Data Quantifies Cratering Restaurant Traffic
While it’s probably obvious that restaurant traffic is down as state and federal mandates require that the majority of U.S. restaurant dining rooms close, traffic and sales data show the full breadth of the damage so far.
Mirus, a data insights firm that draws data from point-of-sale systems for multi-unit restaurant operations, showed an incredible drop. Early in the year, the company saw some very encouraging numbers. Sales in January were up 3.86 percent in company data and traffic was up 2.42 percent. It was the best results for January in years, driven in part by good weather.
February started off OK, with sales trending upward, but there was a little noise the the last two weeks of the month as worry about the COVID-19 virus began to spread. Starting in March, sales and traffic cratered for almost everybody as endless coverage of the scary virus began. The only not totally negative segment was drive-thru operations.
“If you are a restaurant operator and your restaurants are fully operational today, you are considered lucky,” wrote Mirus CEO Dave Bennett. “We have evidence that some restaurant brands are actually seeing a small bump in sales compared to last year, mostly in locations with drive-thru operations.”
Sales and traffic nosedived in March, and as of March 18, sales were down 57 percent, as you can see in the chart below courtesy of Mirus.
Casual dining has been hit hardest. Dining rooms are closed and worried customers seem to be gravitating toward quick service and some delivery. Looking at Open Table data, things are dismal. The company that serves as a place to make reservations has opened up its data stack with a dedicated COVID-19 page. The data showed reservations were typical or up in January through March 1. But starting March 2, reservations slowed down precipitously. By March 18, reservations in the U.S. were down 91 percent year-over-year.
Traffic has changed drastically, as Eli Portnoy, founder and CEO of Sense360, described. The data tracking firm that utilizes location data and consumer surveying saw a marked shift away from restaurants to grocery visits.
“At the highest level, consumers are going out to eat a lot less and migrating that spend to delivery, takeout and specifically grocery, where we’re seeing a lot of stock-up activity,” said Portnoy. March 11 through March 13, "right after it was classified a pandemic, we see a massive shift to grocery channels. Then we saw a dip and a push to convenience stores.”
He said the traffic data tells him when things started running low at grocery stores, consumers started going to smaller, local convenience stores. Much of the changes were driven by mass media reports, naming the virus a pandemic and then the endless coverage of outbreaks has people scared, and rightly so.
The hardest hit were casual dining restaurants, which were down 27 percent nationally, especially down on the West Coast where the first COVID-19 outbreak was reported in the U.S. and in the Northeast, where some of the earliest cases were spotted.
Portnoy said in his five years in business with Sense360, he’s never seen anything close to these numbers at brand or segment levels.
“It’s fascinating to see, at a brand level sometimes there’s a very aggressive promotion or a whole bunch of stores closed for a holiday, but they’re super isolated and brand specific. To see this happen across the restaurant category is unprecedented,” said Portnoy. “I think with 50 years of data, we wouldn’t see this either.”
As for what consumers plan to do in the near term, it’s more of the same or worse. In a survey conducted by Sense360 between March 9 and March 15, 39 percent of respondents said they planned not to travel by mass transit or plane; 36 percent said they planned to attend fewer public events and 26 percent said they planned to eat at fewer sit-down restaurants (back when they had a choice in the matter). Slightly better was their view on quick-service, but only slightly—23 percent of respondents said they would eat at fast food restaurants less. Customers said they would do more delivery, grocery shopping and ordering goods online. See more of that survey in a Sense360 blog post.
Portnoy said given the push toward delivery, there has been a massive surge of order growth.
“Third-party delivery is so fascinating; we feel like we’ve been going through this almost channel shift from in person to delivery. It felt incredibly fast before this, but all the sudden, we went through a week that went zero to 100, much faster than before,” said Portnoy.