Coronavirus and the Restaurant Industry: What the Data Shows

This is a special update by Black Box Intelligence™ detailing the evolving impact of COVID-19 on the restaurant industry. We will continue to monitor the outbreak and update this page regularly.

The Restaurant Recovery Sales Flash is open to all operators. Reporting includes sales, traffic, dine-in and off-premise performance for full and limited-service brands. Click here to participate. 

Coronavirus and the Restaurant Industry:

 

Key Insights – June 30, 2020

 

Consumer Trends
Insights from Black Box Consumer Intelligence™

  • Restaurant spend for Gen-Z consumers rebounded back to pre-crisis levels for the week ending June 21, reporting +1% YoY growth. Spending for this age cohort fell to a low of -41% for the week ending March 29.
  • Not surprisingly, consumers older than 65 had the steepest declines in restaurant spending, bottoming out at -59% for the week ending 3/29. Recovery has been slow for this age cohort and, as of June 21, their spending was still down -22%.
  • Besides the obvious explanation that older consumers feel more threatened by COVID-19, another factor at play is that older consumers historically allocate more of their restaurant spending to full-service restaurants.
  • In 2019, roughly 50% of restaurant spending by 65+ aged consumers went to full-service restaurants with the other 50% going to limited-service. Those spending patterns have significantly changed during the pandemic. In April, 65+ aged consumers increased their share at limited-service restaurants to 79%. While that allocation has been falling in recent weeks, this group is still spending 70% at limited-service for the most recent 30 days.
  • Contrast that to Gen-Z, who allocated 75% of their restaurant spending in 2019 to limited-service and 25% to full-service. That spread grew to 86% in April going to limited service at the height of the pandemic.

Financial Trends
Insights from Black Box Financial Intelligence™

 

(based on data from the week ending June 21)

  • Restaurants experienced a strong improvement in their comp sales during the week ending June 21. This was the best week for the industry since the week ending March 8 when the pandemic had still not had an effect at the national level. Performance results for June will be published in The Restaurant Industry Snapshot next Thursday, 7/9.
  • The improvement in sales during the latest week was largely due to a favorable shift in Father’s Day. Fine dining and upscale casual benefitted most from the shift from a comp sales perspective.
  • Contributing to the improvement in comp sales was an acceleration in YOY growth of average per person check.
  • There was very little change in restaurants reported as open; in any capacity during the week.
  • Only 89% of restaurants were open during the week; based on total chain restaurants open in the first 2 months of the year.
  • The percentage of restaurants that are open for dine-in continues to increase at the national level. The percentage of restaurants open is higher in states that reopened restaurants sooner and where the sales downturn due to COVID-19 was not as deep.
  • The percentage of full-service restaurants open for dine-in is much larger than the percentage offering dine-in in limited-service.
  • As dining rooms reopen, comp dine-in sales growth has naturally been improving in recent weeks for full-service restaurants. Limited-service lag in opening dining rooms is reflected in their much weaker dine-in sales growth.
  • As dine-in sales have been improving, particularly for full-service restaurants, YOY growth in off-premise sales continues to slow down.
  • States with the best comp sales results during the week were Mississippi, Alabama, Georgia, Idaho, Tennessee, Nevada, South Carolina, Utah, Louisiana and Kentucky.
  • States with the worst comp sales during the week were: District of Columbia, Massachusetts, New Jersey, Vermont, Connecticut, New York, Maine, Illinois, Pennsylvania and New Hampshire.

 

Key Insights – June 19, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence™

 

(based on data from the week ending June 7)

  • Limited-service brands are reopening dining rooms at a slower pace than full-service. Given that the majority of their sales are typically off-premise (even in the pre-COVID era), waiting until dining room capacity restrictions are expanded and also until guests feel more comfortable dining out is a much more viable strategy for limited-service brands given their smaller reliance on dine-in sales.
  • Many restaurants that closed completely due to the pandemic have reopened by now. The percentage that remains closed has stayed constant for the last 3 weeks at the national level.
  • Even in the states that had open dining rooms for over a month (Texas and Florida), it seems we are approaching a ceiling in terms of number of restaurants that will remain beyond this crisis. The rest that have yet to reopen may represent many of the restaurant locations that are not likely to come back.
  • The percentage of restaurants open for dine-in has grown rapidly for full-service brands.
  • Comp sales and traffic continue improving for the industry overall. However, vast differences in sales performance remain between limited-service and full-service segments.
  • Limited-service brands continue posting much better comp sales results than full-service restaurants. Nonetheless the limited-service recovery trend has slowed down in recent weeks. Some consumer spending shifted back to full-service now that the option to dine in at those restaurants increasingly becomes an option throughout the country.
  • There continues to be strong improvements in full-service comp sales, particularly for family dining and fine dining, which have had the biggest improvements in recent weeks.
  • Best performing states during the week based on comp sales were Alabama, Mississippi, Idaho, Oklahoma, Georgia, Tennessee, Utah, Arkansas and South Carolina.
  • Worst performing states during the week based on comp sales were Vermont, Pennsylvania, Washington, New York, Michigan, Maine, New Jersey, Massachusetts, New Hampshire and the District of Columbia.

