Off-premises dining became a staple for most consumers during the pandemic and it may remain that way long-term. Thanks to an executive order FEMA now pays 100% of costs for restaurants providing food to soup kitchens and food pantries. These stories and a whole lot more This Week in Foodservice.
Catastrophic events like a pandemic often trigger some significant, long-lasting changes in consumer behavior. Although the pandemic is not yet behind us, historians, sociologists and others are examining changes in our behavior and predicting which ones will be permanent.
Take, for example, meal delivery. This trend was growing before the pandemic. But when government mandated closures shut down restaurant dining rooms, delivery’s role in consumers’ ability to use restaurants increased significantly. As a result, 53% of adults now say purchasing food for takeout and delivery is “essential to the way they live,” and 68% say they are more likely to purchase takeout or delivery food now than they were before the pandemic, per the National Restaurant Association’s State of the Industry report.
Many restaurants are aware of the demand and responding to it. In fact, 46% of family-dining and fine-dining restaurants added delivery options between March and December 2020, per the NRA.
But all off-premises methods are not equal. When looking at which means consumers use when ordering food for off-premises consumption, 62% use drive-thru, 46% use take out and 41% says they use delivery, by ordering directly from a restaurant or via an app from a third-party delivery firm, per Datassential.
Now it may be off-premises dining was simply an idea whose time had come but it is realistic to believe the COVID-19 disaster accelerated off premise acceptance.
Economic News This Week
- Initial-jobless claims declined by 19,000 for a total of 793,000 for the week ending Feb. 6, per the S. Department of Labor. The 4-week moving average declined by 33,500 to a total of 823,000. While the number of claims remains high by historical standards, they are down from the 900,000-plus weekly claims that were being filed just last month.
- The Consumer Price Index rose 0.3% in January, per the S. Bureau of Labor Statistics. Without food and energy prices the index was flat for the month. For the 12-months ending in January the index was up 1.4%. For food prices in January, please see the Foodservice News This Week section.
- The University of Michigan’s preliminary February Consumer Sentiment Index showed a decline. The Index fell to 76.2 in February from 79.0 in January. The Current Economic Conditions Index changed little, with a January reading of 86.7 and February’s preliminary results coming in at 86.2. The preliminary reading for the Index of Consumer Expectations fell to 68.9 in February from 74.0 in January.
Foodservice News This Week
- The Consumer Price Index for Food increased 0.1% in January, per the S. Bureau of Labor Statistics. For the 12-months ending in January, food prices rose 3.8%. The price for food at home fell 0.1% in January and increased 3.7% in the last 12 months. The price for food away from home increased 0.3% in January and increased 3.9% in the last 12 months.
- The operating pattern of many restaurants in the COVID-19 age? Close. Reopen. Repeat. So says a Wall Street Journal report. One operator called changing government directives “insane.” Yelp says 39,000 restaurant businesses it tracks closed and then reopened last year. Yelp also says 17,700 closed and reopened 3 times or more. It is incredibly difficult for restaurants to maintain staff as well as customers. Ordering food and supplies has to be incredibly difficult, too.
- Partnering with soup kitchens and food pantries just became more affordable for restaurants. That’s because President Biden signed an executive order directing the Federal Emergency Management Agency to cover 100% of restaurants’ costs associated when they work with local soup kitchens and food pantries. In January a bipartisan bill entitled “FEMA Empowering Essential Deliveries” (FEED) was introduced into both houses of Congress. These programs usually cover just 75% of costs associated with restaurants supporting food pantries and soup kitchens. President Biden’s action bypassed the congressional process, thus shaving weeks or even months from the time it could take restaurants to benefit from this measure. One obvious goal of the program is to provide financial support for restaurants. How many restaurants will benefit from this is unknown.
- New restaurants are not eligible for round two of the Paycheck Protection Program. When the Paycheck Protection Program was passed by Congress last year one stipulation was that eligible businesses had to be in operation by Feb. 15, 2020.There was some grumbling about the rule, but most people found it reasonable. For reasons unclear to many, though, lawmakers stuck with the same deadline, Feb., 15, 2020, for the second round of PPP. Restaurants and other businesses that started after February last year cannot receive PPP. This has left lot of people, including some in Congress, scratching their heads.
- The pandemic has inspired more partnerships between restaurants and hotels, the Food Institute reports. With hotel occupancy at a record low of 44% in 2020 there were plenty of opportunities for the two business segments to partner. Some restaurants now use hotel rooms as private dining areas. For example, customers of Detroit’s Apparatus Room Restaurant can pay $50 to use a room at the Foundation Hotel as a private dining space. Guests dining at the Sofitel Washington, D.C. Lafayette Square do not need to pay a fee for the room but for anyone who wants to order from the “enhanced private dining menu” must spend at least $70 on food and drink. Ghost kitchens represent another major growth opportunity for restaurants and hotels. Fewer than 5% of hotels have ghost kitchens but that is expected to change.
- In 2019 J. Alexander’s pursued “strategic alternatives,” which most people know as a euphemism for looking for a buyer. The chain’s board of directors believed the company was too small to succeed as a standalone entity. More than 100 companies were contacted and three serious bidders emerged. J. Alexander’s management believed it had a deal but then the pandemic hit. The planned purchaser lowered its offer and the sale fell apart. The company focused on sales and pushed its sales plans into 2021. Management now says the company has enough cash to continue to operate and is probably hoping for a buyer to step forward.
- Growth Chains: Captain D’s will open 10 restaurants across the Southwest and Midwest. The Great Greek Mediterranean Grill will open eight restaurants in Houston.
- Comparable Store Sales Reports: Burger King down 2.9%, Popeyes down 6.4% and Tim Horton’s down 11%.
For details and same store sales of other chains, Please Click Here for the latest Green Sheet.