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As Consumer Confidence Rises So Does Restaurant Sales

With states and municipalities continuing to slowly lift restrictions on restaurants, foodservice operators and, for that matter, other businesses, consumer confidence continues to creep back. As a result, sales at restaurants show small but positive improvements.

For example, the Conference Board’s Consumer Confidence Index held steady in May, following a sharp decline in April. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, declined slightly to 71.1 in May from 73.0 in April, suggesting consumers understand the gravity of the situation. Looking ahead, though, the Expectations Index, which gauges consumers’ short-term outlook for income, business and labor market conditions, improved from 94.3 in April to 96.9 in May.

Similarly, customer transactions at U.S. restaurant chains declined by -21% for the week ending May 17 compared to same period last year, per data from the NPD Group. This represents a 2-point gain from last week’s levels and the fifth consecutive week of improvement. Not coincidentally, 93,000 restaurant units coming back online in states where restrictions to on-premises dining were lifted from the week ending May 10 to the week ending May 17 certainly helped drive these improvements.

The impact of restaurant openings is readily apparent when comparing states with and without restrictions. Full-service restaurants in states where on-premises dining was permitted to reopen as of May 10 improved 13 percentage points in the week ending May 17. Full-service restaurants in open states have a 22-percentage point performance advantage over the remainder of the country.

Overall, full-service chain restaurant transaction declines totaled 49% compared to the same period one year ago, per NPD. This represents a nine-point improvement from the previous week. Quick-service chain restaurants, which represent the majority of restaurant transactions, saw transaction declines total -20% in the week-ending May 17, a 1% improvement compared to the previous week.

“The reopening of restaurant dine-in services across the country will certainly continue to help drive improvements, but it’s important to keep in mind that restaurant on-premises dining operations are not serving to full capacity because of safety protocols,” says David Portalatin, NPD food industry advisor. “Equally important to the industry’s recovery is the consumer’s comfort level with dining in at a restaurant now.”

Despite states starting to gradually allow restaurants to reopen dining rooms, consumers’ attitudes toward eating on premises remains consistent. In fact, 54% of consumers say they plan to continue avoiding eating out, per a May 22 report from Chicago-based Datassential. This is 3 percentage points higher than May 14. Also, 27% of consumers say they are nervous but will continue to use restaurants, down just 2% since May 4, and 19% have no concerns whatsoever about using restaurants, a 1% decline.

Even with the economy starting to reopen in many states, Americans continue to work or learn remotely. In fact, 32% of consumers told Datassential they are working or learning from home while the same percent said they were not working at all. Also, 19% continue to go to work as normal while 17% report being furloughed or laid off.