Guest Trends
Insights from Black Box Guest Intelligence™

  • As restaurants continue to reopen dining rooms around the nation, the gap between full-service and limited-service restaurant net sentiment has widened related to guest mentions of COVID-19.
  • For the rolling 7-day period ending on June 17th, net sentiment is 20% and 10% at full and limited Service restaurants, respectively. Net sentiment was roughly equal for both segments at the end of May.
  • At full-service restaurants, guest comments were particularly positive around guests returning to dining rooms and restaurant staff adhering to COVID-19 guidelines and safety procedures.

Key Insights – June 11, 2020

 

Guest Trends
Insights from Black Box Guest Intelligence™

  • Mirroring what happened to sales in May, restaurant guest sentiment has recovered in recent weeks (for more see the latest Restaurant Guest Satisfaction Snapshot). Although May saw significant YOY drops in both sales and sentiment, guest sentiment was worse in April.  
  • Restaurant service guest sentiment was 12.2 percentage points less positive YOY during May, while the drop in sentiment was 19.0 percentage points in April. 
  • Guest sentiment for restaurant food was 8.6 percentage points less positive YOY during May, also an improvement from the 11.6 percentage drop in positive sentiment experienced in April. 
  • The use of masks was a hot topic on social media by late May. Guests were vocal about their expectations regarding restaurant staff using masks and were quick to call out cases in which masks were being used incorrectly. 
  • There is increased guest vigilance and sensitivity related to overall cleanliness and sanitation practices at restaurants. Guests are on high alert and have been praising restaurant efforts, as well as pointing out instances in which restaurants have fell short. 
  • For additional guest trends during the month of May, see the latest Restaurant Guest Satisfaction Snapshot: Guests Focused on Restaurant Procedures that Ensure Safety. 

Financial Trends
Insights from Black Box Financial Intelligence™

(based on data from the week ending May 31)

  • Sales continue recovering for the restaurant industry, which achieved its biggest improvement in YOY comp sales in the last six weeks during week ending May 31, according to the May Restuarant Industry Snapshot: Slow and Steady Recovery Continues for Restaurants.  
  • There continues to be a huge gap in comp sales performance (about 45 percentage points) between limited-service and full-service brands.
  • Quick service and fast casual remain the best performing segments based on comp sales. 
  • The family dining segment has had significant improvement in recent weeks and is no longer the second-worst performing segment, position it held since the beginning of the pandemic. 
  • The segments with worst comp sales results are fine dining (the segment most hurt by COVID-19) and now upscale casual. However, fine dining has also achieved significant improvement in comp sales during recent weeks as restaurant dining rooms continue reopening and expanding capacity. 
  • Guest checks continue growing YOY for limited-service brands, but the rate at which they are increasing has started to slow down. 
  • Guest checks for full-service restaurants, which had been falling YOY for months, are starting to show signs of recovery. 
  • Dine-in sales are returning quickly for full-service restaurants. For limited-service brands, the growth of dine-in has been slower. 
  • Best performing states based on comp sales during the week were Mississippi, Alabama, Oklahoma, Tennessee, Utah, Arkansas, Georgia, South Carolina, Idaho and Missouri. 
  • Worst performing states based on comp sales were New Mexico, New Hampshire, Maine, Massachusetts, Minnesota, Washington, New Jersey, Pennsylvania, Delaware and Rhode Island. 
  • For official performance benchmarks for May, visit the Restaurant Industry Snapshot: Slow and Steady Recovery Continues for Restaurants. 

Consumer Trends
Insights from Black Box Consumer Intelligence™

  • As many restaurants began reopening across the country in May, the restaurant category was able to get back 4.3% share of food spend from grocery stores. 
  • 2.9% of the overall share growth came from limited-service restaurants and 1.4% came from full-service restaurants. 
  • Despite an improvement in May as compared to April, full-service share of food spend is still well below what it was pre-pandemic. Given that most restaurant dining rooms were either mandated closed or subject to capacity constraints in May, it is expected that restaurants will continue to steal back share as these restrictions are lifted. 
  • Texas, which opened dining rooms at 25% capacity on May 1st was able to grow restaurant shareoffood spend faster. This was particularly true for full-service restaurants in Texas, which increased their shareoffood spend went up by 2.2% from April to May compared to the 1.4% increase that was seen at the national level.

