Impact Report May 1, 2020

We’ve experienced a generation-changing disruption of the Food and Beverage Industry landscape with the COVID-19 pandemic.

Throughout it all, we’ve been supporting our clients to make the best decisions for their brand under these unprecedented circumstances. Now, as countries start to reopen, we are being asked new questions about how to adjust to the ever-changing environment. To help guide our clients this week, we have collected the following information for your consideration as of Friday, May 1st:


While the negative YOY traffic trends in the U.S. and Europe have stabilized, Asia and the Middle East however reported a further decline in YOY traffic trends.

For the US: Keep in mind, that last week’s YOY comparisons are up against Easter Weekend 2019. But even taking that into account, we’re seeing a positive trend as both QSR and table service restaurants performed better than even 2 weeks ago. QSR continues to outperform Table service restaurants with sales down 20 to 30% YOY versus down 50 to 70% for the latter.

We’ve also observed the following micro-trends in the US:

  • QSR Drive Thru and “To Go” for all segments continue an upward trend, with traffic for both sales channels reaching 25-35% YOY and sales grew as high as 60-70%.
  • Chicken continue to rule the roost, outperforming the competition and posting YOY traffic decreases between 10 to 15% with signs of positive YOY sales of up to 5%.

For Europe: Major brands as well as independent players in France, UK, Italy and Spain have started to open again for takeout, drive thru and delivery services in areas with lower infections. Early trends indicate YOY traffic numbers are continuing to trend slightly better from the -35% we saw last week.

For Asia: The decline in YOY overall traffic rapidly declining to negative 20 to 30% after it had stabilized 2 weeks ago at negatives between 10% and 20%. In countries such as Singapore and Malaysia, this is because strict measures were extended until the end of April, and even until June in Singapore, in response to a recent rise of new case numbers.

For Middle East/Africa: Traffic and sales trends declined sharply starting March 15 and stabilized at negative 50-60% YOY.  Since the beginning of Ramadan on April 23rd, YOY traffic declined an additional 20ppt and is currently leveling out at decreases of 70 to 80% YOY.


Cautious Reopening

As the epidemic response evolves, consumer survey data describes a cautious consumer, which has been evident with Georgia’s re-opening, where vigilant guests chose to stay at home rather than risk gathering in public areas prematurely. Even if declining case counts exist, many consumers say it will take a number of factors to convince them to return to a resemblance of pre-COVID economic and social activity.

Snack Consumption in an Age of Quarantine

Consumer desire both in grocery and in other F&B segments still point heavily towards Comfort Foods and Snacking. Also popular are high starch items that fall squarely into the comfort food category and provide high “value for the money” in regard to calorie count. Check additions also seem to be heading towards more add-ons (ex. French fries) representing simple luxuries for little spend.

Pricing Activity

Potential Effects of Supply Chain Shortages

Continuing the theme from previous weeks, dire reports have surfaced warning of disruptions in the meat supply chain. Groups may look to increase prices to hedge commodity spikes or consider offsetting additional costs with menu changes. This is an evolving issue (including potential executive orders for plants to remain open), but general uncertainty can weigh on upcoming price planning.

Potential Pricing Activities Ramp Up

Signs continue to point towards price increases as a primary method to recover/retain profitability in the face of commodity concerns, regional minimum wage increases, business recovery needs and potential inflation. Although high unemployment, value conscious consumers and health scares may bog down progress, economic headwinds may be too great to ignore the need for higher prices. Chief Strategy Officer Joel Davis offers more on pricing post-crisis in his blog post.

Industry Strategy

Visible Employee Hygiene Practices

Extensive and highly visible safety precautions will be a “must” for restaurants for the foreseeable future. In our latest series of consumer insights, consumers in the U.S. and Asia listed “visible employee hygiene practices” as one of their main deciding factors when choosing a restaurant.

Examples include: requiring that employees wear and frequently change masks and gloves, disinfecting and sanitizing all contact areas after each customer, and implementing enhanced cleaning protocols.

The Rise of Physical Barriers

The addition of physical barriers (often plexiglass), already prevalent during quarantine at grocery stores and seen in international units who re-opened, will not only put customers at ease but may be necessary to provide separation that meets regulatory spacing requirements.

Contactless Payment & Space Between Tables

Consumers are placing significant importance on these two elements as new requirements expected post COVID-19.

With the fear of potentially spreading infection through physical banknotes and credit card keypads, consumers are likely to expect establishments to offer contactless payment options (Apple Pay, Google Pay, or bank mobile apps). Already seen in many countries in Asia, contactless payment will likely become more prevalent globally.

In order for customers to feel safe dining out, they will expect that restaurants will help them to maintain the recommended/required 6-foot distance. Restaurant operators will need to remove tables to expand space between tables, limit seating capacity, and limit waiting areas.

Menu Strategy

Respondents to our global survey cited access to healthy and nutritious food as one of their top food-related concerns. Combined with supply chain concerns and a phased approach to recovery, we recommend that brands start with simpler/limited menus that focus on local sourcing, if possible, and healthy and nutritious options. Whether or not local sourcing is possible, we highly recommend providing a level of transparency of sourcing (for example provenance by state/country). While all age groups mentioned that diet plays a role when choosing food, Generation Z and Millennials associate healthy/nutritious with weight control and calories, while Generation X and boomers associate healthy/nutritious with overall general health.

We realize these are stressful and unprecedented times. RMS is here for you. Reach out to us today if you are looking for practical recovery strategies designed to optimize menu profitability, sales and financial profitability that can be implemented by operators immediately.

Let’s start your recovery strategy

Now, more than ever, RMS is committed to doing all we can to support the restaurant industry. Our team of experts is ready to help put you on a path toward profitability.