Restaurant sales

Coronavirus pandemic wreaks havoc on restaurant sales in March

The rapid decline in restaurant sales in the second half of March due to the COVID-19 pandemic was enough to send the industry plummeting to its worst month in decades. Same-store sales fell 28.3% in March. This update comes from data from Black Box Intelligence (formerly TDn2K) of more than 50,000 restaurants and $75 billion in annual sales.

The 28.3% drop does not show the full impact of the virus outbreak on restaurants. Industry comparable store sales fell more than 65% in the last two weeks of the month.

“We’ve been reporting on restaurant sales and traffic since the last Great Recession, and it’s far beyond anything the industry has seen,” said Victor Fernandez, vice president of insights and insights. for Black Box Intelligence. “While it’s hard to classify anything as good news right now, there is a silver lining in the sense that the sales decline may have bottomed out based on early April data. As more restaurants turn their full attention to their off-site offerings and customers adapt their consumption to this new environment, and some of the government’s relief measures come into effect, small improvements may be on the way. .

Guest numbers plummet as shoppers shelter in place

Same-store traffic fell 29.2% in March. As with sales, it took until the last two weeks of the month for traffic to be severely impacted by the measures imposed to try to slow the spread of COVID-19. As normal routines for work, school and other activities were disrupted by people sheltering at home, the number of restaurant customers fell by nearly 70% in comparable stores at the end of the March.

Stable customer check growth, widening gap between segments

Average customer checks were up about 2.4% year-over-year in March. But at the end of the month, growth in customer checks became essentially flat year-over-year.

The real story was the broadening of check growth momentum between segments. Limited-service restaurants saw a sharp acceleration in customer check growth as consumers likely shifted to larger take-out orders to feed multiple people at home.

Meanwhile, customer checks have dropped significantly for full-service restaurants, fueled in large part by the near-complete elimination of beverage sales by shifting to offsite-only operations. Alcoholic beverages, in particular, can have a huge impact on customer checkouts, especially for bars and grills and more upscale restaurants.

The full-service restaurants hardest hit by the crisis

High-end fine-dining and casual restaurants were the worst-performing segments in March based on same-store sales growth. Family dining, which includes many buffet concepts, was another segment that was hit hard.

As restaurant operations shift to offsite sales only, concepts that have been developed with offsite as a core part of their business naturally fare much better. Quick service and fast casual were the best performing segments based on sales growth in March. While full-service restaurants saw year-over-year declines of more than 70% in the last week of the month, full-service restaurants were down about 50% and quick service n only lost about 30% of its sales during the week.

every day suffering

The sharp drop in sales hit all parts of the restaurant day, with daily routines disrupted by social distancing guidelines. As the effects of the pandemic began to hit the whole country at the end of March, it seemed that breakfast and afternoon sales were holding up better than others. However, by the last week of the month, growth in breakfast sales fell in line with declines reported for the lunch and dinner daytime slices.

Mid-afternoon sales remained the best-performing part of the day based on same-store sales growth at the end of the month, while late-evening sales were the hardest hit since. the onset of the crisis.

Regions with large outbreaks see the most negative impact

As of the last week of the month, the regions with the worst declines in restaurant sales were those where the largest COVID-19 outbreaks occurred, as well as regions with large, densely populated metropolitan areas. Same-store sales fell more than 70% for New England, Western Region, New York and New Jersey, Mid-Atlantic and California in the last week of March.

However, the performance was not much better for the rest of the country in the last week of the month. In fact, the Southeast is the only region that has seen a year-over-year decline in restaurant sales of less than 60%.

Economic recovery could be slow after strong initial rebound

From a macro perspective, restaurants face two major questions: when will the economy start to reopen and what will the recovery look like? “The answer to the first question is unknown,” commented Joel Naroff, president of Naroff Economic Advisors and economist at Black Box Intelligence. “As for the second, it is essential to understand that the programs put in place are stabilization plans and not recovery plans. You have to stop falling before you can start getting up again. When the opening occurs, the first phase should be very strong. Given the massive number of business closures, reopening them will create a huge increase in business. Additionally, households will need to restock, creating a temporary surge in consumer demand.

“But it could be a fake head. We have to look not at the first months after reopening, but at the next six to twelve. This is when the economic fundamentals take over. With so much damage to so many businesses, it is likely that even with government financial support, many will fail, slowing business. Moreover, it is not known how consumers will behave. The unemployment rate could reach 20% and it would take years to return to a more normal level. After the initial surge, it may be months before a sustained consumer spending pattern emerges. A second phase of short decline could set in. At this point, we would probably enter the real recovery. Given everything that’s happened, expect growth at moderate rates, similar to the recovery period of the 2010s.”

Restaurants adjust labor practices as industry downsizes

After years of strong job growth in the restaurant industry, the sharp decline in sales has forced many businesses to downsize. A Black Box Intelligence survey conducted in early April found that 22% of participating restaurant businesses had to lay off employees, while the percentage that said they had to furlough some employees was 67%.

As restaurants try to figure out how to meet this challenge, keeping employees and customers safe and cared for has been one of the areas of focus. Many companies already had paid sick leave policies before COVID-19, but many others implemented them quickly in response. Currently, 67% of restaurants said they offer paid sick days to their hourly employees. The percentage is higher for restaurant managers.

In many cases, caring for employees has gone beyond those still working in restaurants. Half of the companies surveyed said they were extending health benefits for an average of 8 weeks for employees who had to be laid off or furloughed.

black-box-intelligence-logo.gifBlack Box Intelligence launched a Sales and traffic tracking now collects data on sales and traffic trends, 3 times a week (M, W, F). It’s open and free to ALL restaurateurs in the restaurant industry. To participate, send an e-mail [email protected] from your catering company’s email address.

Black Box Intelligence™ (formerly TDn2K) is the leading provider of workforce, guest, consumer and financial performance data and insights for the hospitality industry. The Black Box Intelligence product suite is the industry standard for operators looking to achieve best-in-class performance results. With the largest and most trusted real-world restaurant data set, Black Box Intelligence currently tracks and analyzes over 300 businesses, over 2.8 million employees, over 50,000 restaurant units and $75 billion in annual revenue. Black Box Intelligence is also the producer of the Global Best Practices Conference held annually in Dallas, Texas.