Key Insights – June 4, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence™

 

(based on data from the week ending May 24)

  • Restaurant sales and traffic once again improved at the national level during week ending May 24. You can performance for all of May HERE.
  • Limited-service companies continue seeing much better comp sales results than the rest of the industry, with quick service now even posting strong positive YOY growth in sales.
  • Family dining is starting to see an acceleration in its recovery as restaurants reopen for dine-in.
  • Upscale casual and fine dining were the two segments with the worst comp sales growth during the week. There was a considerable acceleration in the recovery for fine dining sales during the last week; however, the segment still has the lowest comp sales.
  • In states that have dining rooms open, dine-in sales represented over half of the total during the week.
  • Dine-in sales are coming back at a slower pace in limited-service restaurants.
  • As dine-in sales have started picking up, there continues to be a deceleration in YOY growth of off-premise sales.
  • The best performing states based on comp sales during the week were Alabama, Mississippi, Tennessee, Oklahoma, South Dakota, Idaho and Utah.
  • The worst performing states based on comp sales were New Jersey, California, Vermont, Washington, Minnesota, New Hampshire and New Mexico.
  • For performance results for the month of May, view our latest Snapshot update: Slow and Steady Recovery Continues for Restaurants.

Guest Trends
Insights from Black Box Guest Intelligence™

  • As states began reopening restaurants for dine-in service, service satisfaction scores improved.
  • At the national level, food satisfaction scores fell slightly in May. However, food scores improved for restaurants in Texas and Georgia (states that were open for dine-in service throughout most of May). This data confirms that COVID-19 has not changed the long-standing trend that guests are more satisfied with food served in a restaurant than food served via an off-premise channel.
  • Despite overt cleanliness efforts, “ambiance” satisfaction fell in May as compared to last year. Guests appear to be hypersensitive to cleanliness resulting in heightened expectations.

Consumer Trends
Insights from Black Box Consumer Intelligence™

  • Consumer spend on travel & leisure has fallen from 20% share of total wallet (pre-pandemic) to 10% as of week ending May 24.
  • Limited-service restaurants were capturing around 20% of the travel & leisure category pre-pandemic, but that share has jumped to 40% as airlines, ground transportation, cruises and recreation have seen steeper losses.
  • Despite stealing 20% of the travel & leisure category, limited-service restaurants share of total consumer wallet is roughly the same as pre-pandemic, while other categories like hardlines (home furnishings, electronics) and broadlines (online retail) increased their share.
  • Full-service restaurants represented 9.5% of the travel & leisure category pre-pandemic. This share fell to 6.7% as of the week ending March 22 but has since climbed back to 10.1% share as of May 24. As a share of total consumer wallet, full-service restaurant spend has fallen -0.85%.
  • While restaurants are outperforming travel and leisure peers like airlines and gyms, the overall category has significantly fallen due to COVID-19.

 

Key Insights – May 28, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence™

 

(based on data from the week ending May 17)

  • Restaurant sales change YOY continued improving during the week ending May 17. May results will be published next week in the Black Box Intelligence Restaurant Industry Snapshot.
  • Average check continues increasing rapidly for limited-service brands. However, growth in average spending per guest remains negative for full-service restaurants.
  • Fine dining and family dining continue to be the industry segments with the biggest declines in sales YOY. While all other segments are seeing faster improvement in their sales, fine dining has seen little improvement in their sales in the last month.
  • Consumer demand is strong in states that have started reopening to dine-in. Comp sales in those states that have had their dining rooms open since the beginning of the month are doing much better than at the national level for full-service restaurants. State results will be published in next week’s snapshot.
  • Comp sales in Texas, Florida and Georgia during the week for full-service industry segments were on average between 10 to 20 percentage points better than at the national level.
  • As dining rooms reopen, YOY growth in off-premise sales has begun slowing down slightly for full-service brands. However, for limited-service off-premise sales continue accelerating.
  • Best performing states based on industry comp sales during the week were Alabama, Mississippi, Arkansas, Oklahoma, Tennessee, Georgia and Utah.
  • Worst performing states during the week were New Jersey, Washington, Massachusetts, Vermont, Hawaii, New Hampshire, West Virginia, New Mexico, Maine (and Washington DC).
  • For full results, including May comp sales, traffic, regional and market performance, expert commentary and more, make sure you are subscribed to the Restaurant Industry Snapshot™ to be published June 4th.

Guest Trends
Insights from Black Box Guest Intelligence™

  • Guest sentiment for “off-premise” restaurant offerings improved in March as restaurants began shifting their efforts toward improving to-go and delivery operations.
  • However, off-premise sentiment scores fell in early May as states started to reopen dining rooms. Many guests complained of long wait times for curbside pickup orders.
  • Guest sentiment trends have started to recover as of the week ending May 24, with off-premise sentiment returning to similar levels as were seen in April.

