bannerFranchise News

Dine-in Traffic Is Improving... But Will it Last?

A new report from The NPD Group finds the rate of restaurant traffic and sales have increased since earlier in the summer.

A new report from The NPD Group finds that the decline in restaurant traffic and spending in August eased a bit from June and July, which were down by 10 percent and 9 percent, respectively, compared to last year. This change likely reflects an increasing comfort in dining out among consumers across the country.

According to the report, slightly less than 25 percent of restaurants were under restrictions for on-premise dining in August, and on-premise visits have improved every month since April. The research also shows increased dine-in visits may have resulted in slightly decreased digital sales, which generated 17 percent of occasions in August, compared to 20 percent of occasions in April.

Although a few major cities have continued to ban indoor dining, restrictions have gradually lifted throughout the country. As jurisdictions increase their capacities, on-premise traffic should continue to show improvement thanks to consumers' pent-up demand for dining out. A survey conducted earlier this month by the National Restaurant Association, for example, shows 47 percent of American consumers are not dining out as frequently as they would like.

To prepare for this increased traffic, franchisors are looking for ways to better accommodate their restaurants for the post-COVID consumer, including expanding outdoor seating. For example, at the recently announced Burger King post-COVID restaurant remodel, guests who want to dine in can access the dining room and covered outdoor seating situated above a drive-thru entrance. Unfortunately, as the colder months creep closer and experts warn a second wave could soon emerge, these on-premise traffic improvements may not be enough. 

Additional ways to entice consumers toward dine-in could be offering adult-only parties — which represented 63 percent of all restaurant occasions in August, according to NPD. Parties with kids represented 37 percent of occasions by comparison. Hosting private dining groups, rather than multiple socially distanced parties, could also ease anxiety following the CDC's recent finding that dining out increases the risk of COVID-19 exposure more than other activities.

Try as franchisors might to promote dine-in service, there is no doubt that consumers continue to prefer off-premise channels. Research from Technomic emailed to Restaurant Dive shows that 68 percent of customers have visited the drive-thru; 63 percent have ordered takeout; 48 percent have ordered curbside pickup; 45 percent have ordered third-party delivery; and 45 percent have ordered direct delivery. Comparatively, 41 percent of consumers say they have dined indoors and 38 percent said they have eaten at a restaurant outdoors.

Of course, the preference for off-premise options isn’t the worst thing that could happen to the foodservice industry. Yum! Brands, one of the nation’s largest franchisors, saw a $3.5 billion in digital sales in Q2, a 40 percent year-over-year boom that equated to a $1 billion step-up from 2019 levels. More consumers have downloaded apps and ordered digitally for delivery and curbside pickup during the pandemic — delivery spend is up 173 percent year-over-year as of July 30, according to Cardlytics' latest State of Spend Report

While pivoting to off-premise channels has been many restaurant franchisors’ primary strategy for survival, it still poses several challenges, including high commission fees for third-party delivery

As winter approaches and infection rates remain high, franchisors will need to be smart in balancing a healthy promotion of limited capacity, on-premise options and an optimized, off-premise strategy.