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The Potential Impact of the Stimulus Package on the Restaurant Industry

The historic $2 trillion bipartisan economic stimulus bill was seen by many as a measure to provide relief to both consumers and businesses.

One of the bill’s highlights was direct payments of $1,200 to individual citizens who make less than $75,000 in adjusted gross income (married couples earning up to $150,000 will receive $2,400). But how much this package, including these payments, will benefit the foodservice industry remains to be seen.

“If you are a restauranteur it will have a limited impact on your business,” says Warren Solochek, principal for Chicago-based Insights to Opportunities. Looking specifically at consumers who receive the direct payments, he adds, “Am I going to spend that at a restaurant or am I going to pay my electric bill? I am not convinced this will be terribly helpful for the restaurant industry.”

It’s possible, though, the stimulus package could have a positive impact on other industries, which are feeling the pain of COVID-19, too. “It’s not just foodservice. It’s all of hospitality,” says Solochek. “Take hotels, for example. While not all have been asked to close, business and other forms of travel have just about ground to a halt for everyone. Hotels are furloughing staff just like foodservice.”

Airlines and cruise ships being hit hard, too. “Some industries may never recover,” Solochek adds.

Plenty of smaller, entrepreneur-driven businesses in retail and other segments are undoubtedly feeling the pain of the economic slowdown brought forth by COVID-19, too. “They are everywhere. They are in urban areas and suburban areas,” Solochek adds. “Restaurants can depend on carry out and delivery to help offset this loss of business but online is not part of the normal ways of operating for many of these businesses. And like some restaurateurs, they don’t have a lot saved up where they can cover rent and other expenses. Businesses like that are going to have a hard time reopening in the future.”

Despite the struggles of so many restaurants, some bright spots are beginning to emerge. “Meal kit companies, like Blue Apron, and local companies that can deliver healthy, chef-driven meals to your home are doing great,” Solochek says. One such example of a company providing chef-driven meals is Eat Purely. Customers go on to the app earlier in the day, pick an entire meal and then it gets delivered to their homes later that same day. All the customer needs to do is heat the meal. It’s also important to note that Eat Purely uses contactless delivery, meaning it leaves the food without making physical contact with the customer.

The meal kit companies as well as concepts like Eat Purely continue to strike two notes that will resonate with consumers now more than ever: convenience and health. “They are doing well because some people don’t want to go into grocery stores out of the fear of getting sick,” Solochek said. “Plus, Eat Purely tends to align with healthier food options. All you have to do is heat up the food.”

Indeed, lots will change in the business world as a result of the COVID-19 pandemic. “A lot of the shopping services, like Instacart, that will take a shopping list, pick it from the store shelves and deliver the order curbside, seem to be doing ok,” Solochek says. “I am guessing they can’t hire enough people to staff the current demand. I don’t think that will last forever, but I do think that their businesses will be stronger because people will see value in these services.”

Regardless of when some of the government restrictions related to COVID-19 begin to lift, it won’t be business as usual. “There are companies out there that won’t be back. But even if you have fewer competitors you can’t go back to your same old, same old,” Solochek says. “You will have to change your operations.”

In the interim, the industry is left to wonder how long individual restaurants can continue to operate on drive-thru, takeout and delivery only. “Everyone’s going to try carryout and delivery, hoping this can get them through the tough times to a point where they can start to offer their full array of services again,” Solochek says. “Some will learn quickly they can’t cover their expenses this way and go dark. Some will realize they are losing more money by staying open.”

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