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Food Service Industry Updates

Restaurant Industry Continues to Persevere

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The restaurant industry is trying to put one of its worst years ever behind it. The industry hadn’t experienced a year as dreadful as 2020 since 2007, the year the Great Recession began.

But if December customer transactions are any indication, the situation is improving on some fronts, according to market researcher The NPD Group.

NPD’s CREST Performance Alerts found that customer transaction declines at major restaurant chains in December were down 10% compared to the same period year ago. That was a 27-point improvement from April, which was the height of the shelter-at-home and restaurant dine-in closure mandates, when transactions declined by 37% from a year ago. CREST Performance Alerts provides a weekly view of chain-specific transactions and share trends for 75 quick-service, fast-casual, mid-scale and casual-dining chains that represent 54% of the commercial restaurant traffic in U.S.

Of course, full-service restaurant chains, which primarily rely on dine-in customers and had few if any off-premises services when the dine-in restrictions went into effect, bore the brunt of the transaction declines throughout the pandemic, according to NPD. In April, the segment’s customer transactions declined by 70% compared to April 2019. However, the full-service restaurant segment improved its declines to minus 30% in December, thanks to many chains quickly pivoting to offer more off-premises services by turning parking lots into drive-thru stations, offering curbside pickup and enhancing delivery options.

However, as NPD points out, government restrictions play a huge role in the current success of full-service restaurants. In more restrictive states, full-service restaurant chain transactions are down 60% to 70%, according to NPD. In less restrictive states, there isn’t as much of a gap between quick-service and full-service restaurants. 

Major quick-service restaurant chains, which represent the bulk of restaurant industry transactions, have weathered the pandemic by expanding their already high capacity for off-premises volumes, NPD stated. The chains’ carry-out, drive-thru, and delivery orders soared throughout the pandemic as consumers looked for relief from preparing most of their meals at home. Quick-service customer transaction declines bottomed out in April with a decline of 35% versus year ago, but quickly improved as shelter-at-home orders were lifted. In December, quick service restaurant chain customer transaction declines were down only 8% versus last year, NPD found.

“The struggles of the restaurant industry are well documented, and we acknowledge that some operators have not survived the pandemic,” said David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “But history has shown that consumers will always value the convenience, quality, and experience of restaurant meals, and the operators that deliver against these expectations have proven it’s a winning formula in good or bad times. Our industry is resilient and consumer demand for restaurants remains strong.”

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