RESTAURANT INDUSTRY PERFORMANCE PULSE: Click for weekly updates on the evolving impact of COVID-19 on the restaurant industryRESTAURANT INDUSTRY PERFORMANCE PULSE: Click for weekly updates on the evolving impact of COVID-19 on the restaurant industry
After seeing its sales hit bottom in late March, the restaurant industry has since been in a slow but steady climb towards recovery. Restaurant same-store sales dropped by 40% during May, which as discouraging as it may seem, represents a strong 15 percentage point improvement from where sales were back in April. As restaurants have started reopening in many states, demand for dine-in sales returned quickly. Additionally, although off-premise sales are still growing rapidly year over year, the pace at which they are growing has been slowing down considerably.
The latest data shows there is some distance to cover before the industry can return to pre-COVID sales levels. Data tracked by Black Box Guest Intelligence™ from online restaurant mentions and reviews suggests guest sentiment reflects a similar negative outlook. Service was the component of the restaurant experience that experienced the biggest drop in guest sentiment during May. The percentage of positive service mentions dropped by 12.2 percentage points year over year during the month, with barely over a third of all mentions classified as positive. But much as what was reported for sales, there was some improvement in service sentiment during May. The year-over-year drop in service positive sentiment was 19 percentage points in April.
There was a similar pattern for guest sentiment based on food. Year-over-year guest perception of restaurant food was 8.6 percentage points less positive during May, compared with a 11.6 percentage point drop in April.
Given the downturn in restaurant food and service sentiment, coupled with the many concerns that still exist in guests’ minds regarding the risks and uncertainty related to the pandemic, it is not surprising to discover that restaurant intent to return has also experienced big hits. Only slightly above a third of guests expressed a positive intent to return when mentioning a restaurant brand during May. Intent to return became 11.2 percentage points less positive during the latest month.
It is clear restaurant guest sentiment dropped sharply the moment the health crisis started expanding across the country and dining rooms began shutting down. But what is even more interesting is the themes that emerged from the online social chatter related to restaurants.
During the first phase of the pandemic, from early March to mid-April, consumers started perceiving a real threat for the first time, shelter-in place-orders were enacted and restaurants had to quickly adapt to the new off-premise-only environment. As this happened, guests initially focused more on their fear of getting sick. In early March guests were hyper-vigilant about the cleanliness practices at restaurants and started voicing what their clear expectations where when visiting a restaurant, like additional attention to cleanliness by all staff.
By late March, as restaurants began closing their doors and many employees were either laid-off or furloughed, an emerging theme on social media was a concern for those employees. In early April, the conversation shifted to delivery and off-premise offerings, which was not surprising given that this was the way guests were experiencing restaurants at that point. A recurring theme was guests stating they were trying new restaurant brands through delivery, and in many cases the result was positive. In fact, Black Box Guest Intelligence data showed an early improvement in delivery and off-premise sentiment, particularly in full-service restaurants during this stage.
By late April, restaurant guests had adapted to this “new normal” and the conversation shifted to those innovative initiatives restaurants took to boost their revenue while helping to meet an expanded set of their guests’ needs. Restaurant brands began receiving kudos from their guests for starting to sell grocery staples as part of their menus, as well as adapting their technologies and processes to enhance the off-premise ordering experience.
By early May, some major states started reopening their dining rooms and guests again started being laser-focused on cleanliness and how well restaurants were meeting their standards of social distancing. Many guests also declared a strong sentiment towards what they perceived to be restaurants reopening too soon.
As more and more restaurants opened their doors to dine-in guests one theme stood out, perhaps because of it being related to the most visible of COVID-19 prevention measures. There was a lot of chatter centered around the usage of masks in restaurants, especially worn by staff incorrectly. Guests were quick to call out instances in which masks were not covering the staff members nose, mouth or both. Guests also made it clear that they were checking restaurant websites to find out what their mask policies were beforehand and were vocal about singling out those cases in which those stated policies were not being followed.
One area in which there some relative normalcy could be found looking at the major markets with the most positive restaurant sentiment. As has been the case constantly in the past, Orlando, FL remains the major metropolitan area with some of the most positive restaurant guests in the country. During May, this market topped the list of most positive guest sentiment for restaurant food and ambiance.
What seems to be a new trend during the last couple of months as the country battles the pandemic is for consumers in the New York DMA to exhibit very strong sentiment based on restaurant value. Being one of the areas of the country hardest hit by the health crisis, it is welcome news for operators in this market that guests have an improved value perception as restaurants have adapted to this new environment.
Another area in which past trends have returned to normal can be found in markets with lowest guest sentiment. Los Angeles, and typically other major markets in California such as San Francisco, have proven to have some of the guests with the least positive restaurant sentiment in the past. In May, Los Angeles held the position of lowest guest sentiment based on restaurant service, ambiance and value.
The Restaurant Guest Satisfaction Snapshot is produced by data from Guest Intelligence™, a Black Box Intelligence Product™. Guest Intelligence is tracking over 190 brands to benchmark customer satisfaction and is the only online tool that integrates with operational performance data to validate the impact on financial performance. The algorithm determining ranking brands is based on sentiment and determined by Black Box Guest Intelligence. Brands included in this monthly snapshot must have a total of at least 250 mentions for the month. Restaurants must have a minimum number of units to be eligible as well. DMA rankings consider only the largest 25 areas.