Before Covid, Li’l Dizzy’s, a Creole buffet run by one of New Orleans’ famous Black restaurant families, was a mainstay of the city’s Treme neighborhood. But when officials issued the first Covid stay-at-home orders in March 2020, Li’l Dizzy’s closed, and it did not reopen: how could a buffet restaurant operate during a pandemic?
That fall, the cafe’s 73-year-old owner, Wayne Baquet Sr, announced he was selling the restaurant, citing his age and pandemic health risks. The closure appeared to mark the end of a Baquet culinary family legacy that started in Treme in the 1940s and expanded to other family outposts across the city.
“People were very heartbroken,” said Arkesha Baquet. She and her husband, Wayne Baquet Jr, both had careers outside the restaurant industry. But, she said: “Wayne and I realized we didn’t want the family legacy to end like that.” They bought Li’l Dizzy’s and reopened it in February 2021: “Same food, same family, just in a different format”.
Five years after pandemic shutdowns sent the restaurant industry into crisis, Li’l Dizzy’s rebirth is tracking broader changes, as restaurants across the country respond to skyrocketing food costs, labor shortages, higher staff wages and big ongoing shifts in customer behavior.
The cafe no longer offers breakfast, operating instead as a lunch-only destination, open 11 to 3. Once a table-service restaurant, Li’l Dizzy’s now serves all food in to-go containers, a mid-pandemic adaptation that ended up becoming permanent.
Now that Li’l Dizzy’s patrons are eating from disposable plates, Arkesha Baquet said, she puts even more emphasis on the restaurant’s service culture, making sure to greet diners and check in on them. And an ongoing priority, Baquet Jr said, is that “we try to keep our prices very in line”. While the restaurant attracts plenty of tourists, “it’s important for our local people to enjoy our offerings”.
Changing realities and trends
Like Li’l Dizzy’s, the US restaurant industry as a whole has survived the crisis of Covid-19: as of early 2025, it’s once again employing more than 12 million people, slightly more than just before the pandemic in February 2020, according to government statistics compiled by the National Restaurant Association. The trade association estimates the industry will generate up to $1.5tn in sales in 2025.
A staffing shortage in 2021 resulted in an overall long-overdue increase in wages for restaurant workers. New $20-an-hour minimum wage laws for fast food jobs in California increased wages for these workers without significant tradeoffs, early research found, and put pressure on independent restaurants to raise wages as well.
But the industry’s recovery has also been marked by major cultural shifts, some created by the pandemic, others apparently accelerated by it.
More expensive full-service restaurants have lost an estimated 250,000 jobs since the pandemic, while “fast-casual” restaurants, which combine fast food-style service with higher-quality food, have grown slightly. And the “little treat” segment of the industry, including coffee, donut and ice cream shops, has grown 20%, according to National Restaurant Association statistics.
There’s also been big growth in “ghost kitchens”, delivery-only restaurants that have no dining area at all, said Dinesh Puranam, an assistant professor of marketing at the University of Southern California. Ghost kitchen sales have already surpassed $60bn annually, he said.
Since 2020, there’s been a fundamental shift in restaurant patrons’ preference for takeout and delivery over in-store dining, Puranam said. “The pandemic triggered that shift quite rapidly, but the shift seems to be here to stay.”
As new restaurant formats have grown, old-fashioned ones, like the bar and grill or the classic restaurant chain, have suffered. In 2024, some of America’s popular sit-down restaurant chains, including TGI Fridays and Red Lobster, filed for bankruptcy while fast-casual, assembly-line preparation brands such as Chipotle boomed.
While customers may have been initially excited to go back to in-person dining after the pandemic, the continually rising costs of a sit-down dining experience have started to catch up with restaurants, said Victor Fernandez of Black Box Intelligence, which tracks business performance across US chain restaurants.
“If you go back 10 years, restaurant prices have gone up by 48%, while grocery prices have only gone up by 28% – and it shows,” Fernandez said.
Chain restaurants across the US have seen a larger decrease in patron traffic at breakfast and lunch than at dinner, a trend Fernandez attributes to the continuing prevalence of remote and hybrid work policies.
Inflation and rising food costs in the US have forced restaurants of all kinds to walk a delicate line. More than 90% of independent restaurants surveyed raised their prices in 2024, as they also increased staff wages, according to a 2025 James Beard Foundation report. But big price increases can spark backlash, the study concluded: independent restaurants that raised their prices by 15% or more in 2024 saw a decline in profits, and fewer customers.
Alcohol consumption has also continued to shift since the pandemic, restaurant experts said, with younger generations of Americans apparently less interested in drinking – a potential problem for the industry, where high margins on alcohol sales have long helped restaurants’ bottom lines.
The industry’s recovery has also been geographically uneven. Some states – Louisiana, Maine, Maryland, Oregon and Vermont – have experienced big drops in their total number of restaurant jobs post-pandemic. Other states such as Montana, Nevada, Oklahoma and Utah saw double-digit increases.
Pandemic survival strategies
The American restaurant industry’s survival is a testament to the creativity and flexibility of its members, said Michael Kaufman, a senior lecturer at the Harvard Business school.
The early months of the pandemic were “about as scary a time for an industry as you can imagine”, Kaufman said. “Over time, because restaurants tend to be run by people who are very ingenious in the way they confront issues and problems, there were all sorts of solutions.”
Monique King, a longtime chef who owns two vintage diners in Los Angeles with her husband, Paul Rosenbluh, recalled the first months of the pandemic as “a game of pivot after pivot after pivot”.
