Coronavirus and the Restaurant Industry: What the Data Shows

This is a special update by Black Box Intelligence™ outlining the evolving impact of COVID-19 on the restaurant industry. We will continue to monitor the outbreak on a weekly basis. Check this page for updates.

Black Box Intelligence is now collecting DAILY sales and traffic trend data. This is open and complimentary to ALL operators in the restaurant industry. To participate, please email marketing@blackboxintelligence.com

Coronavirus and the Restaurant Industry:

Key Insights – March 25, 2020

Black Box Intelligence clients are able to access a full report about the impact of Coronavirus on the restaurant industry. Financial Intelligence clients can find the report in the download section of their dashboard. Workforce Intelligence clients can download the report in the resource section of their Electronic Filing Cabinet (EFC).

To participate in the Daily Sales and Traffic Tracker, please email marketing@blackboxintelligence.com (this is for restaurant operators only).

  • Black Box Intelligence™ Daily Tracker points towards restaurant comp sales declining rapidly at national level over the last week.*
    *Source: Black Box Financial Intelligence
  • Off-premise sales reached over +60% growth year over year for full service brands and almost 30% for limited service brands as of March 23. *
    *Source: Black Box Financial Intelligence
  • Consistent with historical trends, satisfaction scores for consumers ordering delivery remain significantly lower than dine-in and takeout sentiment. **
    **Source: Black Box Guest Intelligence
  • Top coronavirus themes in restaurant reviews include (1) guests displaying their support for restaurants during the pandemic and (2) people using it as a platform to voice their opinion on restaurant staffing decisions. **
    **Source: Black Box Guest Intelligence
  • Grocery sales are up 52.9% compared to the same week last year. ***
    ***Source: Black Box Consumer Intelligence
  • Consumers shifted 10% of their share-of-stomach spend away from restaurants to groceries, ***
    ***Source: Black Box Consumer Intelligence

Key Insights – March 17, 2020

Black Box Intelligence clients are able to access an expanded, 7-page report about the impact of Coronavirus on the restaurant industry. Financial Intelligence clients can find the report in the download section of their dashboard. Workforce Intelligence clients can download the report in the resource section of their Electronic Filing Cabinet (EFC).

  • Comp traffic declines continue to be worse for full service (-3.7%) than for limited service restaurants –3.1%) for the week ending March 8th.*
    *Source: Black Box Financial Intelligence
  • Outbreak centers, major tourist and convention destinations suffer large traffic declines. Seattle’s comp traffic was –10.4% for the week (three times worse than the national average).*
    *Source: Black Box Financial Intelligence
  • In Seattle, comp dine-in traffic was -10.2% (8.5 percentage points lower than the previous week). Comp traffic fell by 30% at fine dining and upscale casual concepts.*
    *Source: Black Box Financial Intelligence
  • Consumer interest in COVID-19 continues rising rapidly according to Google searches. Online mentions related to restaurants are following the same growth pattern; 72% of online restaurant reviews containing “coronavirus” were posted in the last seven days (3/9-3/15).**
    **Source: Black Box Guest Intelligence
  • Upscale casual & fine dining chains seem to be adapting their practices to the COVID-19 challenge better than others according to guest feedback. These segments have the most positive sentiment when guests mention “coronavirus.”**
    **Source: Black Box Guest Intelligence
  • As restaurants shift to off-premise sales, third-party delivery may prove challenging given the very low adoption rates by consumers, especially those in older demographics. Only 4% of all consumers 18-24 years old placed a third-party delivery order the week ending 3/6; the percentage was less than 1% for those 55 and older.***
    ***Source: Black Box Consumer Intelligence
  • Consumers are continuing to shift food spend to grocery. Consumers decreased their share of food spend at restaurants by 2.8% nationally and by 5.7% in Seattle during the first week in March.***
    ***Source: Black Box Consumer Intelligence
  • Most companies already planning for restaurant closures. 60% of restaurant companies had already established contingency plans for closures as early as March 13.
    Source: Black Box Intelligence™
  • Enhancing sanitation procedures and implementing protocols for employees exposed to virus are the most common measures restaurants are focusing on regarding employee practices and procedures.
    Source: Black Box Intelligence™
  • Staffing difficulties for restaurants are increasing as a result of the outbreak. About a third of restaurants were already experiencing increased staffing challenges as of March 14.
    Source:
    Black Box Intelligence™
  • Most companies have paid sick leave policies for their restaurant managers but not their restaurant hourly employees.
    Source:
    Black Box Intelligence™

COVID-19 Deep Dive – Operator Survey – March 13, 2020

Last week over 200 operators responded to a survey on the Coronavirus outbreak and its initial impact on the restaurant industry. Key high-level findings can be found below, to request a complete copy of the results, email marketing@blackboxintelligence.com.

Key Insights

  • Almost 70% of restaurant companies had experienced a drop in traffic as a result of the COVID-19 outbreak. Restaurants most negatively impacted were those in upscale casual and fine dining; 85% of restaurant companies in this segment reported experiencing a decline in traffic.
  • About a third of companies first perceived a drop in their traffic as a result of the outbreak during the week of March 7. About a third of restaurant companies first experienced the decline in traffic a week later (week of March 14).
  • By March 13, the industry was not yet foreseeing a dramatic drop in their traffic. Half of companies said they
    expected the future traffic decline as a result of COVID-19 to be less than 10%.
  • The most commonly implemented measure or procedure in response to the outbreak has been enhancing sanitization protocols (96% of companies have implemented this measure), followed by implementing protocols for employees who have been ill or exposed to the virus to return to work (78% of respondents) and training employees on dealing with potentially ill customers (55% of respondents).
  • About a third of companies (this was consistent across all segments) reported they were already having additional staffing challenges due to the virus. These included employees calling in sick or not coming to work.
  • By March 13, almost half of restaurant companies responding to the survey said they had already banned or restricted travel for their employees.
  • Although over 80% of restaurant companies have paid sick leave policies restaurant management and corporate staff, about half (41%) offer paid sick leave to their restaurant hourly employees.
  • Many restaurants were already preparing for a potential escalation of the threat the virus poses to the industry. By March 13, 60% of restaurant companies that completed the survey said they had already established contingency plans for potential restaurant closures. However, the percentage of upscale casual and fine dining restaurants with closure contingency plans was the lowest of any segment. Only 33% of restaurants in those segments said they were prepared for restaurant closures.

