US Restaurant Trends
While the first two weeks of December showed a drop in traffic and sales likely due to the continuous rise in COVID cases, trends in the US improved during the holiday season as predicted in our previous report. Traffic and sales increases were not as significant as those reported during Thanksgiving week, but still comparable as consumers looked to restaurants for at-home meals during the last two weeks of 2020.
- QSR traffic was down 13% YOY in the first two weeks of December; a significant decrease from November when traffic was even YOY. The gap closed to -8% YOY during the last two weeks of December.
- TSR performance continues to trend downwards, dropping from -40% YOY to -43% YOY. The last time TSR traffic was this low since the pandemic was in June 2020.
To see YOY trends by sales growth, day parts and revenue centers read our full report.
Power Panel: 2021 consumer trends & investor questions restaurant brands don’t want to miss
Hosted by Forbes.com senior contributor Alicia Kelso, we are joined by Piper Sandler‘s Nicole Miller Regan, Rival Technologies‘ Andrew Reid and RMS‘ Joel Davis. Our expert panel takes a look at what restaurant trends operators should keep in mind as we enter 2021. Watch the full episode here. Missed one of our previous episodes? Access our Revenue Stream playlist.
Be Nimble, Be Quick: What Consumers Want in 2021
The old nursery rhyme, “Jack be nimble, Jack be quick” could sum up the actions of successful restaurant operators in 2020. And, based on our recent survey of 830 US consumers, it’s likely a good mantra for 2021. Take a deeper look at what consumers want this year featured in Modern Restaurant Management.
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Manage the crisis and continue.
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Latest expert advice
Understand changes in check composition and guest traffic.
Focus marketing efforts on targeted guests/checks.
Define the best price mix and promotions to optimize margin.
Identify your “new” customer base and what they are buying.
Identify the customer types who respond best to specific promotions.
Common profitability questions
How does the current situation impact the results of a test we have currently in the market?
Unfortunately, it may have some impact on the test results. The situation may impact each store/market differently. You will most likely need to make adjustments, such as changing test periods, considering extending them and adjusting early indicative reads.
Should we reduce prices now to attract more customers?
We do not recommend reducing your prices right now. Instead, create bundles and offers that will entice your customers to come back. With most customers being advised to stay at home, think about offers and deals that focus on family meals, portions that could provide ‘left-overs' for next day, value offers that consider kids and support your staff.
Should we take price given the COVID-19 situation?
No, as of right now, we do not recommend making any price increases to offset the negative impact of the COVID-19 crisis, even if they were planned beforehand. Doing so could lead to negative repercussions on your brand image because customers won’t see when you made pricing decisions, only when you implemented them. Right now, brands should focus on talking about marketing initiatives and new operating procedures. Customers are paying attention to what you are communicating, and brands with a clear and empathic message will likely be best positioned to gain market share post-crisis.
With that in mind, now is the time to plan and build your post-crisis menu, pricing and marketing strategies for when business resumes. We learned from the dot-com crash back in the early 2000s and the financial crisis in 2008 that brands that were proactive with their strategies during turmoil were well-positioned to execute quickly once business resumed.
COVID-19 has already significantly impacted the restaurant industry. Unfortunately, no reasonable amount of pricing will be enough to offset or recoup some of the potential loss in traffic and sales. Even in areas of the U.S. and countries around the globe where authorities have not yet issued firm restrictions on restaurant and bar operators, we have clearly seen consumer behavior shifting to online channels pre-crisis. It is now essential that brands understand how much of this behavior is here to stay before making informed pricing decisions.
On a positive note, we will most likely observe an increase in consumer traffic once people return to their usual lives, especially in those areas now in lockdown.
Expert profitability advice
Piper Sandler invites RMS Chief Strategy Officer to share restaurant industry insights in the face of coronavirus
Identify menu items per sales channel (e.g. delivery, take-out, 3rd party).
Decide whether to return to your full, pre-COVID menu, or extend you limited menu slightly.
Engineer your menu to drive margin, attachment rate and frequency.
Common menu questions
What items should the brand include in their delivery and/or limited menu?
If possible, try to find a good combination of items that offer ease of execution and healthy margins. It is essential to minimize a patron’s time spent in restaurants and during food pickup to honor current social distancing measures.
Ease of execution:
Consider offering bundled items and a menu that will maintain its quality even after the delivery journey. To maintain consistency, select menu items that crew members in all locations can easily assemble and execute. Focus on items that can be packaged quickly to minimize wait time and maximize turnaround, especially if you are working with a smaller staff.
