Executive Summary

COVID-19 has resulted in a pronounced divergence in grocery store and food service & drinking place sales. U.S. grocery store sales have remained significantly above 2019 seasonal levels throughout the first quarter of 2021 while food service & drinking place sales have strengthened to near pre-pandemic seasonal levels as dine-in restrictions ease, weather improves and vaccination efforts continue to advance. Important points to consider include:

• U.S. grocery store sales reached a record high level throughout Mar ’20 and have remained significantly above 2019 seasonal levels through Mar ’21. Food service & drinking place sales declined to a 16 year low level throughout Apr ’20 but have pulled to within five percent of pre-pandemic highs as of Mar ’21.
• U.S. seated diner figures provided by OpenTable exhibited a similar pattern to the food service & drinking place sales throughout 2020, steadily rebounding from the Apr ’20 lows through September before declining again throughout the final quarter of the calendar year. Mar ’21 seated diners rebounded to a 14 month high level but remain significantly below pre-pandemic levels.
• The National Restaurant Association’s Restaurant Performance Index has indicated that the U.S. restaurant industry expanded over three and a half consecutive years through Feb ’20, prior to contracting throughout 11 consecutive months through Jan ’21. The Restaurant Performance Index rebounded to a record high level throughout Mar ’21, although both same-store sales and customer traffic indicators remain well below pre-pandemic levels on an industry-wide basis.

Grocery Store & Food Service Sales

COVID-19 has resulted in a pronounced divergence in grocery store and food service & drinking place sales. Grocery stores sales reached a record high monthly level throughout Mar ’20 as many stocked up on staples in anticipation of lockdowns while food service & drinking place sales declined to a 16 year low level throughout Apr ’20 as stay-at-home orders were placed.

Grocery store sales have declined from the Mar ’20 highs over more recent months but have remained at record high seasonal levels over 12 consecutive months through Feb ’21. Mar ’21 grocery store sales finished 13.7% below the previous year record high levels but remained 13.5% above 2019 seasonal levels. 2020 annual grocery store sales finished 10.8% higher on a YOY basis.

Food service & drinking place sales have rebounded from the 16 year low level experienced throughout Apr ’20 but remained significantly below previous year levels through Feb ’21. Mar ’21 food service & drinking place sales finished 36.2% above previous year levels and just 0.5% below 2019 seasonal levels, however, rebounding to a 13 month high level, overall. 2020 annual food service & drinking place sales finished 19.2% lower on a YOY basis, reaching a six year low level.

OpenTable Seated Diners

Total U.S. seated diner figures provided by OpenTable exhibited a similar pattern to the food service & drinking place sales throughout 2020. Seated diner figures showed YOY restaurant activity steadily rebounding from the Apr ’20 lows through the month of September, prior to remaining largely flat throughout the month of October and slipping once again throughout the months of November and December. More recently, declines in seated diners have decelerated as figures have steadily rebounded throughout the first third of 2021. When indexed to 2019 levels, Apr ’21 seated diners rebounded to a 14 month high level, but remain significantly below pre-pandemic levels.

Restaurant Performance Index

The National Restaurant Association’s Restaurant Performance Index (RPI) rebounded to a record high level of 105.1 throughout Mar ’21. The RPI is a statistical barometer that measures the overall health of the U.S. restaurant industry. A value above 100 signals a period of expansion while a value below 100 signals a period of contraction, with the distance from 100 signifying the magnitude of the expansion or contraction. The month-over-month increase in the RPI was the largest on record. The elevated RPI overstates the current health of the U.S. restaurant industry due to same-store sales and customer traffic indicators being compared to Mar ’20 levels, however. Both same-store sales and customer traffic indicators remain well below pre-pandemic levels on an industry-wide basis but continue to trend in a positive direction.

The RPI has indicated that the U.S. restaurant industry expanded over three and a half consecutive years through Feb ’20, prior to contracting throughout the 12 months of data through Jan ’21. RPI figures reached record low levels throughout Mar-Apr ’20, consistent with the declines experienced in food service & drinking place sales. RPI figures have been provided since early 2002.

The RPI has exhibited a moderate correlation with domestic cheese demand, historically, as the restaurant industry has been a main source of consumption growth. The correlation in the RPI and YOY growth in domestic cheese demand was most pronounced following the financial crisis of 2008, when both declined significantly, each reaching record low levels on a 12-month rolling average basis. Similar declines have been exhibited through the COVID-19 pandemic.

The RPI Current Situation Index, which measures current industry trend indicators, rebounded to a record high level of 104.4 throughout Mar ’21. The RPI Current Situation Index had ranged from values of 92.8 – 96.8 throughout the past 12 months prior to March. The RPI Expectations Index, which measures restaurant operators’ six-month outlook on industry indicators, reached a record high level of 105.7 throughout Mar ’21.

TSA Checkpoint Travel Numbers

Monthly TSA checkpoint travel numbers, a data series tangentially related to the rebound in food service sales, also reached a 14 month high level throughout Mar ’21. Mar ’21 TSA checkpoint travel numbers finished sharply above previous year figures but remained 40.4% below 2019 seasonal levels.

Summary

COVID-19 has resulted in a pronounced divergence in grocery store and food service & drinking place sales. U.S. grocery store sales have remained significantly above 2019 seasonal levels throughout the first quarter of 2021 while food service & drinking place sales have strengthened to near pre-pandemic seasonal levels.

From a dairy perspective, declines in restaurant performance have historically been associated most closely with declines in domestic cheese demand. Declines in food service cheese demand have been partially offset by government intervention programs including the Farmers to Families Food Box Program, however it was recently announced that the Farmers to Families Food Box Program will be discontinued in May ’21.

Food service figures have improved of late as dine-in restrictions ease, weather improves and vaccination efforts continue to advance. OpenTable seated diners reached a 14 month high level throughout Apr ’21 while TSA checkpoint travel numbers, a data series tangentially related to the rebound in food service sales, also reached a 14 month high level throughout Apr ’21. Looking forward, the National Restaurant Association’s Expectations Index indicates an expectation for continued improved food service sales in months to come.