 

Coronavirus and the Restaurant Industry:

Key Insights – March 11, 2020

Black Box Intelligence clients are able to access an expanded, 7-page report about the impact of Coronavirus on the restaurant industry. Financial Intelligence clients can find the report in the download section of their dashboard. Workforce Intelligence clients can download the report in the resource section of their Electronic Filing Cabinet (EFC).

  • In the market in which the first major outbreak occurred (Seattle), restaurant sales dropped by 10% during the initial week. However, this only includes a day or two of heightened public awareness. Real impact is expected to be over 20% in lost restaurant sales after one full week.*
    *Source: Black Box Financial Intelligence
  • Full service restaurants in Washington are seeing the most negative effect in terms of lost sales, especially those that are more upscale.*
    *Source: Black Box Financial Intelligence
  • Restaurant spending seems to be shifting away from full service restaurants towards limited service restaurants, at least initially.*** There is also an increase of to-go restaurant sales in the first market affected. Average to-go sales by restaurant location increased by 10.5% in Seattle during the week ending March 1.* These shifts seem to indicate that as concerns for the virus continue to rise, guests will likely favor quicker or off-premise dining experiences versus extended sit-down restaurant meals interacting with servers and sitting among other guests.
    *Source: Black Box Financial Intelligence
    ***Source: Black Box Consumer Intelligence
  • In Seattle restaurant spending from older guests (65+ years) dropped very significantly compared with their spending in the rest of the country during the week.*** This is the age group whose consumption is likely to be the most affected going forward as well.
    ***Source: Black Box Consumer Intelligence
  • Consumer data shows the categories that saw strong YOY growth in spending at the end of February were online grocery and meal kits.*** This could signal an upcoming trend as consumers shift more of their share-of-stomach spending towards options that allow them to avoid contact with other people while giving them more control over food preparation and hygiene.
    ***Source: Black Box Consumer Intelligence
  • Restaurant sentiment online is beginning to show heightened attention by guests to coronavirus related to food safety and cleanliness, as well as paying attention to signs of sickness among staff members.**
    **Source: Black Box Guest Intelligence
  • Initial areas of concern for restaurant sales decline due to the outbreak include cities and states with rapidly number of confirmed coronavirus cases, markets that are popular destinations for international travelers, markets that are hosts to large events such as conferences and trade shows.

 

COVID-19: Looking Ahead

It is hard to predict at this point what will be the pattern and speed of expansion of the coronavirus in the United States and what measures will have to be taken to slow its rate of spreading. These factors will likely have deep implications on restaurant performance during the rest of the year.

In addition to the headwind presented by this potential crisis, at least for the first quarter of the year the industry is experiencing some very favorable weather conditions which have led to very strong same-store sales growth results for the first months of the year. This will probably mask some of the negative effect of the coronavirus in restaurant YOY sales growth in upcoming weeks, at least at the national level.

What is expected for the upcoming weeks is sharp drops in restaurant sales specific to those locations in which major outbreaks occurred by the first week of March. San Francisco is a market where the downturn may be most apparent, particularly in terms of lost sales for full service restaurants.  For those brands strongly positioned in off-premise offerings there may be some uptick in to-go, delivery and drive-thru sales.

Markets in which major events are being cancelled will also experience a sharp decline in their same-store sales and traffic growth (think Austin due to the SXSW cancellation for the beginning of March).

At the national level it will probably take a few weeks before there is a meaningful erosion in restaurant sales, but that could change rapidly if panic accelerates and consumer confidence drops quickly.

Nevertheless, the global slowdown in economic activity, which is causing many economists to revise down their growth estimates for 2020, coupled with the possibility of the coronavirus outbreak directly hurting restaurants on a wider scale present strong concerns in an industry that continues to struggle with declining guest counts. In this new landscape, flat same-store sales for the year may be the new best-case scenario and declining sales a likely outcome.

Stay Tuned for Weekly Coronavirus Updates

Black Box Intelligence will continue to monitor the impact of coronavirus on the restaurant industry on a weekly basis. Check this page for updates as the situation evolves.

 

Black Box Intelligence Conducting Free Daily Sales and Traffic Survey for Restaurant Operators

March 26, 2020

Black Box Intelligence, leading provider of data and insights to the restaurant industry for over 20 years, recently opened a free survey for restaurant operators to collect and distribute daily sales and traffic data…

Read More

A Letter to Our Clients from Kelli Valade

March 12, 2020

The internet, TV and radio are abundant with information (and misinformation) about the Coronavirus. However, even with this much coverage, the future of the impact this novel virus will have remains uncertain. Thus, the challenge of making the best decisions for our employees, our customers and our guests is greater than ever…

Read More

Sign Up to Receive Updates or Submit a Question

We will be updating this page on a regular basis, and emailing updates as we get them. Sign up to get on the list.

  • This field is for validation purposes and should be left unchanged.