Dining Off-Premises Looks Like It’s Here to Stay

Consumers are increasing their off-premises dinner purchases, according to the latest weekly survey from the National Restaurant Association. In the early spring 2021 period, Gen Xers and Baby Boomers have increased their weekly off-premises dinner purchases by 8% and 7%, respectively.

Here’s a closer look at the recent restaurant survey stats, and what they might mean for the industry’s recovery from the COVID-19 pandemic:

Off-Premises Dining Took Share from Sit-Down Eating During Pandemic

Pre-pandemic, an average of 59% of adults each week went out for dinner at a sit-down restaurant or fast-food establishment, reported MarketScreener (March 19). Full Story

Gen Z adults (72%) and Millennials (65%) were the most likely to go out for dinner in the weeks leading up to the pandemic. However, on-premises dinner patronage fell sharply during the lockdown period, with average weekly usage plunging by more than 40 percentage points.

Prior to the pandemic, around 58% of adults purchased takeout or delivery for dinner, with Millennials and Gen Z being most likely to do so. During lockdown, an increasing proportion of consumers started using takeout and delivery for dinner. Overall, the largest gains in weekly off-premises dinner usage were seen among Gen X and Baby Boomers.

As for the lunch daypart, the survey displayed similar results, in which consumer activity remained below pre-pandemic levels for on-premises and showed growth for off-premises. On-premises breakfast remains below-pre-pandemic, while consumer usage is similar to pre-pandemic for off-premises for that daypart.

Meanwhile, Jack in The Box reported its best quarter in nearly 30 years in February, which can largely be attributed to off-premises dining and digital sales that doubled in the first quarter on a year-over-year basis to account for nearly 7% of all sales, the chain’s CEO said, according to Yahoo Finance (March 22). Full Story

Indoor Dining Restrictions Ease, Sit-Down Eating Trending Up

As the weather improved mid-2020, more people started going out for dinner with an average of 35% of adults each week going out for dinner during the summer/fall period. After a slight dip during the winter restrictions period, on-premises dinner activity trended higher as spring approached.

In addition to the weather, indoor dining restrictions have eased in several states. Diner growth has shown improvement in recent weeks, according to data from OpenTable. OpenTable restaurant diner growth year-over-year data in the U.S. was -29.66% as of Mar 17, 2021. For comparison, it was at -54.81 on Feb. 17, 2021.

Foodservice May Need a Hybrid Model Going Forward

Though on-premises dining is coming back into favor, off-premises is still growing, which means that restaurants will likely need to adopt a hybrid model moving forward.

Restaurant industry experts believe that drive-thru ordering will stay above pre-pandemic levels for the foreseeable future, reported CNBC (March 12). Full Story

One market analyst says consumers have changed their ordering habits for good over the past year and now demand convenience and safety. Food Institute Focus

A Look at Pizza Chains’ Post-Pandemic Plans

Pizza has been in high demand throughout the COVID-19 pandemic. But as indoor dining resumes and competition between food pick-up and delivery services heats up, how will major pizza chains maintain sales momentum?

Major chains like Domino’s, Papa John’s, and Pizza Hut are making menu tweaks of late, which Yahoo Finance recently suggested may be igniting a “pizza war.”

Here’s a closer look at how major pizza chains plan to thrive post-pandemic.

The Pandemic Pie

In 2020, pizza restaurants in the U.S. generated approximately $46.24 billion in sales, according to a recent Statista report. The top performing chain was Domino’s, followed by Pizza Hut, Little Caesars and Papa John’s.

At the outset of the pandemic, pizza sales spiked and top chains recruited thousands of new employees. In the months that followed, demand remained high. But what sales strategies are big pizza chains banking on as consumer dining options diversify in the foreseeable future, as more and more consumers get vaccinated against COVID-19?

Catering to Trends, Customer Demand

One sales-boosting strategy is the development and promotion of new menu items that play off popular trends.

In November 2020, for example, Pizza Hut launched a line of plant-based, alternative-protein pizzas as part of a broader, sustainability-driven collaboration with Beyond Meat. The company also released a Detroit-Style pizza in January, following a year of development and testing iterations in the Midwest.

In February, Little Caesars reintroduced its Pretzel Crust Pizza in the U.S. The pie was introduced six years ago and reinstated due to outspoken customers — some of whom inspired a Change.org petition — calling for the pizza’s return.

