But the silver lining is the opportunity to transform by offering both dine-in and off-premises services
Chicago, July 30, 2020 – Full service restaurants (FSRs) were still recovering from the Great Recession, which ended over ten years ago, when the COVID pandemic hit along with shelter-at-home orders and mandated dine-in closures. With most of FSR business being on-premises dining, these sit down, table service restaurants were hit hard. Visits to FSRs were down -47% in the April, May, and June quarter, the height of the mandated dine-in closures, compared to same quarter year ago, reports The NPD Group. Quick service restaurants (QSRs), which already have developed off-premises operations like carry-out and drive-thru, realized a traffic decline of -17% in the same quarter.
In February 2020, before COVID, only 19% of FSR traffic was for off-premises consumption, and in June, even as dining rooms were reopening, off-premises was 55% of FSR traffic. The transition to an off-premises business during the mandated dine-in closures has been a challenge for FSRs. Some FSRs, particularly FSR chains, were able to quickly pivot by ramping up delivery programs, repurposing their parking lots as temporary drive-thru lanes, and streamlining their menus for more efficiency, but the shift to off-premises was both difficult and costly. However, without a significant shift to off-premises, major FSR chain customer transactions, which declined by -27% year-over-year in the week ending July 19, would be worse. In June, FSR off-premises traffic increased +91% versus year ago while on-premises traffic declined by -62%. That stated, consumers still value the on-premises experience and it’s evidenced by the fact that FSR traffic increased 152% in June, and 69% of that increase was due to the return of dine-in traffic.
“Long before COVID consumers were already favoring quick service restaurants and off-premises dining, and this trend has accelerated during the pandemic and will most likely be a behavior that will stick,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America . “For full service restaurants it will mean more flexible operations, delivering on the on-premises experience and optimizing off-premises services. I see this as a sea-change for the U.S. restaurant industry.”