These considerations are particularly important if your concept is new to the delivery/takeout channel and you are in the process of shifting your team’s focus from dining in to off-premise service. Under normal circumstances, your customers might be turned off by ordering from limited menus, but in this new environment, you can expect that most customers will be understanding, adapt quickly and feel grateful that your doors are still open to them.
To sustain sales and gross profit, offset overhead cost and maintain cash flow, a speedy and limited menu is the answer. This allows you to remove low-margin items and focus on those that are more profitable and in high demand.
Make sure you build creative marketing and PR messages around your menu. Reward customers as they pick up their orders or have them delivered to entice them to reorder from you and share their positive experience with their online communities. In challenging times like these, positive messages travel well and help build brand loyalty for the future.
What key delivery initiatives should restaurants be thinking about?
Tip #1: Launch take out, curb-side pickup and delivery options if you have not yet done so.
Work at lightning speed and don’t overthink it. Two weeks ago, many fine dining brands had no to-go menu. One week later, they do as they recognized now is the time to get directly to-go. For delivery, don’t forget to include local providers. For a list of delivery services in your area, send a DM to https://www.facebook.com/thermda.
Tip #2: Create a limited menu that can easily be executed and is profitable.
To maintain consistency, select menu items that crew members in all locations can easily assemble. Focus on items that can be packaged quickly to minimize wait time and maximize turnaround, especially if you are working with a smaller staff. To sustain sales and gross profit, offset overhead cost and maintain cash flow, a speedy and limited menu allows you to remove low-margin items and focus on those that are more profitable and in high demand. And keep in mind: first impressions can make or break repeat orders, which are critical in this environment. Whether it’s staples or tape, seal the bag. When the fear of germs is so very top of mind, make it clear to your customer that their bag was impenetrable on its way from your kitchen to their front door.
Tip 3: Communicate, communicate, communicate.
Let your customers know what you are doing and how they can order from you. Make sure you communicate your new opening hours, which services are available, what menus they can order from, what offers you have in place, if you are supporting local emergency response staff, if they can support your business by buying local vouchers, etc. Basically, make sure they know what they can expect from you in these uncertain times.
Expert menu advice
Identify where franchisee support is needed.
Monitor financial ratios and debt covenants.
Discovery the locations that are under & over performing.
Determine the locations to prioritize efforts on.
Recognize franchisees that are ready to grow.
Secure opportunities to optimize cash flow by P&L line item.
Expert financial advice
Stay up to date on promotional tactics, pricing actions and economic outlook.
Tap into competitor insights on pricing and promotions.
Benchmark against market leaders to evaluate whether to emulate or innovate.
Common consumer behavior questions
How can we best reach customers given the recent rise of digital use?
Create digital audiences with scalpel-like precision. Directly message those most likely to order delivery, online or carryout. Segment your messages to guests who have ordered from you online and from a third party; from those who have searched online for your brand; from guests in your e-club; and to look-a-like audiences who are likely to order online from your brand.
How can we use social media?
Your social presence is critical right now. Check and recheck social media accounts. Amid self-isolating and mandated shelter-in-place orders, it’s safe to assume social media will play an even greater role in our lives. Customer engagement will no doubt increase across all platforms. Pay attention to customer feedback regarding all facets of your brand: accuracy of order, packaging, menu options and delivery experience.
And don’t forget about positive news as well. If you restaurant is doing something to help your local community, let people know! You might inspire others to step up and help out.
What communications are important right now?
Now more than ever, it’s important to communicate your hygiene protocol. State on your website what you’re doing. Don’t assume the general public knows you’re checking temperatures before staff crosses your threshold or that everyone is wearing masks and gloves. Provide peace of mind. Go the extra mile and include a simple insert that tells customers the precautions you’re taking to make sure everyone who comes in contact with their order demonstrates the highest level of hygiene practices.
Share your initiatives on delivery as well. The greatest risks of virus transmission are (so far) associated with interacting with people, not food. Now is a good time to resurrect the childhood prank of ding-dong ditch and use it as a differentiator. The customer orders, and the order is then left at the door with no human interaction. Similarly, for curbside pickup, the less interaction, the better.
Expert customer behavior advice
Understanding the restaurant consumer in a COVID-19 world
In this multiple part series, we are analyzing responses of over 1,800 restaurant consumers from 3 major markets (US, UK, and Singapore/ South Korea/Taiwan) to understand their behavior and perceptions on the industry as the COVID-19 pandemic continues to unfold and impact throughout the world.
Let’s start your
Now, more than ever, RMS is committed to doing all we can to support the restaurant industry.
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