Executive Summary

U.S. grocery store sales have remained significantly above pre-pandemic levels throughout the first seven months of 2021 while food service & drinking place sales continue to reach record high levels. Important points to consider include:

• U.S. grocery store sales remained significantly above pre-pandemic levels for the 17^th consecutive month through Jul ’21 while food service & drinking place sales reached a record high monthly level. Combined grocery store and food service & drinking place sales remained at the highest monthly level on record throughout Jul ’21, unchanged from the previous month and finishing 3.8% above pre-pandemic trendline figures when adjusted for inflation.
• U.S. seated diner figures provided by OpenTable have exhibited a similar pattern to the food service & drinking place sales throughout the pandemic. Aug ’21 seated diners declined from the 17 month high level experienced throughout the previous month, finishing 11% 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 Jul ’21, although same-store sales continue to be mixed 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 17 consecutive months through Jul ’21. Jul ’21 grocery store sales reached a record high seasonal level, finishing 2.2% above the previous year and 13.3% above 2019 seasonal levels. Grocery store sales reached the third highest monthly level on record throughout Jul ’21, trailing only the Mar ’20 and Jun ’21 monthly sales. 2020 annual grocery store sales finished 11.3% higher on a YOY basis, while 2021 YTD sales are up an additional 1.2% throughout the first seven 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 five most recent months of available data. Jul ’21 food service & drinking place sales finished 38.4% above previous year levels and 10.4% 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 remained at a record high monthly level throughout Jul ’21, unchanged from the previous month and finishing 3.8% 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, prior to declining slightly throughout the month of August. When indexed to 2019 levels, Aug ’21 seated diners declined from the 17 month high level experienced throughout the previous month, finishing 11% below pre-pandemic seasonal levels.

Restaurant Performance Index

The Jul ’21 National Restaurant Association’s Restaurant Performance Index (RPI) of 105.4 declined slightly from the previous month but remained near recently experienced record high levels. 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 RPI reached a record high level of 106.3 throughout Apr ’21 and has remained elevated since. The elevated RPI continues to overstate the current health of the U.S. restaurant industry, however, due to dampened year-ago comparisons for indicators such as same-store sales and customer traffic indicators. Same-store sales continued to be mixed when compared to pre-pandemic seasonal levels, with 60% of operators indicating their sales in July 2021 were higher than they were in July 2019, while 27% 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 106.3 throughout Jul ’21, up slightly from the previous month and reaching the second highest monthly figure on record. 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 104.5 throughout Jul ’21, down slightly from the previous month but remaining elevated, overall.

TSA Checkpoint Travel Numbers

Monthly TSA checkpoint travel numbers, a data series tangentially related to the rebound in food service sales, reached a 17 month high level throughout Jul ’21 prior to declining seasonally throughout the month of August. Aug ’21 TSA checkpoint travel numbers remained sharply above previous year figures but finished 23.1% below 2019 seasonal levels. The month-over-month decline in TSA checkpoint travel numbers of 9.0% was slightly greater than the 2019 seasonal July – August decline of 6.0%.

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 17^th consecutive month through Jul ’21 while food service & drinking place sales have continued to reach record high monthly 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 the Farmers to Families Food Box Program was discontinued at the end of May ’21.

Food service figures have improved over the first half of 2021 as dine-in restrictions eased, weather improved and vaccination efforts advanced. The recent surge in infections associated with the Delta variant has contributed to a decline in seated diner figures experienced throughout Aug ’21, however, while TSA checkpoint travel numbers declined seasonally at a faster rate than levels experienced throughout 2019. Looking forward, the National Restaurant Association’s Expectations Index indicates an expectation for continued improved food service sales in months to come.