Papa John’s added stuffed-crust pizza to its menu in December 2020. Buying patterns revealed that customers who purchase stuffed-crust tend to order more frequently and have higher average ticket sales, reported Yahoo Finance (Mar. 10). Full Story

The company plans to continue investing in stuffed-crust advertisements to raise awareness in the year ahead.

Data-Driven Decisions

Pizza chains are increasing their use of internal data to develop new products and direct overall growth strategies.

Domino’s in particular has capitalized on this approach, mining its database of 85 million users for consumer insights, reported PMQ (Jan. 2020). Full Story

This led the company to focus on carryout service, which represented 45% of its U.S. sales in 2019. The same year, 65% of Domino’s transactions were digital.

Expanding data insights and increasing digital activity helped Domino’s pivot quickly in response to the pandemic. In the months ahead, pizza restaurants could expand their focus on internal data analysis to meet the evolving needs — and predict future demands — of specific customer groups. Food Institute Focus

Restaurant Recovery: How Chains are Innovating

During the pandemic, restaurants have had to find new ways of winning over consumers. Those who are innovating seem to be recovering well from pandemic-related losses.

“300 million people wake up hungry each day, and they want to go eat somewhere. They’re gonna eat somewhere,” said Dan Rowe, CEO of Fransmart in an interview with The Food Institute. “So, the restaurants that have fresh legs right now are thriving.” Rowe also noted that it is important for restaurants to make customers feel safe.

Below are a few examples of chains switching things up to stay profitable:

Taco Bell

Taco Bell’s digital sales approached 20% of total sales in 2020, generating about $1 billion. The company says it has a clear pathway to deploy 1,000 new stores, with a heavy reliance on franchise operations, reported Forbes (March 23). Full Story

“The last six months have really shown us the power of our franchisees and their entrepreneurial spirit in this business,” said Taco Bell President and Global COO Mike Grams. “We’re on an explosive growth trajectory fueled by our franchisees playing a much bigger role.”

The company has also invested in its digital capabilities. Its new Go Mobile model is designed specifically for digitally-focused consumers, including a dedicated digital-order-ahead drive-thru lane and smart kitchen technology.

Leaning into off-premises dining, the chain’s next 1,000 restaurants will be modernized with features such as order-taking bellhops at the drive-thru and kiosk-only ordering, reported Business Insider (March 23). Full Story

Additionally, Taco Bell has been luring in consumers during the pandemic with new menu items like the Quesalupa.

Popeyes

Popeyes has continued to profit off its chicken sandwich during the pandemic. Edison Trends, which analyzed the online transactions of major chains from Jan. 2019 to Dec. 2020, found that Popeyes was Chick-fil-A’s closest competitor in terms of chicken sandwich sales.

The chain has also focused on other areas to drive sales. The company recently revealed new quality and sustainability commitments as part of the Restaurant Brands for Good sustainability plan. The commitments are part of the brand’s work to serve responsibly sourced, high quality food while continuously working to reduce its environmental footprint, which is a big selling point with environmentally-conscious consumers.

Popeyes is also expanding internationally. It is opening hundreds of locations in Mexico as part of a deal with investors and business developers at JK Capital. Currently, the company is only active in Guadalajara, with locations in Mexico City slated to open in 2021. The chain will also open restaurants across India, Bangladesh, Nepal and Bhutan in the coming years.

Starbucks

Like Taco Bell, Starbucks is placing new emphasis on the drive-thru. The chain is making plans to upgrade its drive-thru efficiency by implementing multiple process changes, including having employees walk drive-thru lines with handheld point-of-sale devices to take orders, reported FOX Business (Jan. 28). Full Story

Drive-thru sales at Starbucks have increased by more than 10% since the pandemic began, according to the company.