Consumer Trends
Insights from Black Box Consumer Intelligence™

  • Third-party delivery (3PD) adoption continues to increase for consumers of all ages since the pandemic began. Gen-Z has had the most significant adoption rates, with over 14% of Gen-Z consumers using 3PD to order from a restaurant since March 15th of this year.
  • While only 2.3% of baby boomers used 3PD in the past two months, this reflects a growth of 50% compared to the same months in 2019.

 

Key Insights – May 20, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence

 

  • The slow but steady improvement for restaurants continued during the week ending May 10. Comp sales were -40% YOY for the week. This represented a 5 percentage point increase from last week’s YOY performance and almost 20 percentage points better than mid-April.
  • Limited-service brands continue performing better than full-service, with comp sales of -6.5% for the week. Within these companies, many of those classified under quick service are starting to see significant positive growth in their sales YOY. Quick service has posted 2 consecutive weeks of positive comp sales.
  • With a lot of dining rooms still closed and many others open at a limited capacity, full-service concepts keep experiencing much bigger drops in sales YOY, despite the improvements in recent weeks. Comp sales for full-service restaurants were –55% during the week ending May 10.
  • At the national level, dine-in comp sales were -95% for the week ending May 10. Quick service at -88% and casual dining at -91% are the segments leading in comp sales for dine-in. Casual dining dine-in comp sales were -97% last week, highlighting how the reopening of restaurants has benefitted this segment in particular.
  • Even if there has been some improvement in dine-in sales, at the national level, off-premise sales continue accelerating rapidly at a pace comparable to recent weeks. Comp sales for off-premise (delivery, drive-thru, to-go) grew by 202% YOY during the week for full-service restaurants; for limited-service brands, growth in off-premise was 31%.
  • Taking casual dining as a sample, the top 8 performing states during the week based on comp sales reflect the improvement in states that had dining rooms open during the week. The best performing states (Montana, North Dakota, Utah, Oklahoma, Tennessee, Georgia, Texas and Florida) had a casual dining comp sales average of -34%. The average for the rest of the country was -52%.
  • Using the largest of these states as a sample for analysis (Tennessee, Georgia, Texas and Florida) dine-in comp sales averaged -68% for casual dining in these 4 states (23 percentage points better than the national benchmark).
  • As dine-in sales are picking up, to-go sales are beginning to slow down in those states that are reopening. Average to-go comp sales for these states was 192% for week ending May 10. The average for these states over the last 2 weeks was 226%.
  • The reopening of dining rooms is having a significant impact on guest checks by improving beverage sales mix in those states. Beverage comp sales for those 4 states averaged -67% during the week, compared with -95% at the national level.

Consumer Trends
Insights from Black Box Consumer Intelligence

 

  • Florida and Tennessee have the highest rates of consumers buying directly from restaurants, either through dine-in or takeout orders. 8% of consumers in Tennessee ordered food or beverages at a full-service restaurant during the week ending May 10 based on credit and debit card transaction data. Florida saw 6.5% for the same metric.
  • All other states had less than 5% of their population purchase from full-service restaurants during the week.
  • National grocery sales growth has held steady at around 15% for the last several weeks. An analysis of the states that opened their dining rooms last week (TX, GA, FL, TN) highlights that while full-service sales improved, grocery sales did not decline. This underlines that while some consumers are starting to engage with restaurants more frequently, the shift has not been meaningful enough yet to damper grocery sales growth.

Guest Trends
Insights from Black Box Guest Intelligence

 

  • Over the last 4 months, the restaurant industry experienced a sharp drop in total number of online reviews as well as in guest sentiment at the National level, as well as in Texas and Georgia.
  • Although counts and sentiment are low, Black Box Guest Intelligence captured almost as many reviews during the first few weeks of May, than there were in all of April. This shows excitement for restaurant spending but not quite evidence of a V-shaped recovery.
  • The increase in number of restaurant mentions relative to April has been greater in those major states in which restaurants are slowly starting to reopen such as Texas and Georgia.
  • While there has been a decline in sentiment around service speed, overall experience, and to-go in Texas and Georgia in May compared with April, there was an increase around ambiance and ambiance cleanliness. This is in part due to restaurants adapting to guests needs by establishing safety updates and precautions. Restaurants are now hyper focused on cleanliness and it is paying off in terms of improved guest sentiment around these areas.

