Restaurant customer transactions declined by 42% for the week ending March 29 compared the same week in 2019, per data from The NPD Group.
How deep the declines vary by operator segment. For example, quick-service restaurants, which historically have been better suited to address off-premises business like takeout and delivery, saw a decline of 40% for the period. In contrast, full-service restaurants, which are geared more toward on-premises dining occasions, saw a decline of 79%.
To put these declines in proper context, prior to the COVID-19 outbreak, on-premises dining represented 52% of restaurant industry dollars, and off-premises services, like carryout, drive-thru, and delivery, represented 48% of dollars, according to NPD data. Carryout represented the largest dollar share at 53% of off-premises modes, drive-thru 38%, and delivery 9% of dollars. As of year-ending February 2020, digital orders represented 13% of all off-premises dollars.
In fact, 86% of operators report exactly that: increased delivery and takeout but not enough to offset the loss of on-premises dining dollars, according to a Datassential study fielded March 25-27. Only 14% of operators reported enough of an uptick in takeout and delivery sales to offset losses in on-premises dining occasions.
Making the transition from mainly on-premises dining to only off-premises service is easier said than done. Most industry observers encourage operators to pare down their menus to streamline processes and focus on foods that travel well. And 43% of operators have done just that, per Datassential. Interestingly, 34% of operators indicate they have not made any changes whatsoever, though. Another key change operators made is to offer price discounts or meal deals, which was a common strategy during the economic downturn of 2008 to encourage consumers to keep dining out. Key menu-related changes operators have made include offering more bulk or family-style meals, adding more self-described comfort food items and adding refrigerated/frozen/take-and-bake items, per Datassential.
Falling in line with declining customer participation, Datassential reports 84% of operators have decreased their overall purchasing volume. In addition, 13% of operators report no change in their overall purchasing volume, while 3% report an increase in this metric. Clearly, most commercial operators remain in a state of declining purchases and the same applies to most noncommercial operators. The notable exceptions would be healthcare foodservice operators, including both hospitals that are on the front lines of the COVID-19 battle but also senior living facilities, many of which are on lockdown to protect the health of their residents. The other segment that might have increased purchases are K-12 schools, which now must serve food insecure students, families and the like.
Despite facing significant business challenges, 78% of operators say they have not changed the way they source products compared to 22% who have, per Datassential.