Another way the company has grown over the last few months is by adding more plant-based options to the menu. At the beginning of March, Starbucks cafes nationwide began carrying Oatly’s nondairy substitute. The oat milk was incorporated into Starbucks’ spring menu through the new Iced Brown Sugar Oatmilk Shaken Espresso. Going even further, the chain later added the Chickpea Bites & Avocado Protein Box as the latest permanent addition to its vegetarian menu. Food Institute Focus

Executives on the Move:

• Wendy’s promoted Liliana Esposito to chief corporate affairs and sustainability officer. Full Story
• Church’s Chicken and Church’s Texas Chicken named Gregg Gallaher VP, Americas and Cinthia Nehring-Salm director, international marketing. Full Story
• McDonald’s named Desiree Ralls-Morrison as general counsel and corporate secretary. Full Story
• Red Robin Gourmet Burger named Darla Morse EVP and chief information officer. Full Story
• Shake Shack will search for a new CEO to replace Tara Comonte who is leaving to pursue an opportunity outside of the restaurant industry. Full Story
• Restaurant Brands International’s Chief Marketing Officer Fernando Machado has resigned and is leaving for an undisclosed role elsewhere, reported Business Insider (April 2). Full Story
• Jack in the Box will "separate" from CIO Andrew Martin effective May 7, reported MarketWatch (April 14). Full Story

Store News:

• Buffalo Wild Wings will launch three new menu items this spring: including a Smashed Hatch Burger, Truffalo sauce, and Buffalo Chicken Tots, reported Eat This, Not That (March 14). Full Story
• Chick-fil-A is launching a fleet of food trucks across 30 cities in Indiana and Kentucky, reported eatthis.com (March 17). Full Story
• Torchy’s Tacos, a Texas-based chain, is currently pursuing an IPO that could raise nearly $300 million, reported My San Antonio (March 17). Full Story
• Naf Naf Grill, the fast-casual Middle Eastern restaurant concept, and an investor group have acquired the entire minority ownership in the company previously held by affiliates of Roark Capital. Full Story
• Texas Roadhouse founder Kent Taylor died by suicide battling symptoms following a case of COVID-19. Taylor founded the restaurant chain in 1993 and most recently was its CEO and chairman. During the pandemic, he donated his entire compensation to support the company’s front-line workers, reported Seattle Times (March 22). Full Story
• Burger King announced a cross-Canada rollout of the Impossible Whopper on April 12. Full Story
• Taco Bell's digital sales mix approached 20% of total sales in 2020, generating about $1 billion. The company says it has a clear pathway to deploy 1,000 new stores, with a heavy reliance on franchise operations, reported Forbes (March 23). Full Story
• Starbucks will take a closer look at how its coffee is grown as part of the company’s carbon reduction efforts. The coffee giant is testing programs with smallholder farmers who use an app to glean details about the health of soil to better target fertilizer use, reported Fast Company (March 22). Full Story
• Yum Brands is buying Israel-based startup Tictuk Technologies Ltd., whose software helps customers order food to go via text and social-media apps – a strategy executives hope will fuel sales as people shift away from fast food and return to full-service restaurants, reported The Wall Street Journal (March 24). Full Story
• Chipotle Mexican Grill will continue its expansion into Canada with a new restaurant in Surrey, British Columbia, representing its first new Canadian location since October 2018. Additionally, the company has plans for seven new stores in the country, including the first Chipotlane restaurant in the country. Full Story
• Meanwhile, Chipotle Mexican Grill invested in Nuro, a leader in autonomous delivery, as part of their Series C funding round. This is the company’s first significant investment in a third-party technology company since CEO Brian Niccol arrived in 2018. Full Story
• Brinker International's first virtual brand, It's Just Wings, partnered with Google on a new pickup option. Customers can now order pickup directly on Google Search and Google Maps by searching "It's Just Wings near me.” Full Story
• Delight Restaurant Group will acquire 54 Wendy’s restaurants in the Raleigh metropolitan area. As part of the transaction, Delight plans to build several new restaurants in the area and remodel certain acquired restaurants in Wendy’s new Image Activation format. Full Story
• Pokeworks named Michael Walters COO, Steve Heeley chief marketing officer, and Larry Sidoti chief development officer. Full Story
• Flynn Restaurant Group will acquire 937 Pizza Hut and 194 Wendy's restaurants from NPC International. In total, Flynn will now operate about 2,355 restaurants, with other banners including Applebee's, Panera Bread, Taco Bell, and Arby's, reported AL.com (March 25). Full Story
• Saladworks signed a deal with Ghost Kitchen Brands to double its footprint across the U.S. and Canada. Many of these new kitchens will live inside Walmart stores offering some seating, and all locations included in the deal will offer carry-out and third-party delivery. Full Story
• Pizza Hut is launching The Hut Lane, a digital-first carryout option. The service can be accessed through the Pizza Hut app and pizzahut.com and is also available for those placing orders over the phone. Upon arrival, customers can simply pull up to the dedicated window, grab their order and go. Full Story
• Restaurant booking and relationship-management company Tock is being acquired by Squarespace in a cash-and-stock deal worth more than $400 million. Full Story
• Blaze Pizza accelerated its franchise development efforts in the first quarter of 2021, signing agreements to develop 16 new restaurants in Texas, Florida and Tennessee. Full Story
• McDonald's plans to close hundreds of locations positioned within Walmart stores. At the peak of the 30-year relationship between the companies, roughly 1,000 McDonald's restaurants were opened within Walmart stores, but only 150 will remain following the next wave of closures. Some Subway franchisees report closures, as well, reported The Wall Street Journal (April 9). Full Story
• Chicago-style pizza chain Lou Malnati's is exploring a sale which could reach as much as $700 million. The company operates nearly 70 locations in four states, as well as a mail-order business, reported MarketWatch (April 9). Full Story
• TGI Fridays is implementing new air purifying systems for safer indoor dining nationwide. The company says the treatment system neutralizes 99.9% of COVID-19 particles. Full Story
• Burger King has made the Impossible Whopper available at all of its Canadian locations. Full Story

