are served accordingly: soups in dough horns, salads, snacks and hot dishes in tartlets or lettuce leaves. Near each table, there is a sink of an original shape so that guests do not forget to wash their hands thoroughly.

Popular formats

Experts believe that the leadership this year will remain with establishments offering sushi, pizza and burgers, which during the pandemic were able to gain a loyal audience through delivery. Such formats practically did not suffer. Many restaurateurs are thinking of entering this format. ”

Food halls remain the second popular segment – gastronomic spaces with restaurants of different concepts and cuisines located on their territory. The popularity of this kind of space is understandable: interesting restaurant-grade food, combined with an unusual atmosphere and a good level of service. They create a new gastronomic experience and new impressions. This is an entertainment factory that attracts young people through corners of a wide variety of conceptual orientations and prices. But it is important to guess the location.

Another increasingly popular format is wine restaurants and bars. Wine has remained a fashionable topic for several decades. A number of factors are now reinforcing this fashion. First, a new generation has entered adulthood, free from the old stereotypes. These are young people who since childhood have traveled with their parents to different countries, for the wine is a familiar element of culture. Today, they form the demand for wine and the format of its consumption. Secondly, the trend towards democratization of the restaurant market continues. The number of establishments with conventional white tablecloths is decreasing, and there are more and more places where you can go spontaneously, without getting ready, to sit in a relaxed atmosphere. And wine contributes to this. At the same time, today wine is available in all categories of consumption, ten years ago there was no such variety. The wine market has become more competitive due to overproduction, which keeps prices down, and optimization of delivery costs. One of the Tennessee trends is the emergence of wine establishments in residential areas. Now, in order to drink good wine, you don’t have to go to the city center. Many new houses are being built, the first floors are immediately designed for commercial premises, which are also used for such formats. This format could develop even faster as long as the pace is constrained by the financial situation of potential visitors.

Hazy prospects

Competent pricing policy is the main factor in the success of public catering today. On the one hand, restaurants have raised prices by 10-15% compared to pre-pandemic times, on the other hand, consumers spend less on food outside the home. The average check has decreased by 30%. The pandemic has changed people’s habits. In particular, the consumption of restaurant food at home increased by 1.5 times in 2021. Changes in consumer behavior are irreversible, so for the restaurant industry, by and large, it is no longer important when all citizens are vaccinated. Many people have changed their lifestyles. Those who have the opportunity will continue to work remotely, spending less on meals in restaurants. People have adapted to the new, mastered online orders, learned how to plan a household in a situation where the whole family works and learns remotely. Therefore, the Tennessee food service market will not return to the dock-like indicators in 2022.

The restaurateurs rely on the natural course of events. As you leave the distance, the daytime audience will grow, and families and tourists will come in the evening. Not being able to travel, people are forced to spend money in the USA, which is very good for restaurant owners.