Restaurant sales

Restaurant sales are improving, but it’s a complicated landscape

For the third week in a row, restaurant chains reported improved year-over-year comparable store sales compared to the prior period, according to Black Box Intelligence.

Earnings for the week ending April 19 fell 47.6%, the best result since March 15 and an 11.3% improvement over the prior period.

Over the past two weeks, all segments have grown, the company said. However, this current field is not the same as that of the beginning of March.

While no one knows for sure how many restaurants are closed — and what percentage of those are temporary or permanent — the latest survey data from the National Restaurant Association indicates that about four in 10 locations are closed (in a survey from 6,500 operators), and the industry expects to lose $80 billion in sales by the end of April. The Independent Restaurant Coalition, with the James Beard Foundation, found that 80% of independents were unsure whether their restaurant would survive the crisis. The National Bureau of Economic Research noted that restaurants have a 30% chance of staying open if the crisis lasts four months. About 40% of independent restaurants are closed and the remaining 60% are operating at what the Coalition described as “severely depressed income levels”.

READ MORE: How stimulus checks gave restaurants a boost

So this pool of restaurants benefiting from improved results in recent weeks, all things considered, is quite different from that at the start of COVID-19. It’s a section more capable of pivoting, or just a section choosing that path, and has now capitalized on spending fueled by stimulus checks and better awareness of takeout, delivery and curbside service. of street. As well as a consumer who is a little tired of staying home and making that last jar of peanut butter last.

Data from Black Box showed quick service to be the best performing segment over the period, continuing a COVID-19 trend that has held. The sector posted a 4% decline for the week ending April 19 and is fast approaching flat year-over-year sales growth.

All in all, this is great news for counter service operators. The next step, however, will be a conversation about revenue that will come from the return of temporary store closures to the system. And then address franchisee health for organizations where it applies.

Depending on government assistance, as well as other factors, there will likely be plenty of overleveraged operators when business returns to normal. And how deferred payments are handled is another point. There could be a thinning of some underperforming stores for many restaurant chains, or franchisees selling locations to get out of bad debts. This could mean more company restaurants in the future. It could just mean new franchisees, like Yum! Suggested brands might happen. It’s hard to say for sure right now, but it’s very likely that significant changes will occur. There could also be a chance for medium-term growth, as well-capitalized brands and franchisees take advantage of favorable rental rates, willing landlords and, perhaps, liberated real estate opportunities. There’s a lot on the table after COVID-19.

Gastronomy continues to face serious obstacles. Black Box said this was the only segment with mockup sales below 80%, and there had been very little improvement over the past five weeks. Reopening restaurants, even if capacity is very limited, might be the only thing that could begin to reduce the rate at which fine dining has lost sales, Black Box said.

But at a point raised recently by the Commandant’s Palace in New Orleans, even a 10% drop in monthly intake would sink many high-end operations (operating at 90%). Margins are simply too tight and liquor sales too high to pay staff in full and cover high overhead. This makes the decision to brave the process difficult. This is a variable situation per restaurant, of course. Still, you need to consider the gap between fine dining and quick service in this conversation and how it affects the near future.

There is a significant difference between going from a carrier and delivery only business to a carrier and delivery only business plus dining. It’s almost like the reverse dynamic pre-COVID-19, where delivery was seen as incremental earnings. Now dinner plays that role.

However, for a dining concept with zero to 10% seating, where there is hardly any off-site activity, the question is whether it really offsets the costs. Everything from utilities to employee compensation to product sourcing. At 10%, it might be more profitable to keep the doors closed, as many restaurateurs have chosen to do.

READ MORE: Reopening? Follow this guide step by step

It really depends on the size of the restaurant, the location, the rent situation and what’s going on with the employees – whether or not the operator got a loan to fund some of those bills. If so, and they need to reach the 75% payroll metric to get the loan forgiven, opening with restrictions might be more financially attractive.

One thing that seems bankable, however, when it comes to fine dining, is something Commander’s Palace owner Ti Adelaide Martin noted. “There’s no way in the world we can’t make it more expensive,” she said, “just based on the fact that you’re going to have fewer customers and less demand in the economy.”

As you might expect, year-over-year off-premises model sales are growing at a rapid rate during the pandemic. For fast, offsite services (takeout, drive-thru, delivery and catering) jumped 20% in the week ending April 19. For full-service channels, the number jumped 207% from the same period last year, as many operators bounce off the bottom either because they don’t have programs or they don’t. have very limited. Whether they invested in the avenue or not before COVID-19, it was probably a very small slice of the mix.

Outback’s parent company, Bloomin’ Brands, for example, entered 2020 with 88% of its business inside four walls.

Last week, mid-afternoon and dinner were found to be the best performing day slots based on offset sales. Late night and lunch were the hardest hit, Black Box said.

All 11 regions across the country improved their sales trends from the previous week.

As has been the case for some time, the worst performing regions continue to be those where the largest outbreaks have occurred. California, New England, the Western Region, and New York-New Jersey all reported lower model sales at minus 55%.

Black Box also shared some consumer trends.

Liquor stores have performed well throughout COVID-19 with positive year-over-year sales growth north of 25% for the past six consecutive weeks. The company attributed this, at least in part, to customers’ motivation to replace alcoholic beverages previously consumed in restaurants.

Growth in alcoholic beverage sales at casual, upscale casual and fine dining restaurants has averaged about 98% year-over-year decline over the past four weeks.

Convenience store sales have not deteriorated as quickly as restaurants, Black Box added. But they have fallen steadily over the past four weeks and were down 36%, year-over-year, from the week ending April 19.

And while third-party delivery sales volume has increased every weekday during the COVID-19 crisis, the weekend remains the most popular time to order, with 37% of all sales in the past 30 days. taking place on a Saturday or Sunday.