To illustrate the scope of the COVID-19 pandemic, as it pertains to restaurants, the week ending April 5 was the best to date, based on same-store sales growth. And yet still, comps declined 62.3 percent.
Nonetheless, it suggests something restaurants have looked for in recent weeks. It’s probably safe to assume the bottom is now behind us, with a 4.7 percentage point improvement, week-over-week, stamping a recent hope into something more tangible.
As this set of data shows, March provided a tipping point 11 days in and then it spiked to an apex at negative 78.3 percent in the period ending March 29 (after declining 73.2 percent the previous week). There’s been slight, and slow, improvement since. But at least figures aren’t dropping deeper into the red.
This was also backed up by data from The NPD Group. The company said earlier in the week U.S. restaurant customer transactions declined by 41 percent in the week ending April 5 compared to 2019, following a 42 percent decline in the prior week ending March 29. There remains reason to be cautious, however. “The 41 percent decline in restaurant transactions is similar to last week and may indicate a bottom, we also need to be aware that further erosion could occur if consumers’ economic situations worsen,” David Portalatin, NPD food industry advisor and author of Eating Patterns in America, said in a statement. “To date, many consumers have continued to buy restaurant meals through delivery, takeout, and drive-thru to the degree allowed by the restrictive environment; but with rising unemployment, payroll reductions, and temporary furloughs, consumers may begin to think differently about their food budgets overall.”
As far as why the industry might have struck bottom and then moved upward, it’s likely a result of off-premises adoption. Consumer awareness is higher and brands are simply getting better at it, or expanding current offerings and dipping into new revenue streams, like grocery programs. Many were bouncing off the bottom of zero-dollar programs. It’s also worth taking into account closures of restaurants that weren’t equipped to serve these channels. They took some of the biggest blows in the early days of COVID-19 stay-at-home mandates. The comparable results you’re seeing now are stemming from a fleet of restaurants, on average, more prepared to meet this demand. Although, as the 60-plus point drop still reveals, it’s hardly business as usual or an acceptable substitute for most.
For example, take a look at how Red Robin’s figures have tracked in recent weeks. You can see how off-premises business has increased significantly and helped it climb out of 70-percent holes.
Same-store sales versus prior-year period:
- Quarter to date through March 23: 3.4 percent
- Week ending March 1: 0.9 percent
- Week ending March 8: –3.7 percent
- Week ending March 15: –26.3 percent
- Week ending March 22: –72.7 percent
- Week ending March 29: –70.5 percent
- Week ending April 5: –63.9 percent
- Week ending April 12: –65.2 percent
Red Robin’s off-premises sales per restaurant:
- Through February 23: $7,674
- Week ending March 1: $8,264
- Week ending March 8: $7,963
- Week ending March 15: $7,534
- Week ending March 22: $13,172
- Week ending March 29: $18,259
- Week ending April 5: $20,782
- Week ending April 12: $19,033
Darden’s Olive Garden as well.
Olive Garden
Same-store sales
- Week ending March 1: 3.1 percent
- Week ending March 8: Flat
- Week ending March 15: –18.7 percent
- Week ending March 22: –71.1 percent
- Week ending March 29: –64.7 percent
- Week ending April 5: –59.7 percent
- Quarter to date (April 5): –34.5 percent
To go sales per restaurant
- Week ending March 1: $16,191
- Week ending March 8: $15,500
- Week ending March 15: $14,942
- Week ending March 22: $20,549
- Week ending March 29: $34,524
- Week ending April 5: $39,133
A different pattern is holding firm. Black Box said diverging trends in guest check growth have continued. Limited-service brands are witnessing their average guest check grow rapidly (likely due to bundle meals and people ordering more at once to feed families), while full-service restaurants have experienced a sharp drop. For the latter, you can thank the lack of beverage sales typically attached to takeout and delivery.
Fine dining saw average guest checks drop 43 percent in the week ending March 27. Family dining witnessed a 7.3 percent decline, while casual dining decreased 6.6 percent.
The biggest comp sales falls remain in fine dining and family dining. Both experienced drops north of 80 percent during the week ending April 5.
The dayparts hurt the most were late night and lunch (both worse than negative 80 percent). The only daypart with comps better than negative 70 percent was mid-afternoon, at negative 64.7 percent.
Pizza concepts continue to experience the smallest decline in comp sales, Black Box added (it was negative 15 percent the week ending March 27 compared to minus 30 and 32 percent for chicken and hamburger, respectively). But there was an encouraging sign found in the fact that all cuisine types tracked by the insights company saw comp sales declining at a lower pace during the last week.
This past period, consumers allocated 78 percent of their food spend toward grocery stores, up from 66 percent in January. Full-service restaurants received only 3.3 percent of consumer food spend, down from 10 percent at the beginning of 2020. Share of food spend at quick-service brands was 16.5 percent compared to 22 percent in January.
NPD reported that quick-serves, which historically have more off-premise business than sit-down restaurants, naturally, experienced lower transaction declines (negative 38 percent) in the week than the total industry. Full-service restaurants experienced transaction declines of 79 percent in the week ending Aril 5 compared to same week year ago.
Grocery sales data is stabilizing a bit, up 16.6 percent year-over-year this past week, Black Box said. It lifted 15.5 percent in the week ending March 27 after skryocketing 73.6 percent, year-over-year, in the previous seven-day period.
How much of this is tied to people stocking up is hard to say right now. With stimulus checks starting to circulate, it might bounce back up.
Black Box also found that the average transaction amount for consumers ordering from full-service restaurants on third-party delivery was up 19.2 percent last week compared to the same period in 2019. There were also twice as many consumers ordering from full-service restaurants through aggregators.
On the labor front, Black Box said 67 percent of companies have had to put some of their employees on furlough in response to COVID-19. The percentage that have laid off employees is lower at 22 percent.
The percentage of restaurants that now offer paid sick leave for hourly employees increased to 67 percent—it’s even higher for restaurant managers.
On average, those companies offering extended benefits to separated employees are providing an additional eight weeks of health benefit coverage. Free or discounted meals are extended for nine to 10 weeks at the time of separation.
Black Box added that nearly half of companies have cut base pay of their executives in response to the business downturn as well.
