COVID-19 Impact Report May 15, 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 15th:


Traffic for the US, Europe and Asia improved slightly, while in the Middle East/Africa traffic was down considerably due to Ramadan. In the US, traffic inched up to negative 20% YOY. In Asia, traffic stabilized after a big drop last week, with more segments showing closer to the -30% YOY traffic as compared to -40% in the prior week. Europe’s traffic trends lag behind at negative 30-40% YOY, though we saw a slight rise from 35% declines of last week.

For the US: 

  • QSR continues to outperform TSR in both traffic and sales.
    • Traffic has stabilized at 15 to 20% YOY declines; sales were positive for the first time since the pandemic began, at +5% YOY.
    • Performance continues to be driven by drive-thru, where traffic is increasing by 15 to 20% YOY; sales are up 50-60%.
  • TSR is still posting 60 to 70% declines YOY for both traffic and sales.
    • Subtle traffic improvements have been seen week over week, primarily driven by delivery and to go meals, where traffic is up 80 to 90% YOY and sales are up 100%
  • Overall brands that predominantly offer chicken products outperformed the competition, with YOY traffic numbers of negative 5 to 10% but positive YOY sales of 10-15%.


  • Mountain, West North Central and West South Central divisions continues to perform best across the country with positive YOY sales (0 to 25%) despite YOY traffic declines of 15 to 20%.
  • Coastal divisions (Pacific, New England, Middle Atlantic and South Atlantic) are performing the worst with traffic declines of 20 to 30%, YOY, though sales show positive YOY growth (0 to 25%).

For Europe: Countries such as Germany, Austria and Spain are starting to allow restaurants to reopen their dine-in options step by step, provided they follow regional health and safety guidelines, including: minimum distance between tables, servers – and in some cases also diners – wearing masks, and limitations to mixing between households. Traffic continues to stay negative with declines of 30-40% YOY. Sales declines remain at 25-35% YOY.

For Asia: YOY overall traffic has stabilized again with slight signs of improvement. This week’s declines are still as much as 30 to 40% YOY, though more segments saw declines in the -30% range as compared to 40% in the prior week.

For Middle East/Africa: YOY traffic and sales trends are steadily increasing since the sheer drop due to Ramadan on April 23. Since then, YOY traffic that had been trending at 75% declines is moving towards -65% on average.


A Regional Road to Recovery

Most countries and regions in the US will open restaurants in some structure by June, with limited dining room capacities in place for many. Unfortunately, regions hit harder by COVID may have “stay at home orders” lasting to July. It is clear that recovery for brands that operate across multiple markets, regions and countries will require a regional strategy with granular approaches.

Cautious Consumers

We reported last week that consumers are returning slowly to pre-COVID “regular activities,” which indicates potential long-term behavioral changes. A Sense360 survey confirmed this suspicion. When asked to rank 16 locations they’d like to see reopened, respondents ranked restaurants 8th, with 27% indicating they’d like to see the category reopened, while bars ranked 15th, with only 13% affirming they want to go back.

Even with reassurances of visible health & hygiene practices in place, economies and industries need to brace themselves that consumers will dine out less and travel less frequently even after more permanent solutions (e.g., a vaccine) become available. This will continue to put pressure on restaurant operators to find ways to fight for market share, entice guest occasions, and continue to find alternative ways to sell to guests outside of traditional channels. Some restaurant brands that have already implemented new options, such as selling grocery items and meal kits, have seen a positive response throughout the pandemic and indicate they will continue the practices.  

Trust in restaurants is high but customers don’t trust other guests

In our recent global survey, over 75% of all respondents trust the restaurant industry to safely produce and deliver meals. However, in a recent survey by Datassential, 72% of respondents said they don’t trust others to be safe when non-essential businesses reopen, an additional hurdle operators need to address in their recovery processes.

The data emphasizes the need for restaurants to clearly communicate new processes, rules and regulations in order to help guide and enforce safe behavior. It is also important to note that breakdowns in this enforcement of “good behavior” are among the more publicized stories regarding reopening.

Pricing Activity

3rd party delivery fee regulations on the horizon?

The debate about the “right pricing strategy” for delivery continues.

Pre-COVID, many companies implemented premium prices for delivery, in addition to adding third-party charges. Now that customers are looking for value, the higher price points combined with additional charges could produce total check shock and prevent customers from ordering. Even as restaurants are starting to see dine-in revenue return, YOY traffic for delivery will remain higher than pre-COVID for some time to come.

New regulations by law may become more common. For example, the New York City Council recently introduced a bill that caps third-party delivery fees at 20% for 90 days after statewide lockdowns are lifted.

Grocery prices are soaring

The consumer price index released this week by the US Bureau of Statistics shows the highest increase for food at home (+2.6%) month over month since 1974. Three factors play a role: 1) as restaurants closed and more people ate at home, the increased demand for grocery goods disrupted the supply chain, 2) the closing of several meat packing plants across the US because of COVID outbreaks added additional pressure to the supply, (3) the fear of food shortages led to customers “stockpiling,” which added to the shortage in supply.

Industry Strategy

Sharing is caring

Franchise Times’ recent webinar, “Restaurants: How Do We Redesign Our Future?” reaffirmed that “it is critical that businesses share what is and what isn’t working.” Thank you to CEOs Peter Cancro, Jersey Mike’s, Joe Koss, Culvers Restaurant, and Chris Newcomb, Newk’s Eatery, for donating their time in support of the industry. Our team compiled its top takeaways for those who missed it.

Shifting Dayparts

As more people worked from home, traditional workday schedules changed and new daily routines have been introduced, some traffic shifted from the traditional lunch period to later in the afternoon. Aside from obvious changes this can have for operations and staffing levels, this trend puts even more pressure on earlier day parts like breakfast. The trend to later has not changed “Late Night” dining, which is still affected by early unit closures times and families eating at home.

Industry Bankruptcies

Continued waves of bankruptcies are becoming commonplace as a result of (or hurried by) COVID-related disruptions. Retail bankruptcies, in particular, could negatively impact restaurants who “shared areas” with these key retailers (ex. mall and shopping center units). On the other hand, larger restaurant groups may see increases as smaller brands (and local units of larger brands) permanently close or ramp up more slowly during recovery.

Menu Strategy

QR Code Menus

One of the most unexpected changes in re-opening was the replacement of physical menus with virtual menus as a guest safeguard. In fact, QR codes which link to virtual mobile menus are becoming an essential component of re-opening strategies. It is important to note that this change in menu presentation (and the deletion of many other table material advertising items/specials) may lead to behavior shifts and have a profound effect on guest purchasing trends.

Meal kits, heat-and-eat/take-and-bake dishes continue to sell

Restaurants continue to add income channels such as meal kits and other DIY-style options to help attract guests looking to diversify home options and complement groceries. Brands such as Newk’s and Shake Shack are offering both groceries and DIY meal kits, Dunkin’ is selling donut decorating kits (for which customers have waited up to 45 minutes in drive-thru lines), independents and chains are offering frozen prepared entrees, such as meat pies or pierogis, for customers to simply heat up at home.

In an effort to help the restaurant industry and reduce food waste, UK delivery marketplace Just Eat is encouraging its restaurant partners to use Too Good To Go, an app which helps businesses reduce food waste by enabling them to sell their surplus food to consumers for a discounted price.

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.