Right now, Americans craving restaurant food but unable to visit their favorite local haunts have been resorting to delivery.
“The sector of restaurants that are booming right now are the ones that people traditionally think of getting delivery to their home,” says Noah Shaffer, senior director of asset management for Confidant Asset Management. “So, it’s pizza, and pizza sales are up now. That’s probably going to decline as people start figuring out other food options and get tired of eating pizza for five days in a row.”
Food apps, such as DoorDash, Uber Eats and Grubhub, are also doing well in this new world.
“What is interesting is that the apps are getting overloaded with new requests from restaurants coming in, and they’re waiving their fees,” Shaffer says. “The problem with that is it doesn’t necessarily help the [new] retailers because they just get lost in the shuffle. So, unless they had a strong presence before with high ratings and strong customer loyalty, they’re not going to succeed on those types of apps. There are just too many people that are moving into that space.”
Restaurants with a long history and strong ratings have an advantage. “They’ll just show up higher in the rankings,” Shaffer says. “The new people trying to come in and create a presence there won’t get the attention that they need.”
While the groups who thrive will be the ones who have built a strong presence on apps and have succeeded over time, restaurants with a drive-through are in even better shape. If they have two drive-throughs, it’s even better. For instance, Shaffer says Starbucks is also still doing strong volume through its drive-throughs.
“So, a Chick-Fil-A with a double drive-through can have 40 people go through in 10 minutes, is going to stay busy,” Shaffer says. “But if you go to a Taco Bell drive-through and there are 40 people, and it takes 40 minutes, that’s a lot of lost sales right now.”
On the retail side, it’s little surprise that Shaffer points to companies that provide items for daily needs as the ones that will perform the best.
“I think people are ordering a lot more online,” Shaffer says. “Personally, I’ve started ordering a lot of recurring items online.”
Once people begin in-person shopping again, both retail and restaurants could see a revival of sorts. “I think once this is over, and depending on how long it goes in, most people are still starving to get back to bars and restaurants with their friends,” Shaffer says. “They still want to go back to the mall to try on their Lululemon [Athletica] pants in person and not order them online.”