The coronavirus's long-term effect on restaurants won't be as dire as some people might expect, according to a new report.

"The worst of COVID-19's impact on U.S. foodservice is behind us, as sales declines are expected to moderate," said the report from RaboResearch, which is part of Rabobank, an ag and food-focused bank based in the Netherlands.

"We are recovering, we will continue to get better, but the decline plus the (economic) recession)" will cut into sales over the next 12 months, said Amit Sharma, RaboResearch consumer trend analyst who talked with Agweek.

"People are still very afraid of eating out," he said. Sales at sit-down restaurants, in particular, are down substantially, though they've improved recently.

The report also examined what the foodservice looked like prior to the pandemic and whether it will look differently in the future, Sharma said, adding that foodservice — generally defined as businesses, institutions and companies responsible for any meal prepared outside the home — consists of more than restaurants.

The big downturn is foodservice sales is even more notable because they've been growing much faster than food retail sales for more than 25 years, the report noted.

Key findings of the report include:

  • The foodservice sector is among the hardest hit by COVID-19. Because many Americans are eating less away from home and more at home, the sector has been hurt by "deep and rapid sales declines, profit erosion, and liquidity crunches, even for large operators. Independents and smaller chains are likely even worse off," according to the report.

  • The sector overall is resilient. Thirty publicly traded restaurant chains show double-digit recovery in sales from their lows. Quick-service restaurants, particularly pizza operators, offering delivery and drive-through, have led the recovery. "Historically, the foodservice industry has been very resilient," Sharma said. "And we are starting to see that resiliency show up in these trends."

  • The pandemic will have a lasting, but uneven, impact on the foodservice industry. Growth of new stores will slow, but with limited-service, off-premises and chains doing relatively well. Also, digital capabilities will become increasingly important, as will automation. So-called ghost kitchens, aka cloud kitchens and dark kitchens, which offer food only for delivery, also are expected to become more popular, the report predicted.

  • Restaurant operators will become more innovative. "They will need to be not just more efficient, but also more nimble and open to changes in consumer behavior," according to the report.

One of the big questions facing food retail and foodservice businesses is whether the current eat-at-home trend will continue, if only to a lesser extent, once the pandemic ends. Sharma said he's debated that question with himself, and thinks that the current trend won't be as pronounced long term as some people might think.

"I feel eating out is such a great part of who we are," he said. "By and large, I think eating out will make a rebound Will there be changes in our behavior? Absolutely. ... But I think restaurants are doing a great job of changing the way they operate," such as offering disposable menus.

"I think I might be a little bit more optimistic about the recovery of foodservice than some of my colleagues," Sharma said.

News media accounts of the pandemic haven't always given a full picture of it, which could lead some people to overestimate its long-term impact on foodservice, he said.

The report doesn't deal with how production agriculture will be affected. But Sharma said there could be some changes. For example, there could be potentially more consumer interest in ground beef and less interest in high-end beef products; if so, that will impact meat packers.