U.S. Restaurant Industry Recovery Stalls with No Improvement in Transaction Declines in Six Weeks

Major restaurant chain customer transactions decline by -12% in W/E July 19

Chicago, July 27, 2020 —COVID case surges across the country and the subsequent rollbacks in re-opening plans have stalled the U.S. restaurant industry’s recovery, reports The NPD Group. Major restaurant chain customer transaction declines have been between -11% and -14% versus a year ago since the second week of June compared to the steady improvement in declines from the last week in April through the second week in June. In the week ending July 19, major restaurant chain total customer transactions are down -12% versus year ago, compared to -14% in the prior week, according to NPD’s CREST® Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 75* quick service, fast casual, midscale, and casual dining chains representing 53% of the commercial restaurant traffic in U.S. 

In the week ending July 19, 78% of restaurants are in geographies that permit on-premises dining with varying capacity restrictions. California has 13% of the nation’s restaurant units, all of which are prohibited from offering on-premises dining.  Many restaurants are also operating well below normal capacities in terms of menu offerings and store hours, which are operator decisions made partly due to the pandemic situation overall and partly due to the difficulty in attracting labor.

“I believe there is still a lot of upside recovery for restaurants, but for now we’re stuck in neutral until we can get the industry operating at full capacity,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America .  “The ‘recovery’ phase will then tell us whether the industry can recapture enough customer traffic to get back to the pre-COVID baseline, or whether the new normal will reflect a re-set where consumers prepare more meals in their home kitchens for a longer term.” 

In the week ending July 19, quick service restaurant chains (QSR) were responsible for the improvement in customer transaction declines, which were at -11% year-over-year while full service restaurant (FSR) chains declined to -27% year-over-year.  FSR transactions would be worse without a significant shift to off-premises.  In June, FSR off-premises traffic increased 91% versus year ago while on-premises traffic declined -62%, according to NPD.

“Certainly full service restaurants need to recover their lost on-premises business since that will always be their main source of volume,” says Portalatin. “But, I wouldn’t be surprised to see new casual dining models emerge that are designed to optimize off-premises capabilities for the long-term.”



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