Still Facing Double-Digit Declines, Full Service Restaurants Must Transform To Survive
FSRs tried to pivot to save their businesses by ramping up delivery programs, streamlining their menus, and repurposing their parking lots as temporary drive-thru’s, however, the shift to service their customers off-premises was difficult and costly.
Full service restaurants (FSRs) had their share of troubles to recover from over the years. Restaurants that were still recovering from the Great Recession which ended over ten years ago were now faced with mandated dine-in closures due to the recent COVID pandemic.
Most FSR businesses are on-premises sit down table service restaurants and visits to these FSRs in the April, May, and June quarter, the height of the dine-in closures, were down 47% as compared to the same quarter last year, reports The NPD Group. And, quick service restaurants (QSRs) that operate take-out and drive-thru’s also declined by -17% during the same quarter.
The transition to an off-premise business during dine-in closures have been challenging for FSRs. Only 19% of FSR traffic was for off-premise consumption in February 2020, before COVID. And in June, as dining rooms were reopening, 55% of FSR traffic was for off-premises consumption. FSRs tried to pivot to save their businesses by ramping up delivery programs, streamlining their menus, and repurposing their parking lots as temporary drive-thru’s, however, the shift to service their customers off-premises was difficult and costly.
Major FSR chain customer transactions were already declining by -27% year-over-year in the week ending July 19. “Long before COVID consumers were already favoring quick service restaurants and off-premises dining,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “And the trend has accelerated during the pandemic and will most likely be a behavior that will stick.”
But all is not lost. According to the report, returning consumers still value the on-premise experience. In June, FSR traffic increased 152%, and 69% of that increase was due to the return of dine-in service traffic. The pivot for the U.S. restaurant industry, according to Portalatin, means full service restaurants will need to offer more flexible options, delivering on the on-premises experience and optimizing off-premises services.