Some operational pivots are sure to linger. Others will not.
If there’s one thing we can say about the current state of COVID-19 and restaurants, it’s that many operators are thinking about the future. Some of the sticker shock has worn off.
But what that looks like is anybody’s guess. Currently, the crystal ball has two main images materializing—three to six months of “altered dining experiences,” or a “new normal” that never truly reverts to pre-pandemic ways.
The fear that these changes will result in irreparable damage, though, has lessened a bit lately, Datassential said, making way for growing confidence in survival. That said, uneven distribution of COVID-19 impact across the industry has never been clearer.
We’ve reached a juncture where the crisis is disproportionally affecting different segments and business models. You have chains like Papa John’s hitting record sales highs, while countless full-service venues are leaning on limited dine-in service to turn back months of 70-plus percent declines.
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For just the second time since the pandemic landed with force in early March, Datassential released a report based on insights from restaurant operators instead of consumers. This study was fielded April 30 to May 5 from 502 industry decision makers. Here’s a look at the last operator recap, which took place roughly two months ago.
What’s become quickly evident is that all restaurants are focused on staying open and serving customers via the few methods left available. “Job one for the supplier and manufacturer community to be flexible and communicative,” Datassential said. “Right now, operators need partners as they navigate this new environment.”
What’s the feeling?
Mostly, restaurants are feeling optimistic. There’s definitely a sense of “we’ve made it this far” taking form. While operators remain discretionary for all consumers at this point, many have adapted well to the new off-premises environment and are more confident business will emerge stronger than before. This is especially true of limited-service restaurants, concepts that were well-equipped to handle the new takeout/delivery culture.
The question now, however, becomes, how long will this fuel business? Domino’s said Wednesday it was “seeing a tailwind as consumer behavior across the restaurant industry has shifted toward delivery and carryout, though we are not sure whether this trend will continue for the remainder of the second quarter or how long this tailwind may last.”
Today, the pool of customers tapping delivery and takeout is much wider than before. So when that changes and dine-in returns, how will the scales shift? There’s no concrete answer right now.
- 11 percent: Restaurants feeling very nervous that their operation will not be able to come back to business (–2 percent since April 3)
- 58 percent: Worried, but fairly confident their operation can get through this in one piece (–7 percent since April 3)
- 31 percent: Feeling cautiously optimistic and expecting to emerge stronger than ever (plus 9 percent since April 3).
By segment:
Very nervous
- Fast food: zero percent
- Fast casual: 8 percent
- Midscale: 6 percent
- Casual dining: 28 percent
- Fine dining: 14 percent
- Healthcare: Zero percent
- Lodging: 17 percent
- B&I: 22 percent
- C&U (campus and universities): 4 percent
- K-12: 7 percent
Cautiously optimistic
- Fast food: 64 percent
- Fast casual: 38 percent
- Midscale: 19 percent
- Casual dining: 19 percent
- Fine dining: 18 percent
- Healthcare: 47 percent
- Lodging: 22 percent
- B&I: 30 percent
- C&U: 22 percent
- K-12: 46 percent
Here’s how it looked on April 3:
Very nervous
- Fast food: 21 percent
- Fast casual: 20 percent
- Midscale: 24 percent
- Casual dining: 20 percent
- Fine dining: 4 percent
- Healthcare: Zero percent
- Lodging: 20 percent
- B&I: Zero percent
- C&U (campus and universities): 12 percent
- K-12: 2 percent
Cautiously optimistic
- Fast food: 26 percent
- Fast casual: 3 percent
- Midscale: 20 percent
- Casual dining: 9 percent
- Fine dining: 8 percent
- Healthcare: 45 percent
- Lodging: 13 percent
- B&I: 24 percent
- C&U: 25 percent
- K-12: 38 percent
The fight ahead
“What is your outlook on your business as it relates to the coronavirus crisis?”
- 54 percent: Preparing for 3–6 months (–7 percent since April 3)
- 33 percent: Will be our “new normal (plus 20 percent since April 3)
- 13 percent: Over in 30–45 days (–13 percent since April 3)
It’s pretty crystal restaurants don’t see a fast-approaching end to COVID-19. Perhaps that has something to do with attrition and feeling like this nightmare has lasted years, not months. But it also might turn out to be very true that parts of this “new normal” do indeed get etched into operational practices for the foreseeable future. Whether that means something beyond just off-premises adoption and contactless ordering remains to be seen. There’s still so much time ahead and learnings to be gleaned from reopenings. We might very well have all-new practices enter the picture before the summer arrives.
