Food & Beverage

Restaurants adapt to short, long-term impact of COVID-19

The short-term impacts of COVID-19 have been tremendous on restaurant customer behavior. Luckily, restaurants have adopted many tactics to handle both the short and long-term effects of the pandemic.

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October 9, 2020 by Fast Casual

Dot It is a single-source brand partner specializing in food safety products and print fulfillment solutions for growing brands looking to streamline their supply chain and maintain brand consistency. Dot It's product solutions include labeling and packaging, safety and sanitation supplies, first aid, and print fulfillment. Dot It is the official manufacturer of SecureIt tamper-evident labels.

Out of all the industries, it could be argued restaurants have had to make the biggest adjustments to handle COVID-19, especially fast casuals which often have larger dine-in crowds than QSRs. While many have tried to adjust to this "new normal," others argue we haven't even reached a stable enough point to call anything "normal."

"We cannot yet speak of a 'new normal,'" Don Fox, CEO of Firehouse Subs, said in an email. "The industry is far from reaching a point of stability in terms of customer's use of brands. Their behavior is still heavily influenced by the relatively short-term influences of COVID-19."

The short-term effects

The short-term impacts of COVID-19 have been fairly tremendous on consumer behavior, according to Keri Smith, president of Dot It. For example, customers were already eating out less at the beginning of 2020, but when the pandemic hit, money spent on food eaten away from home dropped from $67.6 billion to $54 billion.

Other short-term effects include:

• Increase in average order size due to desire for more value family meals.
• Increase in at-home alcohol consumption with 16% adults saying they were drinking more.
• Consumers stockpiled groceries, with grocery sales increasing 8% in April.
• Increased reliance on drive-thru, curbside, order ahead, delivery and grocery pickup/delivery.
• More budget-conscious due to economic hardship and unemployment rates which skyrocketed to 14.7% in April.

"COVID-19 accelerated the consumer's move to utilizing restaurants for off-premise consumption," Fox said. "We were already on a seven-year trend of declining sales in our dining rooms, and as of March 14, we went to 0% due to the proactive stoppage of in-restaurant dining. We are now building back our dining room business from a starting point of zero."

The long-term effects

It is difficult to predict the long-term effects of the pandemic on consumer behavior, however many restaurants are doing just that and working to pivot their operations and marketing to cater to the post-pandemic consumer. Smith comments that it is widely agreed that consumers will continue to have much higher expectations for cleanliness and sanitation.

Other presumed long-term effects include:

• Continued reliance on online ordering, delivery, curbside pickup and drive-thru.
• Increased expectation for food safety, including tamper-evident packaging and labeling solutions.
• Increased desire for grab-and-go and pre-packaged goods.
• The normalization of touchless kiosks and ordering systems.

How restaurants can respond

Restaurants have not been left helpless in the wake of this pandemic. They have found ways to adapt and to survive.

In the short term, most restaurants focused on adapting to new consumer behaviors, Smith said. For example, around 42% added delivery, according to research by finance services company Rewards Network. In the long term, restaurants have been developing fresh tactics to adjust to the pandemic including:

• Tamper-proof packaging and labeling solutions.
• Communicating health and sanitation practices.
• Social distancing signage and print for in-house operations.
• Adjusting dine-in configurations.
• To-go specials for families.

On a deeper level, restaurants can also adjust to these changes by having a stable and reliable network of supply chain partners.

The most effective way restaurants can tackle these changes head on is by having trustworthy supply chain partners, Smith said. These partners need to have both sufficient inventory and a commitment to shared success.

Ultimately, restaurants that have made adjustments now will also be more prepared for the future.

"Our ability to predict the future is better than what it was back in late March and April, but it is still far from certain where consumer behavior is going to settle. Fortunately, we had made significant improvements in our off-premise experience during the past two to three years, and we were in a relatively great position when guests were inclined to use us in ways that they may not have considered in the past," Fox said. "Of course, during the past seven months, we have continued to improve upon our execution, and continue to seek innovation."