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Restaurant sales in Massachusetts have increased sharply since early April and surpassed their comparable 2019 levels even before Massachusetts lifted the majority of its COVID-19 restrictions, the Federal Reserve Bank said in its latest Beige Book update Wednesday.
“Restaurants across Massachusetts experienced a dramatic uptick in sales in April and May, with recent revenues exceeding those in the same period of 2019. April also brought the reopening of the majority of the roughly 500-700 restaurants in the state that temporarily closed over the winter.
“The return of widespread outdoor dining fueled the initial surge in sales, but more recently dining room sales increased as well,” the central bank wrote in its summary for the region that covers all of New England except Fairfield County, Connecticut.
The strength of the restaurant sector helped spur retail leasing activity, the Fed wrote, largely in the form of new openings and relaunches as large-format retail leasing remained weak.
Though restaurant revenues are up, so are restaurant prices. The Fed said that Massachusetts restaurant prices “increased sharply to cover increased labor and food costs.” Other sectors are experiencing similar issues, but the Fed said that restaurants specifically are dealing with “pronounced labor shortages.”
Elsewhere in the report, the Boston Fed warned that some industrial real estate market players fear construction cost increases could start to put a dent in the industrial construction boom.
However, “robust demand for warehouse space amid low inventories translated into very rapid sales of listed properties,” Fed officials wrote, and the Boston area’s biotech boom appeared to be creeping into Rhode Island, as well.
Office leasing continued to be a dull spot in the overall CRE sector, the Fed reported, with “no signs of improvement” and an “uncertain” outlook. The Fed’s contacts said they expected to have a clearer picture of the office market after Labor Day, when more firms are set to bring workers back full-time.
