US Restaurant Transaction Declines May Have Hit Bottom, Says NPD

LinkedIn Pinterest Tumblr

Restaurant customer transactions in the United States declined by 41% during the week ending April 5 compared to year ago, following a 42% decline in the prior week ending March 29. This could well indicate a “bottoming out” of negative economic impact on the industry related to the novel corona pandemic shock, according to a report from the NPD Group.

The apparent “bottom” is likely due to the full effect of on-premise dining closures throughout the country and the ability of restaurant operators to convert to off-premise modes, like carry-out, delivery, and drive-thru.

“The 41% decline in restaurant transactions is similar to last week and may indicate a bottom. We also need to be aware that further erosion could occur if consumers’ economic situations worsen,” said David Portalatin, food industry advisors to the Port Washington, New York-headquartered NPD Group. “To date, many consumers have continued to buy restaurant meals through delivery, takeout, and drive-thru to the degree allowed by the restrictive environment; but with rising unemployment, payroll reductions, and temporary furloughs, consumers may begin to think differently about their food budgets overall.”

Quick service restaurants, which historically have more off-premise business than full service restaurants, experienced lower transaction declines (-38%) in the week than total industry, according to NPD’s CREST® Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 70 quick service, fast casual, midscale, and casual dining chains.  Full service restaurants, which were already challenged prior to the Covid-19 outbreak, experienced transaction declines of 79% in the week ending April 5 compared to same week year ago.