A number of restaurants that economically withstood the pandemic are apparently encountering a resurgence of business as the economy reopens.
National retail sales data shows May sales at foodservice locations totaled $67.28 billion, up 1.8% from April and 71% higher than last year.
In fact, the latest sales numbers represent a record high for foodservice, surpassing $66.34 billion in February 2020.
“Higher traffic counts and menu price inflation have contributed to the recovery in foodservice sales,” authors of the CME Group’s Daily Livestock report noted. “The recovery in foodservice demand was expected, but it has been quite surprising to capture pre-COVID sales levels so quickly.”
The uptick in foodservice sales also could be attributed to less competition and more online orders. Datassential reports the industry lost nearly 9% of restaurants (90,296 closed/12,596 opened) since the start of the pandemic.
Meanwhile, May retail sales totaled $65.99 billion, the second highest monthly total for grocery sales.
Overall, combined sales at grocery stores and foodservice in May totaled $133.2 billion, $8.4 billion higher than the previous record in January 2020, the livestock report noted.
A key driver of the boost in spending on food, inflation, doesn’t appear to be waning any time soon.
USDA’s latest food price outlook report projects food at home prices could increase between 2-3% while the cost of food away from home could increase 3-4% this year. This follows gains last year of 3.5% and 3.4%, respectively.
“The CPI (Consumer Price Index) for all food increased 0.4% from April 2021 to May 2021, and food prices were 2.2% higher than in May 2020,” USDA noted in its June food price report.
Fresh fruits experienced the largest relative price increase (4.8%) so far this year while meat prices are expected to increase 2-4% in 2021 after posting the largest price gains last year (9.6% for beef and veal, 6.3% for pork and 5.6% for poultry).
“The biggest culprit here is robust beef and pork demand, which is pushing wholesale beef and pork prices to historic levels,” Michael Nepveux, American Farm Bureau Federation economist, said of meat prices. “Grocery stores, foodservice and exporters are all competing for product.”
Boxed beef prices reached record highs in the past year while the pork cutout value reached levels not seen since the supply crunch of 2014 caused by the outbreak of porcine epidemic diarrhea virus.
“Normally I might be concerned about the impact that a surging cutout price has on consumers’ willingness to pay for the product,” Nepveux added. “But, the saving grace is prices for all proteins seem to be increasing, which may prevent one protein from gaining substantially at the expense of another.”
It certainly doesn’t help consumers’ pocketbooks, though, as inflation continues across the economy. The all-items CPI increased 5% in May compared to the same time last year.