Uncertainty Surrounds How and When to Reopen US Economy

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Chicago-headquartered Technomic, a global foodservice research and market forecasting company, has issued an update on how the novel coronavirus (SARS-CoV-2) is impacting the overwhelmingly shuttered restaurant industry across the United States and prospects for resuming on-premise dining in the near to mid-term future.

With the publication of federal guidelines, some states have received mixed signals from officials on the proper timing of reopening. There is an increasingly vocal segment of the American population pushing the reopening for businesses, and a number of states are moving in that direction.

Health Projections on Timing Pandemic are Work in Progress

There is concern that reported plateaus regarding coronavirus infection in the USA reflect a peak in the number of tests being provided as opposed to an actual peak in new cases. These concerns are growing due to the discovery of previously unknown cases that occurred weeks or months before the formally diagnosed cases appeared in the marketplace.

Consumers and Operators Won’t be Rushing Back
Despite their expressed excitement and fondness for restaurants and the experience they provide, consumers report a growing reluctance to quickly return to normal restaurant behaviors. This is likely due to both ongoing concerns for safety as well as the massive amount of job loss currently being experienced in the nation. For these reasons, Technomic is currently turning it attention to more detailed insights around off-premise services and safety. Restaurateurs are also showing drops in optimism about the pace of reopening. Despite potentially experiencing the bottom of the sales drop, many operators are reporting that they do not expect a quick recovery and expect a prolonged ramp-up period.

Off-Premise Trend to Continue into Future
The Covid-19 health crisis has likely sped up the adoption curve for delivery across the industry. Prior to the pandemic, many operators were experiencing a steady climb in the share of orders through digital channels. Consumers are now getting a crash course in using digital platforms for restaurant transactions and usage has proliferated. From a restaurant owner’s perspective, tensions are rising between them and some third-party delivery players during this period, which may result in some operators considering moving toward self-delivery, as off-premise business grows.

Impact Outside Major Metropolitan Areas

This Disruption Index factors local infection rates, social distancing practices/guidelines, mobile data, population density, disease states that increase risks associated with Covid-19 and other lifestyle factors into the score. Counties with heavier shading indicate a higher disruption score.

Beyond the obvious urban hot spots, as well as those in California and the Northeast, areas that could experience a prolonged impact are emerging in more rural locations and smaller states. Counties in Utah, Virginia, Pennsylvania and Maryland are all showing higher than average rises in the Disruption Index and may be places of future concern.

*Source: | Data updated April 24, 2020

F&B Sales Down Over Significantly

The 16% of operators reporting a greater than 70% decrease in food and beverage (F&B) sales is driven largely by beyond restaurant operators (37%) – some of which have had to stop their foodservice business entirely.

Operators Promote Comfort and Convenience

In an effort to better support the consumer in hectic times, operators are increasingly promoting comfort foods and low-prep options like family-style and ready-to-heat meals. The apparent decrease in the success of these promotions could be due to an increase in competitive offerings and promotions in the marketplace, which highlights a need for operators to stay creative by considering new ways to add value for guests.

Job Insecurity Impacts Spending

Fifty-six percent (56%) of consumers indicate that their employment situation has not changed. However, about a fifth (19%) anticipate that their job will be impacted in the future. Like those who have already experienced employment hardships, consumers expecting a negative impact are also likely to cut back on current spending.

Coupons and Promotions Drive Sales

Coupons and promotions are especially popular among consumers with kids under the age of 18 (55%) and customers aged 25-34 (54%).

Most consumers prefer that the third-party delivery fee goes directly to the driver, likely as personal financial concerns put enhanced focus on employee welfare.