As always, the best ideas often end up shared and repeated throughout hospitality. There’s no harm in “borrowing.”
Despite many states lifting restrictions, dining-room closures remain the norm.
- 28 percent: Closed completely for the time being (22 percent restaurants; 34 percent on-site concepts, like healthcare)
- 65 percent: Closed dine-in area, but offer delivery/takeout (75 percent restaurants; 55 percent on-site)
- 6 percent: Open for business completely (2 percent restaurants; 10 percent on-site)
Closed dine-in, open for delivery/takeout
- Quick-service: 83 percent (–6 percent since April 3)
- Fast casual: 87 percent
- Midscale: 78 percent
- Casual dining: 66 percent
- Fine dining: 68 percent (plus 12 percent since April 3)
- Healthcare: 67 percent
- Lodging: 55 percent
- B&I: 44 percent (plus 9 percent since April 3)
- C&U: 48 percent
- K-12: 61 percent
Closed completely
- Quick-service: 17 percent (plus 6 percent since April 3)
- Fast casual: 9 percent
- Midscale: 19 percent
- Casual dining: 31 percent
- Fine dining: 32 percent (–12 percent since April 3)
- Healthcare: zero percent
- Lodging: 45 percent
- B&I: 49 percent (–7 percent since April 3)
- C&U: 46 percent
- K-12: 33 percent
Where help can come
Datassential asked operators, “what could a supplier, manufacturer, or distributor partner do to make the biggest difference in your operation right now?”
Here were some responses:
“I know things are on limited supply due to delivery concerns and such, but it would be nice if there were alternates offered for foods that aren't going to be available and not wait to find out at the last minute.”
“Just lower order minimums. We are ordering 15 percent of our usual volume, and we do not see anything coming back quickly.”
“Consistent delivery times. We are running on a much smaller scale, and when product is ordered, we need it to open for business that day.”
A good point, and one that’s going to get pretty complicated for some concepts as they restart after being temporarily closed for a while. It’s almost going to feel like a grand opening again, from a supply standpoint.
“Having a lot of issues with things being out of stock. Please be ready to offer an alternative. Also let me know UP FRONT if something is out of stock so I can make a back-up plan. Don't let me find out when the truck arrives that the product is not there.”
This happens to consumers with pickup grocery orders all the time. The stakes are obviously far higher for restaurants.
“No sales pressure. We small businesses have been rocked and are just trying to figure out a way to stay afloat.”
“Make sure that plants are safe and safety protocols are being followed so that we receive clean, non-tampered products.”
“Try to make sure to communicate. Obviously, the supply chains are somewhat compromised, but it's challenging when you find out late night/early morning that something you need is unavailable.”
For restaurants, menu flexibility is going to look very different out of lockdowns. More survival than creative. Anything a supplier can do to ease that burden will help.
The numbers
Per Datassential’s respondents, sales declined 65 percent across the industry as of April 3.
“How much has your overall business decreased since the outbreak of COVID-19?”
- Quick service: –33 percent
- Fast casual: –29 percent
- Midscale: –55 percent
- Casual dining: –62 percent
- Fine dining: –65 percent
- Healthcare: –17 percent
- Lodging: –79 percent
- B&I: –73 percent
- C&U: –80 percent
- K-12: –61 percent
Datassential found that some restaurants, which laid off most staff by early April, have been able to rehire some employees. This likely stems from a difficult and slow transition from dine-in to off-premises, the company said. Quick-service operators, however, have begun to feel some of the staffing pressures endured by full-service concepts early in the pandemic.
- No staff cuts due to coronavirus so far: 37 percent
- We let go of more than 75 percent of our staff: 29 percent
- We let go of up to 75 percent of our staff: 11 percent
- We let go of up to 50 percent of our staff: 11 percent
- We let go of up to 25 percent of our staff: 12 percent
Menu changes
An increasing number of restaurants are working with a shortened menu, focusing on best sellers and offerings that travel best. Here’s a look at why simplification is the new rallying cry during COVID-19 for operators.
“Have you made any changes to your menu in response to COVID-19?”
- Narrowed/limited your menu offerings: 50 percent
- Added large/family size/bulk-size options: 22 percent
- Added more “comfort food” type menu items: 21 percent
- Added price discounts/coupons/meal deals: 19 percent
- Added refrigerated, frozen “take-and-bake” items: 16 percent
- Added full meal bundles: 16 percent
- Added “indulgence/treat yourself” menu items: 14 percent
- Added “healthy/better-for-you” menu items: 9 percent
- Added multi-day meal options: 6 percent
- None: we have not made any menu changes: 24 percent (–10 percent since April 3)
And what about operations?
