The rate of vaccination is rising in the United States, with a national mandate to make the COVID-19 vaccine available to all adults by May 2021. However, that may not correlate to a quick recovery of foodservice demand.
In a WATT Poultry Chat interview, Dr. Thomas Elam, president of FarmEcon LLC, said a huge number of restaurants went out of business during the COVID-19 pandemic and that, along with other factors, makes it hard to say exactly how fast foodservice demand will return if the U.S. starts to see more widespread vaccination of adults beginning in May 2021.
Austin Alonzo: What is your expectation on what the effects would be for the turkey and broader poultry markets if the U.S. achieves widespread vaccination of adults by the end of May 2021.
Thomas Elam: If it does, in fact, happen you start to see all these restrictions of people gathering together to eat out get relaxed and it moves along fairly rapidly.
We could see a significant ramp up in foodservice, via restaurants in particular, we're going to include a link to an article that was just published about the end of January. And it has a lot of details in it not only about the number of jobs lost, et cetera, but some expectations based on surveys of what people expect to do when they feel safe going into a restaurant again.
The numbers are startling, 110,000 plus restaurants have closed many of them permanently. Last year, the forecast was for about $900 billion in U.S. restaurant sales, and we fell 240 billion short of that. It's a huge loss, millions of jobs vanished, and shockingly, a lot of restaurant owners who were surveyed who had been in the business for quite a while do not expect to reopen their restaurants.
So it may very well be that people want to go to a restaurant and have to wait in line because the numbers are down so sharply in terms of the number of restaurants they'll be able to go to, but particularly among the older population, of which I'm a member of, the baby boomers strongly want to go back to restaurants when they think it's safe to do so.
But as you know, restaurants are not the only source of foodservice demand. There are cafeterias that cater specifically to companies. There are other kinds of eating establishments in the economy other than restaurants. And they've also been hit hard. We don't have the kind of detailed data on those that we do have on restaurants.
The other thing that I think we may need to worry a little bit more about than we think we do at this time is how fast the restaurants plan on actually taking advantage of the relaxation of restrictions.
I'll give you a little example here. Here in Indiana, we've been able to reopen restaurant establishments for in person dining for months. And down on 96th Street, just south of my house, there's two McDonald's, they're about three miles apart. One of them has had their dining room open for months, the other one has never opened their dining room. Same company, same menu, three miles apart, both in the same county where these restrictions are based: on our own local regulations, not state regulations.
So it'll be interesting to see just how fast the restaurant industry is able to ramp up and put all their tables back in, hire back all their staff and they may have problems getting staff. A lot of these people were getting some very handsome unemployment benefits, they may not want to go back to a $12 an hour job. So, it's going to be an interesting summer to see just how fast the restaurant industry can ramp back up. Assuming that we do in fact get the vast majority of the population vaccinated by the end of May.
This transcript is edited for length and clarity.