Key Insights – May 13, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence

 

  • The number of restaurants reopening their dining rooms has steadily increased in recent days. As of Saturday, May 9, on average almost 30% of the restaurants operated by the companies that participated in our Restaurants Recovery Sales Flash survey opened their dining rooms in some capacity.
  • The impact of those dining rooms opening has been impactful in driving incremental sales for full-service restaurants. Over the last week, the difference between comp sales for full-service restaurants that have dining rooms open in some capacity and overall comp sales for full-service has ranged between 8% and 15%.
  • Dine-in sales still represent a small percentage of the total. During the last week, dine-in sales have represented an average 11% of total limited-service sales and 13% of total sales in full-service restaurants. This remains a dramatic shift for full-service, which tended to see roughly 86% to 88% of their sales coming through dine-in in the last year.
  • Comp sales for the industry were -45% during the week ending May 3, a 2.5 percentage point improvement since last week and the best result since week ending March 15.
  • Texas allowed dining rooms to open on May 1. The following analysis includes data for week ending May 3, which includes the first three days (Friday, Saturday and Sunday) of dining rooms open. This state was chosen for a deeper dive analysis given the size of its economy and the large number of restaurants operating within the state.
  • While casual dining’s YOY dine-in comp sales in Texas improved by almost 11 percentage points compared with the previous week, the improvement for fast casual and quick service were a much lower 3.4 percentage point change.
  • Texas to-go comp sales declined compared with previous weeks. After averaging +142% YOY growth for the last 2 weeks, to-go sales growth was up 123% during the week ending May 3.
  • Still down by more than 80% YOY in Texas, beverage sales YOY growth improved by 9 percentage points compared with the previous week for casual dining. Upscale casual improved beverage by 3 percentage points and fine dining by an industry leading 14 percentage points.
  • Breakfast and lunch were the only 2 dayparts that improved their comp sales results compared with the previous week in Texas during the week ending May 3. Lunch made the biggest gains at 5 percentage points.
  • However, the rest of the dayparts (mid-afternoon, dinner and late night) actually saw their comp sales YOY worsen during the week. This suggests guests may be favoring their local independent favorites for these dining occasions as dining rooms reopen.

Workforce Trends
Insights from Black Box Workforce Intelligence

 

From the recently published Workforce Response to COVID-19 Survey. Download the infographic on the side bar. Workforce Intelligence clients can download the full report in their EFC’s.

  • Despite many companies beginning to bring back employees from furlough, of those people employed by chain restaurants back in January, only 45% of them remain actively employed today on average.
  • Restaurant companies held on to most of their managers. Of those employed back in January, on average 75% of restaurant managers remain actively employed today.
  • Many of the employees that were separated through furloughs or lay offs are not expected to return to their former employer. About 25% of furloughed employees and 67% of laid off employees are not expected to return if given the opportunity.
  • Most companies are expecting to re-hire or bring back employees from furlough at the same base wages and salaries they had before.
  • Almost half of restaurant companies said they are adjusting their bonus criteria or performance goals in response to the pandemic.
  • Companies are focusing on ways to guarantee the safety of their employees and guests. Some of the most common measures taken include requiring all employees to wear masks and gloves, adding plexi-glass shields to customer facing stations such as host/hostess stands and counters, taking temperature of employees, removing tables and providing hand sanitizer throughout the restaurants.
  • A few companies are planning to stop receiving cash and some even plan to discontinue the use of physical credit cards.

Key Insights – May 6, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence

 

  • It seems that under the environment prevalent the week ending April 26, the industry hit a ceiling in terms of its sales recovery, and it will probably take dining rooms to open in some capacity to see further jumps in comp sales performance.
  • For the week ending April 26, comp sales for the industry were -47.2%, which was essentially flat from the previous week. As a comparison, the industry improved its comp sales each week by an average of almost 7.0 percentage points in the previous 3-week period.
  • Full-service restaurants continue to lose sales at rapid pace. These brands lost 62% of their comp sales during the week. Limited-service restaurants continue faring much better, at -17% comp sales for the week.
  • Early data from a the newly launched Black Box Intelligence Restaurant Recovery Sales Flash shows that in Texas for Saturday, May 2 (the second day restaurant dining rooms were allowed to reopen in the state but at only 25% capacity), same-store sales for full-service restaurants dropped 36%, which is almost 30 percentage points better than the decline in sales recorded at the national level for that day.
  • Data from Texas and Georgia (both allowing dining rooms to be open in some capacity May 1), revealed that, on average, full-service restaurant operators only opened dining rooms in about 40% of their locations in Texas and 31% of them in Georgia that day.
  • Comp sales at the individual segment level showed little improvement for the week ending April 26, with the exception of quick service.
  • Quick service comp sales were less than -2% during the week, which makes it the only segment close to getting back to normal, pre-pandemic sales.
  • Average check per person or per transaction continues accelerating at a fast pace year over year in the case of limited-service restaurants. Quick service checks grew by 20% during the week, while growth was 16% for fast casual. However, guest checks continue dropping for full-service brands, largely due to lost beverage sales.
  • Allowing restaurants to sell alcoholic beverages for off-premise consumption has had very small positive impact on lost beverage sales in those states in which it has been authorized. Comp beverage sales for casual dining in Texas, Nebraska, Arizona, Connecticut and California (states that allow off-premise alcohol sales and were the best performers on alcoholic beverage sales growth) were all within -92% to -94% for the week. Although better than the -98% national beverage sales growth rate for casual dining, this represents only marginal improvement.

