Impact Report September 18, 2020

Staying up to date with the latest insights is fundamental to meeting customers where they are now.

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 weekly. The following information for your consideration is as of Friday, September 18:

Break through the never ending flow of articles, information and opinions with the latest insights and trends that serve your brand, your business and your customers. Coming October 2020, we’ll introduce our monthly reports to replace our weekly reports. These reports will feature the condensed information you need most, including latest trends, insights and industry data, to inform you as you navigate the road to recovery. Stay tuned, too, for a special consumer report on the increased popularity of plant-based meat alternatives next week.

Outlook

Voluntary Covid-19 Surcharge

As restaurants in New York City prepare to return to indoor dining after months of only outdoor dining, surcharges are taking a spotlight. The New York City Council passed a bill that would allow restaurants to include a COVID-19 relief fee for up to 90 days after full-capacity indoor dining resumes. A lever for operators to increase revenue and help cover rapidly rising costs, only small restaurants with no more than 15 locations will be able to add the surcharge to a customer’s bill. It must be clearly disclosed and cannot be added to takeout or delivery orders. New York City Mayor Bill de Blasio’s is expected to sign into law.

Pricing Activity

Sales and Cost Headwinds Collide

Fall is normally the time when restaurants plan their pricing strategies for the year ahead. This year isn’t normal, but we still recommend a strategic pricing plan to optimize profitability. Many restaurant operators are facing challenges from YOY sales trends, while at the same time having to plan ahead for cost increases such as minimum wage adjustments. Planning for different scenarios will help operators be prepared as we approach the end of the year.

Our latest customer survey suggests that, unlike pre-COVID, customers are aware that prices will increase and are likely to for some time. Older generations overall anticipated higher price increases than the younger generations. To learn more about attitudes toward pricing, download our latest report: COVID-19 Impact on Restaurant Consumers July 2020 Update – Generational Insights.

Industry Strategy

Eat Out To Help Out Results

RMS previously reported on the British government’s initiative to cut the value added tax (VAT) from 20% to 5% on food, lodging and attractions purchases and the launch of a voucher initiative encouraging customers to return to restaurants in August.

Now in September we ask, was the initiative effective? According to the Office for National Statistics, the UK’s inflation rate fell from 1% in July to 0.2% in August. In addition, prices in restaurants and cafes fell 2.6% compared to August 2019, the category’s first decline since 1989. More than 100 million meals were ordered using the voucher, providing a lending hand to many local establishments. While the campaign has not been officially extended, some restaurants have decided to continue offering a discount through September due to its success.

RMS stands 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.