One of the most discussed casualties of the Covid-19 pandemic was the restaurant industry. Many restaurants throughout the country were forced to close as dining out became impossible either by self-imposed absences or by virtue of government regulations. Those that survived either were able to successfully change their business model to home delivery or to curbside pickups. Restaurants went through a long period when their indoor dining was closed as they suddenly transformed into outdoor cafes that one is likely to see in most European cities. Menus had to be tweaked because of spot shortages of ingredient items. Capacity had to be restricted due to a severe labor shortage.
For a significant number, survival meant shifting a good deal of their business to online. Some were lucky enough to use funds from the federal Payroll Protection Program (PPP) to pay their bills, particularly to keep their employees in such a down business environment. But still labor shortages and supply chain interruptions caused havoc for the restaurants. When the restaurants reopened to the delight of the deprived diners, waiters were in short supply as a good number moved on to other professions.
Larry was a waiter at a Miami restaurant for the past two years. The money he earned, and the tips helped put him through college, but when the restaurant closed its doors for over 16 months, he decided to pursue his childhood passion of aviation. Larry’s owner offered him a bonus of over $10,000 to return but sensing that the restaurant might go through some more difficult times, he went back to his West Coast home and enrolled in an aviation school.
Similarly, the kosher restaurant business already faced such limitations as a shorter week confronted some of the same issues and challenges as the entire restaurant industry faced. Indeed, a number of them closed, never to reopen. But miraculously the kosher restaurant business rebounded with more than two dozen new establishments opening in the New York region since the onset of the pandemic. Many of the new eateries were planning to open just when the pandemic hit. They were at the point where they invested a good deal of capital already and as soon as conditions improved, they opened their doors.
One of the largest booths at the recently held Kosherfest was the Culinary Depot of Rockland County, designers, furnishers, and installers of commercial kitchens since 1998 with a great deal of expertise in designing kosher kitchens. Other foodservice commercial purveyors are also constantly expanding. Ozzie, an Israeli expatriate, has helped redesign many a kosher commercial kitchen. “Designing a kosher kitchen means more stoves, more refrigerators and much more equipment,” he says. Many of the large independent kosher supermarkets have built huge kitchens to expand their prepared foods sections. Ozzie points to Lakewood as an example of constant growth and expansion of catering facilities.
The food service industry is defined as encompassing all the activities, services, and business functions involved in preparing and serving food to people eating away from home. This includes all types of restaurants from fine dining to fast food.
Foodservice is, of course, much more than restaurants but despite the pandemic it is an industry that some say is exploding. One trade newspaper ceremoniously wrote that the growth is so substantial that irrespective of some of the issues faced by the industry, “the train has left the station!” It means that foodservice is on the verge of rapid expansion and even more extraordinary growth. Restaurants remain one of the central elements of foodservice. The market size of the Fast-Food Restaurants industry, for example, is expected to increase 15.8% in 2021. It has grown 2.4% per year on average between 2016 and 2021.
Catering is a very important part of the kosher foodservice business. As the community continues to grow, so does catering. The market size of the catering sector in the US fell to $14.22 billion in 2020, reflecting a decline over the previous year’s size of $15.72 billion. This was largely due to the Covid-19 pandemic. The sector was forecast to reach approximately $15.36 billion by the end of 2021.
Foodservice accounts for about 45%-50% of total spending on food in the US, with the category reaching several billion dollars and more than half of the kosher market. The pandemic has certainly put a cringe in the burgeoning foodservice industry but the prospects for its growth are astounding. In the kosher world, it includes servicing more schools, hospitals, nursing homes, independent living facilities, camps and so forth.
Amid the COVID-19 crisis, the global market for the Food Service Industry in 2020 was estimated at $3 trillion and projected to reach well over $4.5 trillion by 2026. It is now evident that the changed restaurant model will have a huge impact on food service since on-line sales will be a big percentage of sales and so will such services as Uber Eats and sidewalk delivery.
The rapid growth of the online and home delivery markets is driven by growing consumer demand for home delivery of foods. It is even helping a company like Uber get out of the doldrums towards profitability. It is its delivery of foods rather than its car on demand service that is helping the company turn a profit. The industry can expect a great deal of innovation with new apps, platforms, and convenient ways of interacting with consumers.
The explosion of foodservice bodes well for all the related industries such as construction and equipment. In the rapidly growing kosher market, the prospects are bright for companies like the Culinary Depot. Foodservice providers will be updating their commissaries and the equipment that goes with it to accommodate the growth of the community.
Still the mainstay of the foodservice business is the supply of food of all kinds, particularly ingredient items. Two of the largest US foodservice distributors, Sysco, and US Foodservice, two of the largest foodservice companies, have nearly 15,000 tractor trailers to deliver food to restaurants, caterers, and healthcare institutions. They too were faced with many labor shortages as well as disruptions in the supply chain. In the kosher industry many of the purveyors deliver directly to foodservice locations. S. Bertram Foods and Quality Foods specialize in the kosher food distribution to foodservice. So, when we speak of the rapidly growing kosher food industry, let’s not forget the all-important foodservice component.