Guest Trends
Insights from Black Box Guest Intelligence

 

  • Guests reported a decrease in “food” satisfaction for the average restaurant during the last 3 weeks as compared to before the pandemic. Food satisfaction has historically been much lower for off-premise orders than for dine-in orders, so this is not a surprising trend given the shift to off-premise.
  • However, overall “off-premise” mentions on Twitter and review sites have become more positive since before the pandemic began, suggesting that restaurants are improving their execution in these channels.
  • In this environment of uncertainty guests may be more aware of value even when interacting with upscale brands. Upscale casual and fine dining restaurants have seen more positive “value” mentions in the last three weeks than they did for the first three weeks in February, as they increasingly meet guest expectations in this area.

Key Insights – April 29, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence

 

  • Restaurants have now had 3 consecutive weeks in which YOY comp sales improved compared with the previous week.
  • Comp sales for the week ending April 19 were -47.6%, the best result posted by the industry since March 15 and an 11.3 percentage point improvement from last week’s comp sales.
  • All industry segments experienced an improvement in their comp sales results over the last 2 weeks.
  • Quick service continues to be the top performing segment; at -4% comp sales for the week ending April 19, quick service is close to start experience flat sales growth YOY.
  • Fine dining is the only segment that continues to experience comp sales worse than -80% and that has experienced little improvement over the last 5 weeks. Restaurant dine-in reopening, even if under very limited capacity, may be the only thing that could start reducing the rate at which this segment has been losing sales.
  • As would be expected, off-premise comp sales YOY continue growing at a rapidly accelerating pace as a result of the pandemic restrictions. For limited service brands, off-premise sales (including to-go, drive-thru, delivery and catering) increased by +20% YOY during the week. For full service brands, the increase in off-premise sales was +207% YOY.
  • Mid-afternoon and dinner were the best performing day parts based on comp sales during the week. Late night and lunch had the worst comp sales.
  • All 11 regions of the country improved comp sales results during the week ending April 19 in comparison with results for the previous week.
  • The worst performing regions based on comp sales continue to be those were major outbreaks of COVID-19 have occurred: California, New England, the Western region (which includes Washington state) and New York-New Jersey. All of these regions had comp sales worse than -55% during the week.

 

Consumer Trends
Insights from Black Box Consumer Intelligence

 

  • Wine and liquor stores have performed well throughout the pandemic with positive YOY sales growth of greater than 25% for the last 6 consecutive weeks. This strong growth may be at least partly motivated by replacement of alcoholic beverages previously consumed at restaurants. Alcoholic beverage sales growth in casual dining, upscale casual and fine dining has averaged about -98% YOY over the last 4 weeks.
  • Convenience store sales did not deteriorate as quickly as restaurant sales, but they have steadily declined over the last 4 weeks and are down -36% YOY as of  the week ending April 19.
  • While third party delivery (3PD) sales volume has increased for all days of the week during the COVID-19 crisis, weekends remain the most popular time to order. 37% of all 3PD sales in the last 30 days occurred on a Saturday or a Sunday.

 

Dear Restaurants,

From our family to yours, this message is for you…

Coronavirus and the Restaurant Industry:

Key Insights – April 23, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence

  • Comp sales growth improved for the second consecutive week YOY compared to the previous week, providing more evidence that the worst of the sales erosion because of COVID-19 may be behind us.
  • Comp sales and traffic for the industry were both -59% during the week ending April 12; this is the first time in the last 4 weeks when the industry posted comp sales or traffic results better than -60%.
  • There continues to be a widening in average spending per guest in limited service vs. full-service concepts. While YOY growth in average guest check for limited service has grown at a pace of 10% or more the last 2 weeks, average spending per guest YOY for full-service restaurants is declining.
  • All industry segments except for fast casual experienced an improvement in their YOY comp sales compared with the previous week’s performance. Fast casual had a 1.1 percentage point decline in comp sales vs. the previous week, but this could simply be the effect of Easter offsetting any improvement in weekly sales achieved by this segment during the week.
  • Family and fine dining are the segments that continue to experience the biggest drops in sales.
  • The best performing restaurant cuisines based on comp sales during the week were pizza, chicken and hamburgers. All of them had comp sales better than -30% during the week.
  • Out of the 11 regions of the country, only California did not improve its YOY comp sales compared with the previous week.