First, she and her husband worked alone to turn one of their diners, Cindy’s, into a takeout only operation. Then they transformed their parking lot into an outdoor dining space borrowing from residential neighbors and crisscrossing Los Angeles to obtain outdoor tables and umbrellas, as global supply chains broke down. It was an eerie time, King said: on one supply-gathering mission, she found herself driving down an LA freeway during the normally jam-packed peak of morning rush hour in one of the only cars on the road.
When restaurants were allowed to operate socially distanced indoor dining, they hand-built plexiglass dividers between the diner’s old booths and spaced out people sitting at the counter stools.
The supply chain problems didn’t stop: for months, they couldn’t get Heinz ketchup. Then they struggled to get enough saltine crackers or the right kind of root beer. But the social and political challenges were harder: a handful of customers would reliably defy mask mandates and then turn confrontational, putting already-beleaguered servers under additional stress. “Paul and I had to be there every day, from open to close”, so they could intervene when necessary, King said.
While hard work and talent played an important role in restaurant survival, the relatively strong state of the industry today is also a testament to local and federal government support for businesses in crisis, said Cody Utzman, a restaurateur from Corvallis, Oregon.
Utzman, who had spent his 20s and early 30s building a small empire of hipster-friendly Brooklyn restaurants, had moved back home to Oregon after his father’s death, to be closer to his family.
He opened Bodhi, a new bakery and cafe, just a few months before the pandemic shutdowns, pouring his entire savings into the new business.
When the first stay-at-home orders came, he decided to simply close. “Is it going to be a week? Is it going to be two weeks? That was pretty much what we were looking at. Then those two weeks turned into three months,” he said.
Utzman stayed at home with his five-year-old daughter. For the first time in a long and often high-powered career, he found himself “relying on government programs, relying on unemployment insurance. I went from having what was a successful business to not knowing if I was going to have a job when it was all over.”
Utzman decided to hang on, convinced that the government would eventually bail out the restaurant industry because the economic devastation would be too great if it did not.
The first pandemic support he received, from local programs in Oregon, brought in $10,000 or $20,000 at a time, but the early money helped. Once his cafe had reopened, it earned only a fraction of its pre-pandemic sales. But Oregon and the federal Paycheck Protection Program helped close that gap and gave Utzman funds to expand his delivery program.
Then came the federal Restaurant Revitalization Fund, for which Utzman and many others had lobbied. That brought his restaurant more than $200,000, which Utzman used “to invest back into our business, and invest back into the community”, by purchasing more equipment, expanding sales to more farmer’s markets and opening additional locations. Today, Utzman’s business has 75 employees, compared with 17 at the low point of the pandemic.
A shift from in-person dining to delivery
Like Li’l Dizzy’s, a surprisingly large chunk of Bodhi’s business is now delivery, a development that might never have happened without the pandemic.
“It’s pretty amazing what people will pay for,” Utzman said. “People will get a $6 coffee and pay $6 to have it delivered, and we just laugh. It’s like, ‘Oh my god, is that a college student with her dad’s Amex card?’”
Industry experts said that the shift from in-restaurant dining to takeout and delivery is affecting all segments of the business, from sit-down restaurants to fast-casual chains. Three-quarters of restaurant traffic nationwide is food that is consumed off-premises, Kaufman said.
At full-service chain restaurants before the pandemic, only about 12% of sales were for takeout or delivery food, Fernandez said. Today, it’s nearly 20%.
At quick service and fast-casual chains, the shift is even starker: 75% of sales in 2024 were eaten off-premises, compared with 46% in 2019.
Part of that shift has been driven by the rise of delivery platforms such as DoorDash and Uber Eats, Kaufman said, but there are also broader cultural trends at play: dining, once a communal activity, like shopping and watching movies, is now one more thing people like to do without leaving their homes.
“I think people like convenience. I think that may not be good societally. I’d like to have people coming together, and breaking bread, and socializing together,” Kaufman said.
When celebrity chef Thomas Keller recently visited Kaufman’s Harvard MBA class on the restaurant industry, the group discussed the challenges of the new delivery culture – and the ramifications it might have for the future of fine dining experiences, which cannot be put in a paper bag and left on a doorstep.
“I don’t think [Keller] is concerned about the French Laundry per se, I think he’s just posing the question of ‘Where does society go, and how does this play out overall?’” Kaufman said.
Utzman was more optimistic: while delivery sales have grown, his cafe in downtown Corvallis still overflows with students from nearby Oregon State University and local regulars. Some faithful customers have been coming to that exact spot daily, or even multiple times a day, for decades, as one coffee shop after another occupied the space. It’s known as “Corvallis’s living room”, he said.
In New Orleans, Arkesha Baquet said, the pandemic ultimately proved an opportunity for some up-and-coming chefs, even as some legacy businesses closed. She rattled off a list of locals who had transitioned from selling food from their homes during the pandemic to having food trucks, or grown from food trucks to opening bricks-and-mortar businesses.
“What you had in the pandemic was, people ate all day,” she said. “You were locked inside; you ate and watched a Netflix subscription.”
New challenges are piling up for restaurants, including ongoing supply chain problems, and the ongoing devastation of floods, wildfires and other extreme weather. In Los Angeles, one of King’s two vintage diners, Fox’s, burned down in January’s wildfires. Meanwhile, Cindy’s, her remaining diner, added a $2 surcharge on egg dishes early in February, as bird flu has caused egg prices to soar.
“It does feel like [the last few years have] kind of been a little bit relentless,” King said.
But Utzman said he had been surprised to receive a query looking back on the pandemic. “I had even kind of forgotten about it,” he said. “It just feels like it’s behind us.”
