Impact Report August 21, 2020

With the continued demand for contact-less services, restaurant concepts are improving drive-thrus and implementing digital innovations for a more seamless experience.

To help our clients navigate this ever-changing environment and allow them to make the best decision for their brands, we collect the latest restaurant data and consumer insights. The following information for your consideration is as of Friday, August 21:

Overview

For the week ending August 9, US YOY traffic numbers improved to the best level we have seen since mid-March, trending at negative 10% to 15% YOY. Europe’s YOY traffic numbers improved slightly and are trending at negative 20% to 25%. Asia’s YOY traffic remains at negative 20% to 25% YOY and the Middle East/Africa stabilized at negative 15% to 20% YOY.

For the US

QSR v. TSR

QSR performance has remained at the same level for the past four weeks. Traffic is between negative 10% and 15% YOY, while sales are still flat to 5% YOY.

  • Drive-thru continues to out-perform other channels. Traffic is up 15% to 20% YOY and sales are up 35% to 40% YOY.
  • Dine-in YOY traffic and sales remain low, down 65% to 70% YOY.

TSR traffic and sales are trending at negative 30% to 35% YOY.

  • Delivery and to-go meals maintained steady growth. Traffic and sales are both up close to 100% YOY.
  • Dine in traffic and sales saw another slight improvement this week, trending at negative 50% and 55% YOY.

By Daypart

  • Dinner began outperforming lunch in the middle of June and continues to do so in July and August. YOY traffic is slowly and consistently improving after a dip in late July — down just 5% YOY compared to declines of 10% back in June. Sales are up 10% YOY.
  • Lunch YOY traffic also improved slightly from negative 10% in June to negative 8% in August. Lunch sales are growing now at 5% to 8% YOY, in line with July trends.
  • Late night continues to lag other dayparts but is showing improvement. Traffic for the segment improved about 5ppt from a low in late July and is down 18% YOY. Sales are down 5% to 10% YOY.

By Food Category

  • Chicken remains a winner, but overall growth has slowed. Traffic for chicken concepts is flat to negative 5% YOY. Sales continue to grow at 18% to 22% YOY.

Regional / Category

  • New England outperformed other regions this week. Traffic for the region is negative 5% to 10% YOY and sales are positive 5% to 10% YOY.
  • Pacific, South Atlantic, Middle Atlantic and West South Central were the worst performing divisions, with traffic down between 5% and 10% YOY and YOY sales trending between positive 5% and negative 5%.

For Europe

Traffic and sales improved slightly this week. Traffic is down 20% to 25% YOY and sales are down 5% to 10% YOY. Many European countries have implemented stimulus packages to support and revive their restaurant industries. While overall these schemes are encouraging customers back, a recent increase in COVID cases led to local governments reintroducing quarantine rules. During the peak summer holiday season, these new closures will have a direct effect on restaurants.

For Asia

Parts of Asia that seemed to have COVID-19 under control have recently witnessed fresh outbreaks. China, Japan, Philippines and Indonesia, which had few or no cases in the past months, saw a resurgence. Overall traffic and sales remained static. Traffic is down 20% to 25% YOY and sales are down 25% to 30% YOY.

For Middle East/Africa

The Middle East/Africa dropped slightly. Traffic is negative 15% to 20% YOY and sales dropped slightly to between 0% and negative 5% YOY.

Outlook

Consumers Moving Away From Bunker Mentality?

Stockpiling food became a natural behavior during quarantine. Cooking at home was a necessity and consumers wanted a ready-supply of food with limited grocery trips. In a positive note for restaurants, recent Sense360 data shows a decline in consumer “hoarding behavior.” In the early days of the pandemic (April 10-16), the majority of Sense360 respondents were stocking groceries for 1 week or longer. That percentage is now down to 43%, indicating that people are starting to feel comfortable leaving their homes more often. In the same survey, the number of consumers expecting to increase their use of drive-thru or pick-up at a fast food restaurant increased by 2 ppt this week.

Reviving the Restaurant Industry – News From Around the World

The virus continues to affect every region of the world, but some countries are experiencing high rates of infection, while others appear to have mostly controlled the virus. To better understand the effects on the restaurant industry, we talked to our associates from around the globe. In Asia, our team reports that QR codes and contact tracing are boosting consumer confidence. In the UK, tax (VAT) decreases and a stimulus scheme are giving hospitality a much needed boost. And in Europe, restaurants are turning pain into productivity through innovation.

Drivers for Restaurant Choice are Shifting

In our April and May surveys, respondents told us that they were dining out to “break the routine” or feel “more normal.” The choice of where to eat was driven by the “type of cuisine I want to eat” or simply “convenient to my location.” But as the pandemic continues and consumers are starting to go out more often, the drivers for where to eat out are shifting. Recent survey insights shared by Sense360 show that consumers are changing their attitudes: “best food” and “value” now the key drivers of restaurant choice.

Pricing Activity

Pepperoni Shortage Might Drive Up Pizza Prices

Commodity pressures continue to put a burden on restaurants, and the shortage of pepperoni has many pizza restaurants considering price increases. Other commodity shortages have impacted restaurants throughout the pandemic, and consumers have felt the impact personally when shopping for groceries. This has led, we believe, to a greater acceptance of price increases. In our recent survey, 79% of respondents expected restaurant prices would increase as a result of the pandemic.

Industry Strategy

Working From Home & Homeschooling – Mealkits Reprieve Families From the Question “What’s for Dinner?”

Mealkits have been gaining popularity since the start of the pandemic as restaurants looked for different ways to reach customers. Some that have found a permanent home in Quick Service extend the experience into the home (think pizza building or finalizing a dessert with toppings) and all provide brands an opportunity for diners to continue to engage with the menu. In our latest US consumer survey, 20% more family households stated that they are using Mealkits. More on why mealkits work and how brands can connect with families is reported in our COVID recovery blog.

The Future is Digital

Supercharged by recent events, restaurateurs are improving the new guest experience by creating efficiencies in their contactless systems. Long-term, these improvements will have a profound effect on the data restaurants are able to obtain and analyze, guiding operations and bringing a new understanding of guest behavior. Translating these data points into actionable insights that enable clients to make faster and more informed business decisions will contribute significantly to the brands’ success.

RMS stands at the ready to support restaurant brands through these ever-changing times. Reach out to us today for practical recovery strategies designed to optimize menu profitability, sales and financial profitability immediately.