 

Consumer Trends
Insights from Black Box Consumer Intelligence

  • Share of food spend remained at 78% for grocery stores during the first 2 weeks of April. That represents an increase of 3 percentage points from grocery’s share back in March.
  • As the industry shifted to off-premise only in response to COVID-19, the number of unique guests ordering meals through third-party delivery has grown by about 60% for limited-service restaurants. Growth in unique users for full-service has doubled YOY.
  • Despite the rapid increase in third-party delivery adoption, off-premise sales for restaurants continue to be predominantly through the restaurants direct off-premise channels (drive-thru, curbside pickups, takeout, restaurants’ own delivery, etc.).

 

Guest Trends
Insights from Black Box Guest Intelligence

  • There has been diverging trends in guest sentiment towards restaurant off-premise offerings among limited-service and full-service restaurants.
  • Limited service, which typically do a significant portion of their business through off-premise channels, initially saw an improvement in their guest sentiment related to both to-go and delivery. However, most of those initial gains were eroded in the latest weeks and guest sentiment is back to being relatively low.
  • For full-service restaurant, there was the same initial jump in guest sentiment for delivery and to-go offerings, and that improvement in sentiment has sustained through the last 4 weeks. Guests have a much more positive sentiment on off-premise offerings from full-service restaurants now compared with the pre-COVID-19 period.

Join us 4/28 to discuss restaurant reopening strategies for the next normal with Kelli Valade, Black Box Intelligence’s CEO & President, Snagajob CEO Mathieu Stevenson, Sweetgreen’s COO Sanjiv Razdan & Union Square Hospitality Group’s CPO, Patti Simpson. Click above to register.

 

Key Insights – April 15, 2020

 

Financial Trends
Insights from Black Box Financial Intelligence

  • Since the negative effect of COVID-19 reached a national scale mid-March, the week ending April 5 was the best for restaurants based on comp sales growth. There are some signs that the sales decline may have reached bottom in the last few weeks and the industry is now experiencing some slow improvement.
  • Comp sales for the industry were -62.3% for the week ending April 5, which represented a small 4.7 percentage point improvement from last week’s results.
  • The pattern of diverging trends in guest check growth continues. Average guest check for limited service brands continues to grow rapidly year over year, while guest checks for full-service brands are experiencing a sharp drop.
  • The biggest declines in comp sales continue to be in fine dining and family dining; both segments experienced comp sales declines worse than -80% during the week.
  • The late night and lunch day parts experienced the biggest declines in comp sales this week (both worse than -80%). The only day part with comp sales better than -70% was mid-afternoon (-64.7%).
  • Pizza concepts continue to experience the smallest decline in comp sales, but there is an encouraging sign in the fact that all cuisine types tracked by Black Box Intelligence had comp sales declining at a lower pace during the last week.

 

Consumer Trends
Insights from Black Box Consumer Intelligence

  • Consumers allocated 78% of their food spend towards grocery stores last week, up from 66% in January.
  • Full-service restaurants received only 3.3% of consumer food spend, down from 10% in January.
  • Share of food spend at limited-service restaurants was 16.5% for the prior week compared to 22% in January.
  • There is starting to be some consistency in grocery sales data with year-over-year growth of 16.6% for the most recent week.
  • The average transaction amount for consumers ordering from full-service restaurants on third party delivery (3PD) is up 19.2% compared to the same week last year.
  • There were twice as many consumers ordering from full-service restaurants through 3PD compared to the same week last year.

 

Workforce Trends
Insights from Black Box Workforce Intelligence

  • Most companies (67%) have put some of their employees on furlough in response to COVID-19; the percentage that have laid-off employees is much lower at 22%.
  • The percentage of restaurant companies that now offer paid sick leave for their hourly employees increased to 67%; the percentage is even higher for restaurant managers.
  • On average, companies that are offering extended benefits to their separated employees are providing an additional 8 weeks of health benefit coverage. Free or discounted meals are extended for 9-10 weeks at the time of separation.
  • Almost half of companies have cut base pay of their executives in response to the business downturn caused by the pandemic.

Key Insights – April 9, 2020

 

Insights from Black Box Financial Intelligence

Week ending March 27, 2020

  • The week ending 3/27 was the second to show the impact of COVID-19 shelter-in-place and stay-at-home restrictions on a wide, national scale. Comp sales dropped by more than 60% for the industry, representing a 2.1 percentage point decline from the previous week.
  • The ability to fare better has been linked mostly to the strength of off-premise business before the pandemic hit, followed by the ability to quickly pivot to ramp up those off-premise offerings in recent weeks.
  • For full service restaurants, checks are declining rapidly: average guest checks changed by -43% for fine dining, -7.3% for family dining, and -6.6% for casual dining.
  • As usual routines got increasingly disrupted, the breakfast daypart saw a significant drop in sales during the week. Breakfast comp sales were -80%, which represented a 19 percentage point drop in performance from the previous week.
  • Pizza concepts are holding up the best in the current environment, down 15% in comp sales, followed by Chicken and Hamburger (-30% to -32%). Performance across all cuisine types vary widely, with bottom performers within the Breakfast-centric concepts and Bar & Grill declining -83% and -74%, respectively.

