Executive Summary

U.S. grocery store sales have remained significantly above pre-pandemic levels throughout the first five months of 2021 while food service & drinking place sales have rebounded to above pre-pandemic seasonal levels as dine-in restrictions continue to ease, weather improves and vaccination efforts continue to advance. Important points to consider include:

• U.S. grocery store sales remained significantly above pre-pandemic levels for the 15^th consecutive month through May ’21 while food service & drinking place sales reached a record high monthly level. Combined grocery store and food service & drinking place sales reached the highest monthly level on record throughout May ’21, finishing 0.2% above pre-pandemic trendline figures when adjusted for inflation.
• U.S. seated diner figures provided by OpenTable exhibited a similar pattern to the food service & drinking place sales throughout 2020. Jun ’21 seated diners rebounded to a 16 month high level but remained ten percent below pre-pandemic seasonal 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 remained near recently experienced record high levels throughout May ’21, although same-store sales were a mixed bag when compared to pre-pandemic seasonal levels.

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 remained significantly above pre-pandemic seasonal levels over 15 consecutive months through May ’21. May ’21 grocery store sales reached a record high seasonal level, finishing 0.2% above the previous year and 14.9% above 2019 seasonal levels. Grocery store sales reached the second highest monthly level on record throughout May ’21, trailing only the Mar ’20 monthly sales. 2020 annual grocery store sales finished 11.3% higher on a YOY basis, while 2021 YTD sales are up an additional 0.5% throughout the first five months of the year.

Food service & drinking place sales remained below pre-pandemic seasonal levels over 12 consecutive months through Feb ’21, prior to fully rebounding over the three most recent months of available data. May ’21 food service & drinking place sales finished 70.6% above previous year levels and 4.6% above 2019 seasonal levels, reaching a record high monthly level, overall. 2020 annual food service & drinking place sales finished 19.4% lower on a YOY basis, reaching a six year low level.

Combined grocery store and food service & drinking place sales reached a record high monthly level throughout May ’21, finishing 0.2% above pre-pandemic trendline figures when adjusted for inflation.

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 subsided as figures have steadily rebounded throughout the first half of 2021. When indexed to 2019 levels, Jun ’21 seated diners rebounded to a 16 month high level but remained ten percent below pre-pandemic seasonal levels.

Restaurant Performance Index

The National Restaurant Association’s Restaurant Performance Index (RPI) of 105.5 declined slightly from the record high level experienced throughout the previous month but remained elevated, overall. 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 elevated RPI overstates the current health of the U.S. restaurant industry due to same-store sales and customer traffic indicators being compared to May ’20 levels, however. Same-store sales were a mixed bag when compared to pre-pandemic seasonal levels, with 45% of operators indicating their sales in May 2021 were higher than they were in May 2019, while 49% reported lower sales.

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, with each metric rebounding since.

The RPI Current Situation Index, which measures current industry trend indicators, finished at a value of 105.7 throughout May ’21, down slightly from the record high level experienced throughout the previous month. The RPI Current Situation Index had ranged from values of 92.8 – 96.8 from Mar ’20 – Feb ’21, prior to reaching record high levels over more recent months. The RPI Expectations Index, which measures restaurant operators’ six-month outlook on industry indicators, finished at a value of 105.3 throughout May ’21, also down slightly from the record high level experienced throughout the previous month.

TSA Checkpoint Travel Numbers

Monthly TSA checkpoint travel numbers, a data series tangentially related to the rebound in food service sales, also reached a 16 month high level throughout Jun ’21. Jun ’21 TSA checkpoint travel numbers finished sharply above previous year figures but remained 26.0% 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 remained significantly above pre-pandemic levels for the 15^th consecutive month through May ’21 while food service & drinking place sales reached a record high monthly level.

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 the Farmers to Families Food Box Program was discontinued at the end of 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 16 month high level throughout Jun ’21 while TSA checkpoint travel numbers, a data series tangentially related to the rebound in food service sales, also reached a 16 month high level throughout Jun ’21. Looking forward, the National Restaurant Association’s Expectations Index indicates an expectation for continued improved food service sales in months to come.