Major restaurant chains had no choice but to flex their off-premises muscle when COVID-19 hit. As discussed in a previous post, bigger proved to be better during the pandemic, as large chains were able to rely on and build out their already well-developed delivery, takeout and drive-thru capabilities. Digital ordering linked consumers to foodservice with contactless ease and became a lifeline that made the difference in whether operations sank or swam in a rising tide of restrictions and infection rates.
The tide may be turning, but it can still be a struggle for operators to keep their head above water. Despite a surge of government funding for restaurant relief, rising vaccination rates and receding restrictions, 39% of restaurants—about 2 out of every 5—couldn’t cover their June rents, according to survey data from the lead generation platform Alignable.1
It’s no secret that top restaurant brands like Domino’s and McDonald’s navigated the pandemic more nimbly than small operations, which often ate heavy losses due to a lack of robust off-premises channels. Expedited by the ease and convenience of digital ordering, takeout, delivery and drive-thru service all proved to be powerful revenue engines for major players when in-store traffic slowed to a crawl or came to a screeching halt.
Roiled by the pandemic, 2020 became the year of transformation for the foodservice industry. Regroup, reassess and reinvent have become the gotta-get-it-done directives for foodservice operators, topping the menu of must-dos for moving forward.
The pandemic put a lot on the restaurant industry’s plate. Dine-in restrictions and shutdowns. Safety concerns. The seismic shift to off-premises channels. The rise of third-party delivery and fallout from delivery fees. The mad dash to digital integration and online and in-app ordering. It all added up to a perfect storm of unparalleled challenges, and everyone—from independent operators to major chains—scrambled for ways to weather it.
The impact of COVID-19 on the restaurant business has proved far greater than any prior recession, according to data from market research firm The NPD Group. In the third quarter of 2020, restaurant transactions dropped 27%,1 and foodservice operator spend was down 19%.2 Home cooking heated up last year, driving a 31% increase in sales growth for small kitchen appliances. Eighty-two percent of meals were sourced from home, and 70% of restaurant dinners were eaten at home.3