“Have you implemented any other operational changes specifically in response to COVID-19?”
(This just includes restaurant results)
- Closed off seating/stopped dine-in service: 63 percent
- Reduced hours of operation: 68 percent
- Updated food safety procedures: 62 percent
- Added curbside pickup: 66 percent
- Shuffled/repurposed staff to help in other areas: 37 percent
- Began offering contactless delivery: 37 percent
- Contacted customers directly about policies/updates: 28 percent
- Added online ordering and/or pre-pay functionality: 27 percent
- Begun offering paid sick leave to staff: 7 percent
- None: we have not made any operational changes: 4 percent
The takeaway: Pretty much every restaurant has had to adapt in these past few months. Nobody is in this battle alone.
What will stay, what will go?
Arguably the most prominent topic lately centers on which of these operational pivots will stick around, and which will not. Datassential said new safety protocols and a focus on online ordering appear likely to be part of a “new normal.” On the other hand, things like shortened menus, multi-day meal offerings, repurposing staff, and reduced hours were COVID-19 life-savers, but they might have a shelf life soon to expire. Interestingly, the company said, coronavirus could have opened a direct line of communication between foodservice operators and customers, which would help build sales now and in the future.
“How effective have the menu and operational changes you’ve made been?”
Updated food safety procedures
- Effective and will continue after COVID-19: 92 percent
- Effective for now but will not continue after COVID-19: 8 percent
Added new online ordering and/or pre-pay functionality
- Effective and will continue after COVID-19: 81 percent
- Effective for now but will not continue after COVID-19: 16 percent
Sign on to new third-party delivery service
- Effective and will continue after COVID-19: 79 percent
- Effective for now but will not continue after COVID-19: 17 percent
Contacted customers directly about policies/updates
- Effective and will continue after COVID-19: 76 percent
- Effective for now but will not continue after COVID-19: 24 percent
Added large/family size/bulk-size options
- Effective and will continue after COVID-19: 65 percent
- Effective for now but will not continue after COVID-19: 28 percent
Added more indulgence/treat yourself type menu items
- Effective and will continue after COVID-19: 60 percent
- Effective for now but will not continue after COVID-19: 24 percent
Added more comfort food type menu items
- Effective and will continue after COVID-19: 59 percent
- Effective for now but will not continue after COVID-19: 36 percent
Began offering contactless delivery
- Effective and will continue after COVID-19: 57 percent
- Effective for now but will not continue after COVID-19: 40 percent
Added more healthy/better-for-you type menu items
- Effective and will continue after COVID-19: 56 percent
- Effective for now but will not continue after COVID-19: 44 percent
Added price discounts/coupons/meal deals
- Effective and will continue after COVID-19: 56 percent
- Effective for now but will not continue after COVID-19: 36 percent
Added curbside pickup
- Effective and will continue after COVID-19: 53 percent
- Effective for now but will not continue after COVID-19: 39 percent
Added full meal bundles
- Effective and will continue after COVID-19: 50 percent
- Effective for now but will not continue after COVID-19: 33 percent
Begun offering paid sick leave to staff
- Effective and will continue after COVID-19: 47 percent
- Effective for now but will not continue after COVID-19: 35 percent
Added refrigerated, frozen take-and-bake items
- Effective and will continue after COVID-19: 43 percent
- Effective for now but will not continue after COVID-19: 33 percent
Narrowed/limited your menu offerings
- Effective and will continue after COVID-19: 37 percent
- Effective for now but will not continue after COVID-19: 53 percent
Added multi-day meal options
- Effective and will continue after COVID-19: 33 percent
- Effective for now but will not continue after COVID-19: 50 percent
Shuffled/repurposed staff
- Effective and will continue after COVID-19: 28 percent
- Effective for now but will not continue after COVID-19: 61 percent
Reduced hours of operation
- Effective and will continue after COVID-19: 23 percent
- Effective for now but will not continue after COVID-19: 59 percent
In the end, the safest approach is probably to stick to the things that mattered to customers during the crisis, even as dine-in service returns. Then, as feedback rolls in and trends start to settle, operators can gradually pull back and replace if necessary.
Just like before, anticipation and reaction are actionable things that will need to live in harmony. And data and communication will be the key to it all.
