Full-Service Restaurant Sales to Remain Sluggish This Quarter

With renewed bans on indoor dining and a limited ability to offer outdoor dining in much of the country during the winter months, growth in off-premise restaurant sales due to carry-out, drive-thru and delivery will only provide a partial offset to the decline in on-premise sales, says Fitch Ratings. Therefore, coronavirus’ negative effect on US restaurant sales, especially for full-service operators, will continue for the next several months. Fitch expects sequential sales trends to stabilize around the second quarter as warmer weather returns and vaccinations increase, but renewed restrictions may threaten the trajectory of the recovery.

As the health crisis continues, widely varying restrictions across states and counties have resulted in restaurant location topping the list of the most significant drivers of restaurant performance. Specifically, restaurants in urban locations are underperforming those in suburban locations and restaurants in states that took aggressive lockdown actions such as New York are underperforming operations in less-restrictive states.