The State of the Restaurant Industry
Overall, 61% of restaurant operators say their total sales volume in October 2021 was higher than it was in October 2020, but when compared with October 2019 pre-pandemic levels, 53% of many New Mexico operators say their sales were lower in October 2021.
Business conditions deteriorated in recent months, according to many New Mexico operators. 46% of operators say their restaurant experienced a decline in customer demand for indoor on-premises dining during the last 3 months.
Looking ahead to 2022, many restaurant operators do not expect a return to pre-pandemic sales levels. 44% of operators expect their 2022 sales volume will remain below 2019 levels. An additional 27% of operators say business conditions will never return to normal for their restaurant.
Although the industry added back many of the jobs lost during the pandemic, a majority of restaurants remain understaffed. 71% of New Mexico operators say their restaurant currently does not have enough employees to support existing customer demand.
Among restaurants that are currently understaffed, 75% of operators say their restaurant is more than 10% below necessary staffing levels. 36% say they are more than 20% below necessary staffing levels. 76% of operators say their total labor costs (as a percent of sales) are higher than they were prior to the COVID-19 outbreak.
Restaurants are being impacted by disruptions in the supply chain. 97% of operators say their restaurant experienced supply delays or shortages of key food or beverage items during the past 3 months. 92% of operators say their total food costs (as a percent of sales) are higher than they were prior to the COVID-19 outbreak.
58% of operators say their total occupancy costs are higher than they were prior to the COVID-19 outbreak. 72% of operators say their profit margin is lower than it was pre-pandemic. Most operators do not expect their profitability to improve in 2022 with 41%expecting to be less profitable in 2022.
2022 NMRA Legislative Agenda
The pandemic took a massive toll on the tourism hospitality industry, and many sectors are still struggling to recover. This legislative session we need our state to invest in marketing and rebuilding the industry workforce to help restore tourism, including business travel, conventions, and events to their former level. We also need the legislature to support programs that will attract and rebuild the workforce. The industry will not fully recover without significant support from our leaders.
- We support the Governor’s Tourism Budget Request of $53.9 million for the NM Tourism Department. Without a significant increase in marketing our state will be passed over by travelers going to other states that are increasing their marketing.
- We support a one-time appropriation of $25 million to establish an Opportunity Fund to provide direct funds to support communities as they work to bring back events, meetings, sporting events, and conventions around the State.
- We support $5 Million to expand the high-school ProStart program and build a Hotel program to engage more high schools. The restaurant ProStart program is in 35 New Mexico high schools and has 2,500 students enrolled. We would like to expand this successful program that provides a pipeline of students to our industry at this critical time when we are in desperate need of employees.
- We support another $25 million to go to the New Mexico DWS workforce reimbursement program for the hospitality industry to assist them with training costs and increase the workforce to pre-pandemic levels.
The majority of restaurants remain understaffed. Many are shrinking their hours, some are closing entire sections of their restaurants, some are not opening their dining rooms and just relying on take-out orders. This isn’t good for restaurants and it’s not good for the state.
We still need help!