America’s Incredible—And Incredibly Unequal—Restaurant Comeback

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In 2020, the restaurant business as we knew it looked like a goner. Even its own lobbying group said so. As the pandemic crushed bars and sit-downs, the National Restaurant Association put out a dire prediction: The business would likely never return to its pre-pandemic state.

Over the next four years, just about everything that could go wrong for an industry went terribly, unthinkably wrong for restaurants. The pandemic destroyed indoor service across the country. More than 2 million jobs were lost in 2020. As COVID restrictions waned, chaos swarmed every reopening. In the Great Reshuffling of 2021 and 2022, the “quits rate” among restaurant and hotel workers—the share of employees who left their job, in any given month—rose above 6 percent, close to the highest rate of any industry this century.

This resurgence of worker power was wonderful for low-income employees, who saw their earnings grow faster than those of the rich, partially erasing decades of rising inequality. But it created a historic challenge for restaurant managers. In the 30 years before the pandemic, annual income growth for restaurant workers never once exceeded 6 percent. In both 2021 and 2022, restaurant wages grew faster than 10 percent, according to the Bureau of Labor Statistics.

Wage growth is especially challenging for restaurants, because they are one of the most labor intensive parts of the economy. A presentation by the NRA earlier this year noted that it takes 12 restaurant employees to generate $1 million in sales. That’s compared with just four employees at clothing stores, three at grocery stores, and fewer than two at gas stations.

While wages surged, visitors didn’t always follow. In many downtown areas, where office occupancy remains moribund, foot traffic has dwindled, crushing daytime sales. In major cities, the industry continues to struggle with depressed tourism. For fine-dining operators, tourists and travelers make up more than half of sales. But international travel to the U.S. last year was still below its peak pre-COVID levels.

Given this gauntlet from hell, the following news might come as a surprise: In 2024, the restaurant recovery is complete, by almost any measure.

Before the pandemic, about 12.3 million people worked in restaurants. Today, about 12.3 million people work in restaurants. Before the pandemic, Americans spent $1.28 on food away from home (mostly at restaurants and bars) for every dollar they spent on food at home (in grocery stores and supermarkets, for example). In 2022, the USDA reported that the away-home ratio for food spending had sprung back to exactly $1.28. The NRA now forecasts that food and beverage sales will hit $1.1 trillion this year, a new record. Arguably, business is booming like never before.

How did the restaurant industry do it? Part of the answer is that more independent businesses embraced a hybrid model to adapt to new consumer behavior. My favorite local restaurant, Elle in Washington, D.C., serves coffee and pastries in the morning to commuters, offers takeaway sandwiches at lunchtime, and prepares inventive dishes in the evening, with a blend of indoor and outdoor dining available throughout the day. Is it a café, a fast-casual joint, a ghost kitchen, a takeout place, or a fine-dining establishment? The answer is yes; it’s all of those things, depending on the hour and the customer.

Behind the headline figures, however, the restaurant recovery is not a simple story of universally positive outcomes. The closer you look, the more uneven the landscape seems.

First, although chains are thriving, independent sit-down locations are struggling. This is evident in both the labor and sales data. Employment at fast-food and fast-casual (think Chipotle) restaurants is up more than 100,000 jobs since the pandemic, according to the NRA. But full-service locations, where waiters attend to seated diners, are still several hundred thousand employees short of their totals from early 2020. According to The Wall Street Journal, from 2019 to 2023, sales for fast-food and other limited-service restaurants grew at twice the rate of sit-down-restaurant sales. Meanwhile, about 4,500 more independent restaurants closed than opened last year.

Second, the recovery differs dramatically by region. The Northeast and Midwest still seem to be in a kind of dining recession, in part because of their lack of population growth. Almost every state east of the Mississippi River and north of the Mason-Dixon Line had fewer restaurant employees in December 2023 than they did four years earlier. (The happy exceptions were Illinois, New Jersey, and Delaware.) Meanwhile, across the South and through the Mountain and Pacific Time Zones, most states have seen a full recovery of restaurant jobs. If you trace your fingers from Idaho and Montana down through Arizona and Texas, every state you touch except one (sorry, New Mexico) has seen at least 4 percent growth in restaurant employment since the pandemic. A similar story holds if you compare cities in the booming West and stagnant Northeast. In Las Vegas, restaurant employment is significantly higher than it was before the pandemic. Meanwhile, in New York City, employment at full-service restaurants is still down about 30,000 from its peak.

Finally, with every passing year, restaurants are more about filling to-go bags than filling chairs. According to the NRA, on-premises traffic hasn’t returned to its pre-pandemic highs. But drive-through and delivery orders have grown so much that together they now account for a higher share of customer traffic than on-premises dining, for the first time ever. Meanwhile, the only parts of the day with growing foot traffic are the morning and late night, when customers are likely to be on the go.

Altogether, American restaurants are shifting from independent operators to chains, from slow food to fast(er) food, from east to west, from city centers to suburbs, from lunch and dinner to breakfast and late night, and from eat-in to takeaway.

The evolution of the restaurant industry in some ways mimics the trajectory of the entertainment industry. In the 1930s, when the typical American went to the movies several times a month, film was a collective sit-down experience, to be enjoyed with strangers. But video entertainment has long since become something people mostly consume at home or on the move—even in their car, while waiting at a red light. It’s the same with prepared food. If you say, “Think of a restaurant,” most people will imagine a room with tables bearing meals. But from a sales and traffic perspective, the 2024 American restaurant industry isn’t primarily about rooms, or tables. It’s about preparing food for someone to consume at home or on the move—even in their car, while waiting at a red light.

As Americans spend less leisure time with other people, it’s predictable that they’d spend less time in shared public spaces, such as cafés and diners. The great restaurant comeback is an inspiring business story. Less inspiring is to recognize that, overall, restaurants have survived by evolving to fit within the well-worn grooves of a new American solitude.