Texas restaurant industry makes huge comeback since pandemic, passing $100 billion in annual sales

After a tough four years since the pandemic, Texas restaurants are finally seeing a turnaround with two major milestones.

The Texas Restaurant Association announced this week that the Texas food service industry has crossed the $100 billion yearly sales threshold for the first time, with 56,739 restaurant locations driving $106.8 billion in annual sales in 2023.

"It's really a story of resiliency. It's a story of, how we are growing and we are just exhibiting tremendous staying power, even when the economy is against us. Even when we have these ongoing challenges and even when we're rebuilding from that existential crisis that was the COVID-19 pandemic," said Kelsey Erickson Streufert with the Texas Restaurant Association.

According to the latest data from the U.S. Bureau of Labor Statistics, food service businesses employ 1,461,800 Texans, making up 11% of the state’s total employment. This now makes the Texas food service industry the largest private employer in the state, surpassing even the healthcare industry.

“The resiliency of Texas restaurants in the face of strong economic headwinds is a direct reflection of the growth mindset that we’ve successfully championed at the Texas Restaurant Association.” Emily Williams Knight, Ed.D., president and CEO of the TRA said. “Between the legislative wins that we’ve secured at the state capitol to the crucial time and money savings that we deliver through the products, services, and education we provide to our members, the TRA is proving that the future for restaurants is bright when we band together.”

The National Restaurant Association reviewed the latest data from the U.S. Bureau of Labor Statistics (preliminary 2023 figures), and found:

• Foodservice businesses employ 1,461,800 Texans—11% of the state’s total employment. Over 1.2 million Texans work in restaurants.
• At the same time, small businesses continue to lead the industry with 91% of Texas restaurants employing fewer than 50 people.
• Texas has 56,739 restaurant locations driving $106.8 billion in annual sales.
• Restaurants are an economic engine. For every dollar spent in a Texas restaurant, $2.35 is contributed to the state’s economy.

Looking back on the last four years, this is a huge comeback for an industry that was devastated by the impacts of the pandemic.

During lockdowns that began in March 2020, restaurants across Texas and the nation were required by law to complete shut down, an unprecedented move that saw hundreds of thousands of Texans lose their jobs overnight.

"It was a really hard stop. I think about like slamming on the brakes. And then we really went to work quickly as the Texas Restaurant Association to figure out what is the new normal? How do we create a safe environment, but an environment in which restaurants can continue to operate?" said Erickson Streufert. "We developed those safe operating protocols in the Texas Restaurant Promise. We worked hand in hand with the Texas governor's office and the legislature to reopen gradually and in a way where we could really monitor the health impacts. And then we worked closely with our policymakers at the local, state and federal level to create things like alcohol to-go."

While this new data sheds light on a comeback, businesses are not out of the woods entirely.

"For example, we know last year in 2023, about a third of Texas restaurants did not make a profit. And that's a pretty staggering number," said Erickson Streufert. "The cost increases, the labor shortages, the supply chain disruptions. When you add those on top of an industry that's a low-margin business in good times, and the fact that about half of Texas restaurants have debt that they took on during the pandemic to stay afloat, that really adds up. And that's why you're seeing restaurants continue to struggle. They're busy, they look like they're doing well -- and many of them are -- but for a lot of them, the math is still really difficult to balance because of this inflationary economy."

Still, a recent survey conducted by the Texas Restaurant Association underscores that restaurants are making gains despite inflation and worker shortages. In January:

• Only 52% of Texas restaurants had enough employees to support existing demand.
• Despite 64% experiencing food cost increases and 58% experiencing labor cost increases, 55% were able to keep their menu prices about the same.
• In total, 42% of Texas restaurants reported that their profit margins decreased slightly, 32% said that they stayed about the same,12% reported that they decreased significantly, 12% reported that they increased slightly, and 2% said they increased significantly.
• Overall, Texas restaurant operators were cautiously optimistic, quantifying their overall outlook as 58 on a scale of 1-100 (with 100 being extremely optimistic).

"There's no silver bullet to a crisis like the COVID-19 pandemic, but we kind of bundled together every innovation, every cost saving, every innovative idea we could think of. And really that guides us to this day," said Erickson Streufert.

The Texas Restaurant Association said this new data is great reminder for Texans to make a list of their favorite local restaurants and make it a point to support them.

"My message to consumers is really be intentional and support those local businesses that matter to you because it is still a really rocky economic road ahead and it's going to stay that way for a while.," said Erickson Streufert. "Restaurants are such a vital part of our community, not just as employers, not just as food suppliers, but they're the heart and soul of our communities."