Manhattan’s West 46th Street has been temporarily converted into an outdoor row of restaurants during the fourth phase of the New York coronavirus pandemic reopening.
Roy Rochlin | Getty Images
On the way to 2020, the catering industry was facing another year of growth.
One of the operators’ biggest problems was the lack of manpower to keep up with demand. The delivery increased sales but remained a small part of the overall business.
But the coronavirus pandemic turned the industry on its head, causing millions to lose their jobs and a significant portion of restaurants to close permanently as consumers changed their eating habits and places.
More than six months after the states introduced stay-at-home orders, the National Restaurant Association estimates that over 100,000 bars and restaurants – or 15% of all dining and drinking establishments – have closed permanently. The trading group predicts that $ 240 billion in restaurant sales will be lost to the pandemic this year.
Not all facets of gastronomy are in such dire straits. At fast food chains, customers are returning after giving up their greasy burgers and fries years earlier in favor of healthier options. Consumers are also faster to deploy third-party provisioning apps, compressing years of growth into months.
“I think restaurateurs need to think more systematically about whether food is becoming much more of the norm in the home,” said Oliver Wright, global director of Accenture’s consumer goods and services practice. “In terms of what we eat and where we eat, it will likely be the biggest shock we’ve seen in our adult lives.”
The paycheck protection program was supposed to contain some of the losses, but the imperfections of the government plan became more apparent as the pandemic widened and operators quickly went through the eight weeks of funds made available. In August, restaurant sales fell an average of 34%, according to a survey by the restaurant association of more than 3,000 operators.
The relaxation of zoning rules to provide al fresco dining and the reintroduction of indoor dining with capacity constraints have resulted in some sales, but any surge in coronavirus cases has typically been followed with greater caution by consumers. And now the world has reached a grim milestone The death toll from pandemics has exceeded 1 million lives worldwide.
The devastation of the hospitality industry has also resulted in millions of jobs being lost. The leisure and hospitality sector had the highest unemployment rate in August at 21.3%, although it has declined significantly since April, according to the Bureau of Labor Statistics. For those who have held on to their jobs, the pandemic has tightened their working conditions, their low wages and, in some cases, their scrutiny. Lawsuits against their employers.
Industry experts and analysts expect a further decimation. Cold weather will end outdoor dining and a possible second wave of infections that could spell another round of bans. ONE current report The Centers for Disease Control and Prevention has linked restaurant food to an increased risk of contracting Covid-19, despite the restaurant association calling the study’s methodology flawed and saying it was irresponsible to the spread of the virus to be limited to one branch.
“”[The virus] is not a three-month, six-month challenge. This will last a long time and it will have such a negative impact on the restaurant sector, “said Wright.
In the short term, more consumers are expected to do most of their eating and drinking at home after years of moving in the opposite direction. An Accenture poll of more than 8,800 consumers in June found that 70% plan to do most of their food and hospitality at home for the next six months. That likely means take-out and delivery jobs, as well as more cooking. Many consumers have become more skilled in the kitchen after being their only option in the early days of lockdown.
Favorable offers and drive-through lanes
Chain restaurants have done much better than independent businesses, and fast food restaurants in particular have seen the fastest recovery in sales thanks to cheap deals, quick service, and the convenience of their thoroughfares. Technomic expects the market share of the fast food sector to increase by around 8% this year.
Dominos pizza and Papa Johns are among the most obvious winners as consumers quickly moved to ordering their pizzas for delivery during blackouts. But like burger chains MC Donalds and Wendy’sSales, which saw lower sales in March and April, also reported relatively rapid declines for their US companies.
The differences between the fast food sector and full-service restaurants are also reflected in restaurant inventories. Shares from Olive Garden parents Darden restaurants have fallen by about 8% during this year Dine brandsThe owner of IHOP and Applebee’s saw its share price decline 32%. On the flip side, McDonald’s stock is up 11% and Wendy’s stock is unchanged in 2020. Shares in the fast-casual chain Chipotle Mexican Grill have grown more than 50% year-to-date and added more than $ 11 billion to the company’s market value.
Jim Stevens, president of the Golden Chick restaurant chain, said the company saw sales declined 15% in the five weeks after ordering at home at more than 190 locations in Texas, South Carolina, Oklahoma and Florida. The roast chicken chain sales rose 21% in the same store in the second quarter and rose 26% in the third quarter. Drive-thru sales currently account for around 85% of business, compared to around two-thirds previously.
Jim Stevens, President of Golden Chick
Source: Golden Chick
Stevens credits part of the quick turnaround with the $ 1,200 economic reviews and higher unemployment benefits. Golden Chick has not cut its marketing or advertising spend or vacation days. New products continued to be introduced, including a popular partnership with Fletchers Corny Dogs, an icon at the Texas State Fair. Stevens predicts a full recovery in the fast food industry over the next year, but doesn’t think it will fully return to the way it worked.
“I honestly never see the idea that masks and gloves and those kinds of safeguards are going away in the industry,” said Stevens.
Wright believes consumer spending will shift back to independent restaurants as their safety concerns are resolved and they are keen to support local businesses.
“Many outlets have trouble getting the message across about openness, which makes it easier to book and physically manage the space to keep consumers safe,” he said. “In the short term, there was a bit of an escape to safety and some of those aspects.”
Check for delivery apps
The crisis has also transformed the way third-party delivery platforms do business. GrubhubNet sales rose 41% in the second quarter.
The analytics platform Second Measure found that sales for food delivery services grew 158% year over year in August. Consumers are also less loyal to a particular delivery app than they were two years ago, adding pressure on businesses, although data from Second Measure shows DoorDash continues to lead the market.
However, the surge in demand has also renewed control of businesses by regulators and consumers. Cities across the country including San Francisco and New York imposed temporary caps on the fees DoorDash and others may charge for each order. Restaurant owners had long advocated such measures, citing their already razor-thin profit margins.
Consumers are also increasing Note how provisioning apps work. Under normal circumstances, restaurants can pay up to 30% commission fees on an order processed by the businesses. Some chefs and restaurateurs used social media to raise awareness of the types of fees they have to pay and motivate their loyal customers to call directly for their orders or to drop by in person.
For example, New York’s 132-year-old deli Katz recently launched its own delivery on its website after scaling back its presence on third-party delivery websites.
“I took customers to see how much they cost and how awful they really can be, and I needed the customer’s buy-in before I could do something we’d wanted to do for a while,” Owner said Jake Dell.