The Pandemic, Restaurants and Luxury Goods
Restaurant Meals Poised to Being Considered Luxury Goods
Across the globe, food prices are rising significantly post-pandemic. The market supply chain has been impacted by the COVID pandemic in such a way that product categories across the line are seeing substantial price raises.
The trend is impacting restaurant pricing as well. Restaurant Business reports fast-food restaurants are raising their price to extreme levels for the first time since the 2008 recession.
Alternate government data suggests limited-service restaurants raised prices by 6.2 percent. More traditional dine-in restaurants have seen price raises of 2.9 percent. The rising prices can be attributed to the challenges restaurants are facing post-pandemic, including employee wages, delivery fees and new sanitation and safety guidelines.
When the COVID pandemic shut-down restaurants, drive-thru service kept many businesses operational. Alternatively, pay wages went up based on hazard pay and overtime as a result of short staff.
Delivery apps also become a popular option to continue service during the pandemic. This led to additional fees for the restaurant itself which in turn increased menu prices.
January alone saw an increase of 3.9% for menu prices. Much of the increase is based on limited staff. To meet wages for overtime fees adjustments needed to be made for food and beverage costs.
Limited service menu prices v. full service
Post-pandemic numbers are seeing limited-service restaurants exceeding the demand that full-service restaurants have. Full-service restaurants are feeling the pinch based on seating limitations and limited staff.
On top of that, adjustments to menu items are pricing them out while quick-service restaurants aren't being affected as dramatically. Even if a consumer frequents an establishment, when the restaurant becomes a luxury brand based on pricing the customer may lose interest.
Key Takeaways:
Impact of Coronavirus on Luxury Goods in Restaurants
As global demand for premium foods rises, so do the prices. Thousands of fine-dining restaurants have been pressured to raise menu prices or face shuttering their doors permanently.
Even as restrictions ease up and things go back to normal post-pandemic, some luxury food staples might not make a return. Items like wagyu beef, bluefin tuna champagne and caviar rely on restaurants to continue circulating in the food industry.
With most restaurants feeling the economic pressure from closures and new ordinances, these luxury foods aren't in demand as they once were. Some food distributors are sourcing consumers direct-to-market. Others have needed to cut-down on their supply.
Is this the end of fine-dining?
While the restaurant industry makes its slow climb back from the brink of extinction, fine dining is still struggling. Unemployment is tapering off but consumers hardest hit are still wary of their spending.
Fine-dining at high-end restaurants are taking a back seat to home cooked meals. Professionals are concerned this may end fine-dining altogether.
But restaurant owners aren't going down without a fight. Fine dining restaurants have reopened in some areas with limited capacity. Some reports say that the chairs are being filled regardless of price or wait times.
Wealthy customers will continue to spend at their favorite establishments. More traditional restaurants are looking for ingenious ways to lure their customers back in.
Fine-dining has also needed to change some things in order to make the best out of a bad situation. Retargeting towards different demographics has helped to move them along out of the current slump.
A New Way of Dining
Most restaurants stayed afloat when they were forced to close based on delivery, drive-thru and curbside pickup options. The restaurants that didn't have those abilities in place are not integrating them to keep their business open.
Fine-dining will find this challenging. Most consumers go to high-end restaurants for the ambiance over the food. Delivery doesn't satisfy in the same way.
The restaurants in the luxury sector are starting to get imaginative with their approach. Some are offering park-and-dine experiences in the parking lot to keep fine-dining alive.
High-price menus are being reimagined by incorporating more portable options on a scaled down menu. This ensures that if delivery is preferred the customer will enjoy the same quality of taste to the food. Chefs at luxury restaurants are now redesigning the menus to create less complicated dishes that travel easier.
Conclusion to Luxury Goods
- Innovations to fine-dining are continuing to be made to meet the demands post-pandemic.
- The COVID pandemic has forced restaurants to come up with new ideas to keep their dining rooms open. Delivery apps and limited seating are some of those ideas.
- Post-pandemic is seeing new obstacle present themselves for the restaurant industry. Staying flexible is the best way to meet these challenges.