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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Covid-19 Will Affect Restaurant Chains Disproportionately in Relation to Level of Service

03/18/2020

It is anticipated that casual dining restaurants will suffer more than QSRs as a result of a cutback in eating out.  The Covid-19 outbreak is progressively favoring eating at home, as evidenced by heavy demand for shelf-stable packaged foods and dairy items including eggs, cheese, milk, and bottled water.

 

Many of the supermarket chains that have introduced in-store dining, have closed their seating areas. Many Starbucks locations are operating only on a take-away basis.  The decline in sales at casual dining restaurants may, however, be offset to a certain extent by home delivery and pick- up. 

Among the fast food chains, those with a high proportion of company operated units will be more affected than companies with a franchise model. Chains with drive-through service will be less affected than in-mall and storefront units such as Subway, Dunkin’ Brands and Chipotle.

 

Because of uncertainty as to the duration of the Covid-19 outbreak, chains and their franchises are delaying capital expenditure. The impact of the decline in in-store revenue will be evident in second quarter financial results and in the monthly indices reported by the National Restaurant Association.

 

Datassential a market research company issued the results of a consumer survey on March 12th,  demonstrating that close to 90 percent of consumers feel safer eating at home, compared to sit-down restaurants, with 60 percent of respondents expressing doubt as to the safety of eating out.  Datassential determined that fear is highest among parents, urbanites, and the affluent suggesting that the casual dining restaurant chains will be most impacted with a prolonged outbreak, at present measured in months by health advisors to the government.  The trend towards home dining will be intensified as economic conditions deteriorate.  Even those unaffected, and with jobs, will be disinclined to spend on restaurant dining.  There is a danger that with resolution of the Covid-19 problem, purchasing patterns may not revert to the status quo.  This pattern was observed after the Great Recession when frugality extended through the mid- to late 2010s.


 
Copyright © 2020 Simon M. Shane