The world is slowly returning to the pre-pandemic color and bustle. Restaurants – dine-ins, QSRs etc. – and bars, and other businesses are reopening across the states. Although, for many businesses, the road to recovery might be long and harsh.
When the pandemic first hit, just like other industries, the restaurant industry took a hard hit too.
Many independent restaurants and dine-in restaurants were forced to shut down during the pandemic as they relied on dinning in for revenue. Some will likely stay shut down while others – quick-service restaurants – are forced to switch to delivery or takeout.
This pandemic may have changed the landscape for many restaurant businesses forever. It is a perfect demonstration of the quickly-changing consumer behavior and the pace at which the restaurant industry had to adapt. While most dine-ins experienced losses, quick service restaurants (QSRs) were quick to recover and even profit.
Let’s take a look at some industry stats for a clear picture, starting with the quick serves.
Stats for Quick Service Restaurants (QSRs) & Dine-ins During Lock-down
Let’s start with the quick service restaurants (QSRs) and the impact coronavirus has had on them.
The data mentioned below offers an insight into some quick-service restaurants that took a hit but recovered. QSRs like McDonald’s and Burger King have reportedly recovered faster and many quick-serves are experiencing increased sales. Reason being, customers are ordering online via food ordering apps. Let’s see the stats.
- Domino’s Pizza US – Same-store sales went up by 16% as more people are ordering through delivery. They announced they would recruit an extra 10,000 staff to fulfill the demand. Pizza outlets are faring better than most fast-food chains.
- Burger king – Sales in the same store were mostly flat trends which is progress from alarming drops that began in mid-March when self-isolation and dining room closures pressed restaurants nationwide.
- Popeyes – despite the fact that the parent company has suffered a 25% drop in the revenue, the fried chicken chain has experienced a 24.8% sales growth.
- Starbucks – Not only the shares fell over 4.5% with as much as $3.2 billion dips in revenue in its third-quarter they shut down their dine-in service at the US stores in March.
- McDonald’s announced shutting down of 200 locations in the Walmart stores.
- Dunkin’ is also closing down as many as 800 of its locations.
- Restaurant Brands International – The parent company of Burger King, Popeyes, and Tim Hortons – would also be closing several hundred locations across the three brands.
Let’s walk through some recent dine-in stats now
- With lockdown and social distancing in practice, fewer people are dining out, causing most restaurants to hit their lowest, experiencing a 2-6% dip in sales within the first quarter of the year.
- According to research by the National Restaurant Association, more than 3 million jobs and as many as $25 billion sales in the restaurant industry were lost within the first 22 days of March.
- Independent restaurants serve a category that is at heightened risk of shutdown than any other category in the future. In June, the Independent Restaurant Coalition added: “ without direct aid, 85% of independents could shut down, which would be a crushing blow to the industry.
- Off-premises sales increased nearly four times faster than dine-in business in the lockdown.
- And 75% of service restaurant owners admit their eateries are unlikely to generate a profit in the next six months, according to the Association.
Many dine-ins and independent restaurants have closed their doors and some are barely staying afloat as their revenue depends on people dining out.
Most quick-service restaurants (QSRs) were much less impacted because they already had pre-pandemic delivery systems – a proprietary app or a third party delivery service – that became their saving grace.
So what does this mean for online food delivery businesses? Let’s take a look at some stats!
Online Food Delivery Stats
Food delivery Services like Doordash or GrubHub are likely to benefit!
- A survey by Technomic revealed that 86% of consumers are using third-party delivery services at least once per month.
- Based on data from Statista, online food delivery revenue in the US alone is predicted to hit $26.5 billion in 2020.
- A Business Insider report disclosed that orders placed through smartphone apps will likely add up to $38 billion value and account for about 11 percent of aggregate quick-service restaurant sales by 2020.
- DoorDash has beaten UberEats, GrubHub, and other meal delivery chains to the top, at a value of $16 billion.
- The recent data from eMarketer shows that food delivery apps like Postmates, DoorDash, and GrubHub experienced a 30 – 60 % increase in downloads since the start of 2020.
Do you see the upward trajectory for online food ordering apps? Most customers resorted to online food delivery during the lock down causing a meteoric rise in orders.
And here’s why.
