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The Latest News

As Sales Stabilize, Operators Get Innovative

Has the restaurant industry hit rock bottom? Well, data from one market research firm seems to indicate that may be the case as the crisis surrounding COVID-19 continues.

U.S. restaurant customer transactions declined by 41% in the week ending April 5 compared to the same week a year ago, according to data from The NPD Group. This follows a 42% decline in the prior week ending March 29.

“The 41% decline in restaurant transactions is similar to last week and may indicate a bottom, we also need to be aware that further erosion could occur if consumers’ economic situations worsen,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “To date, many consumers have continued to buy restaurant meals through delivery, takeout, and drive-thru to the degree allowed by the restrictive environment; but with rising unemployment, payroll reductions, and temporary furloughs, consumers may begin to think differently about their food budgets overall.”

Looking at results by operator segment, quick-service restaurants saw transactions decline by 38% compared to the same year-ago time frame, per NPD data. Full-service restaurants continue to suffer most, posting a decline of 79%.

The flattening of the decline falls in line with consumers’ comfort using restaurants during the ongoing COVID-19 crisis. In fact, 64% of consumers plan to avoid eating out, according to results from a Datassential study released on April 10. This matches consumers’ comfort level exactly from the previous week. The same applies to the percent of consumers who are nervous but will still eat at restaurants (21%) and consumers that have no concern eating at restaurants (15%).

Interestingly, consumers show a strong interest in patronizing restaurants to purchase something other than meals, per Datassential. This includes everything from bread and bakery items to fresh meat, seafood and even produce to paper goods.

As a result, a variety of restaurants, including large chains and smaller locals, continue to get into the game. Take, for example, Panera Bread. Late last week the St. Louis-based fast-casual concept started selling a limited list of grocery items. The list includes baked items such as bread and bagels; dairy items such as milk, yogurt and cream cheese as well as produce items such as apples, avocados, blueberries and even tomatoes. Panera is making this available in addition to its menu of food items that are available. And just as when they order menu items, customers can receive them via contactless delivery, curbside pickup and even to-go.

Even nontraditional players are getting into the act. Lush Wine and Spirits is a Chicago-based boutique wine shop that in normal times offers a focused yet whimsical menu that includes various cheeses, charcuterie as well as some hot items. The three-location wine bar now functions more like a French market, featuring artisanal breads and cheeses, as well as fresh meat and produce.

In addition, consumers continue to show interest in various do-it-yourself options that they could source from restaurants, according to Datassential. This includes take-and-bake comfort foods, build-your-own pizza and taco kits as well as take-and-bake desserts.

Operators from various segments are getting into the DIY game. Take, for example, Brix Catering and Events. Operating from Chicago’s Roscoe Village neighborhood, the operation has implemented Brix To Go. Customers can choose from a rotating series of meals designed to serve two people and finish them in their own homes. Brix even offers extra meal kits, kids’ meal options as well as make-at-home cocktail kits. And in accordance with the times, the company promises contact-free pickup.

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