Insights from Black Box Consumer Intelligence

Week ending March 27, 2020

  • Grocery sales are starting to stabilize with YoY growth for the recent week at +15.5%. Last week grocery sales growth was +73.6%, likely the effect of consumers stocking up on supplies for upcoming days and weeks. Online grocery sales growth remains high for the current week, up +62.3%.
  • Limited-service restaurants experienced an increase in share of consumer food spend by 3% week over week, as grocery stores saw a 2% pullback and full-service lost another 1%.
  • While restaurant spend continues to decline for all age cohorts, the average restaurant is seeing a larger mix of spend coming from Millennials and Gen Z consumers than it did a year ago.
  • 72% of consumers who were dining weekly at full-service restaurants in early 2020 stopped spending at full-service restaurants during the week. Similarly, limited-service restaurants lost 35% of their regular weekly guests.
  • High-frequency spenders still exist among the consumers that have not eliminated their restaurant spend. Of those consumers that spent any money on restaurants during the week, 39% made at least 5 or more restaurant transactions during the period.

Insights from Black Box Guest Intelligence

Week ending April 5, 2020

  • Conversation around delivery and takeout on social media has fallen over the last 2 weeks with 15% fewer off-premise mentions in the week ending 4/5 than when it had spiked for the week ending 3/22.
  • For 2 consecutive weeks, guest satisfaction for takeout has grown more positive while delivery satisfaction has become more negative.

Key Insights – April 1, 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 Sales and Traffic Tracker, please email marketing@blackboxintelligence.com (this is for restaurant operators only).

  • YOY Guest check growth for the industry slowed to 0.5% during week-ending 3/22, after averaging
    +2.5% for the previous 4 weeks. *
  • Most full-service restaurants were able to increase off-premise sales, but the offset of lost dine-in sales is
    low. *
  • Mid-afternoon sales daypart is holding up the best; late night is the worst. *
  • Full-service in all states posted comp sales growth of -60% or below. Limited service had a wider range
    in comp sales performance. *
    Grocery sales are up 73% compared to the same week last year. **
  • Consumer share of stomach spend at full-service restaurants fell below 5%. **
  • Consumer visits are declining for restaurants and increasing for all forms of grocery stores. **
  • Consumers with higher income have reported the greatest declines in restaurant spending. **
  • Gen-Z YoY restaurant spend is down -22% compared to Baby Boomers (ages 65+) spend, down -43%. **
  • Off-premise guest sentiment 3x more positive in March for full-service restaurants (compared to
    February). ***
  • Takeout net sentiment jumps to 11.6 after months of negative scores. ***
  • Restaurants that promoted #TheGreatAmericanTakeout campaign on March 24th received 3x the
    amount of chatter and 2x higher net sentiment scores. ***

* Source: Black Box Financial Intelligence
** Source: Black Box Consumer Intelligence
*** Source: Black Box Guest Intelligence

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.

 

Download 56 Days that Forever Changed the Restaurant Industry

After an encouraging start to 2020, the restaurant industry was hit with the hardest few months in recent history due to the COVID-19 pandemic. Sales plunged. Most restaurants had to adapt to an off-premise only model to stay afloat. Employees were furloughed and laid off, adding another layer of complexity to an industry already in the midst of a staffing crisis. Guests have had to adapt. Download 56 Days that Forever Changed the Restaurant Industry for a timeline of the last few months that shook us all.

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Slow and Steady Recovery Continues for Restaurants

Pent up consumer demand for dining out is a huge driver needed to facilitate recovery for restaurants during the pandemic. The effects of this demand are already displayed in comp sales dine-in growth in states that have already reopened. 

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

Resources

Trending Business and Legal Issues: COVID-19 Advisory – Prepared by Haynes and Boone, LLP

Coronavirus Disease 2019 (COVID-19) Situation Summary – CDC

COVID-19 Reopening Guidance – NRA

Coronavirus – What Can You Do? – ServSafe

Coronavirus – Ecolab

COVID-19 Considerations – Align Public Policy

COVID-19 State Action Center

The Restaurant Operator’s Path to the Next Normal

Weekly Hourly Hiring Report – Snagajob

Restaurant Employee Relief Fund

 

Articles

Community Involvement is Key for Restaurants Amid COVID-19

Cheesecake says off-premise sales could hit $3M per unit

Timeline: The impact of coronavirus on restaurants

Strong Restaurant Chains May Feast After Coronavirus Famine

Coronavirus: Delivery operators take action to safeguard consumers, drivers

Olive Garden parent Darden Restaurants adds sick leave for 180,000 hourly workers