California Logjam Finally Easing

A persistent kink in the global supply chain is getting straightened out – slowly, but relatively surely.

The backlog at southern California ports appears to finally be easing, even as imports continue to flood into the U.S. What had been a lingering issue in recent months may now be approaching its end.

As recently as late March, West Coast ports like those in Los Angeles and Long Beach, California, had caused major supply chain disruptions. The two California ports – among the busiest in the world — were clogged at length from an inventory restocking drive that began late last year. The California ports handled 97.1% more container imports in March compared to the year-ago period, and 65.1% more than March 2019, reported The Wall Street Journal (April 14). Full Story

Signs of Hope

“We are making progress,” Port of Los Angeles executive director Gene Seroka told The Wall Street Journal. “Today we have half the number of anchorage ships that we reported at the peak in February.”

The shipping traffic jam, of course, has been part of a larger gridlock in supply chains around the globe caused by disruptions from the COVID-19 pandemic.

The ports of Los Angeles and Long Beach dealt with their busiest March on record, handling 898,287 container imports. The port of Los Angeles is on pace to have the best fiscal year in history for any port in the Western Hemisphere, reported presstelegram.com (April 14). Full Story

Businesses have been restocking inventories that were depleted earlier in the pandemic. Trade data group Panjiva said Tuesday that U.S. seaborne imports of containerized freight surpassed 3 million TEUs (or 20-foot equivalent units) last month.

The global ripple effects are many, and the supply chain pain has been far-reaching. In February, for example, Hershey CEO Michelle Buck noted that her company has seen freight inflation become an increasing issue. And, more recently, trucking companies have been boosting pay in order to hire drivers as consumer demand rises. Knight-Swift Transportation Holdings Inc., the largest trucking company in North America, recently increased pay for certified drivers by 40%, reported The Wall Street Journal (April 14). Full Story

Issues at Play

The heavy flow that began in July, Seroka told reporters, is due in large part to a pandemic-related online retail spending surge, as consumers consistently purchased items they could enjoy at home (golf equipment, for example, according to Seroka).

And, as a result, the waiting time to load containers on trains out of Los Angeles reached 11 days this week, up from a normal yearly average of around two days, port officials said. Seroka said that the rapid succession of vessel calls, poor weather across the country, plus a one-way trade spike make it tough to get railcars back to Los Angeles quickly.

The port expects box volumes to rise 28% from last year in April and 45% in May. Liner operators say there simply isn’t enough capacity in the water to handle the demand. The backlogs have caused many retailers to wait for weeks for goods stuck on ships at sea.

However, Rolf Habben Jansen, the chief executive of container line Hapag Lloyd AG, told The Wall Street Journal that he expects the bottlenecks to ease in the third quarter. Food Institute Focus

Restaurant industry comparable sales increased 1.8% in March 2021 when compared to March 2019 as the industry passed over the first month of the pandemic in 2020, according to Black Box Intelligence. Same-store sales skyrocketed 62.3% over March 2020, when closures and stay-at-home orders became more common. Full Story

Meanwhile, restaurant industry experts believe that drive-thru ordering will stay above pre-pandemic levels for the foreseeable future. One market analyst says consumers have changed their ordering habits for good over the past year and now demand convenience, cleanliness, and safety, reported CNBC (March 12). Full Story