Because Customers Prefer Online Food Ordering i.e Mobile Ordering Apps
It’s true. The number of smartphone users in the world is 3.5 Billion in 2020. And the customers who are placing orders online are using their mobile devices to do it. So relying solely on a website just won’t cut it!
This is to say, no one wants to go through a lengthy online food-ordering process, lest they lose their appetite midway. People are less eager to tap on a browser in their mobile devices to type in to open a website and order their food online.
As someone who really loves Domino’s pizza, I absolutely adore the fact that I have the option to get it delivered to my place – using the app or a third party delivery app offering discounts – on days I cannot dine out, especially during a pandemic. I love that I don’t have to dial up a number to place an order. And like most people I prefer a mobile app to place my order over a website portal for ordering my food.
Because most of us just want our food, Karen, that too in a very convenient way i.e an app!
Therefore, even with a website, your quick-service restaurants (QSRs) needs to have a mobile-friendly app. A stand-alone food order app alongside the food pick-up service you are already offering will add to the convenience. Your goal is to make it easy for your customers by allowing them to either pick up their food from a designated line, on the curbside of a car park or simply place an order using an app.
Or You Could Team up with Third-party Delivery Services
If the customers cannot come to the food, you take food to the customers. Provided you are not able to have a proprietary mobile ordering app for your quick-serve, you can always partner up with a food delivery service instead of losing a valuable customer. Albeit, this method has a downside where profits are concerned, this model will save your quick-serve business not only the pains of hiring drivers but also managing the hectic process. The market is filled with great options to choose from. There are the prominent ones such as UberEATS, Postmates, and Grubhub and there are plethora of other food delivery businesses to choose from. The world is your oyster.
Here are Some Quick-serves that Changed Strategy to Cope with Coronavirus
From Dunkin’ Brands to Grubhub, many quick-service restaurants (QSRs) are tapping into mobile innovations to help diners make the best use of their mobile devices to order meals amid the restaurant apocalypse.
Here are a few instances of fast-food businesses serving convenience:
It’s an awesome example of how one quick-serve has succeeded in making a switch from din-in to delivery or drive-thru.
They overhauled their advertising to get consumers to order through the drive-thru, its mobile app, or via delivery using partners such as DoorDash, Uber Eats, and Grubhub.
It’s true Starbuck is the majority’s first love when it comes to coffee. Starbucks closed dine-in service at its US stores in March. Customers are being encouraged to order with a drive-thru, delivery, and other pickup options. Starbucks has partnered with Grubhub for nationwide delivery.
3. Taco Bell
Taco Bell – owned by Yum – has also partnered with Grubhub for nationwide delivery.
4. Burger King
Their customers are coming back through the drive-thru lanes, BK app, and delivery services.
For orders placed via their app, the fast-food chain is giving out two free kids meals.
So how does it profit Burger King? While free meals are a good bargain for children, Burger King derives considerable marketing value from this deal. Well, this stimulates downloads of their company application.
Two kids’ meals typically cost $10, but for Burger King, the lifelong payoff for app downloads is likely even higher. This is a win-win.
Chipotle invested in their app and offered free delivery throughout March and April, winning them increased digital sales in March solo.
Chris Brandt, Chipotle CMO, went on to say that Chipotle used its Customer Relationship Management (CRM) program to convert frequent customers to delivery customers incorporating targeted social media ads as well as email marketing.
The Case Post-Pandemic: Food & Online Food Delivery will Always be a Need!
Even after dine-ins have opened, industry experts are of the view that many customers will continue to rely on food delivery applications such as Postmates, Grubhub, DoorDash, and Seamless for fast-food deliveries. In many restaurant establishments, the delivery has gone from becoming a secondary revenue source to being a primary one.
Domino’s, the giant pizza delivery chain, experienced a seven percent surge in sales in April. Other QSR brands like Dunkin, Chipotle, and McDonald’s are also scaling their delivery programs and partners, and polishing their mobile services. Meanwhile, many quick-service restaurants are still in the early stages of their own delivery models – proprietary mobile ordering app – and therefore, are dependent on third-party services to sustaining their sales, but it comes at a cost. A high cost at that.
As for the third-party delivery services, they are definitely here to stay and benefit from quick service restaurants (QSRs) fully adopting and availing their offerings.