Consumers Respond to New Off-premises Options at Restaurants

Graph - U.S. Restaurant Off-Premise Trends
Consumers Respond to New Off-premises Options at Restaurants

Seven in 10 operators say off-premises sales represent a higher proportion of their total business compared to pre-coronavirus levels.

The restaurant industry has been hit hard by the coronavirus pandemic, with restaurant and foodservice sales losses surpassing $185 billion between March and August. However, without the expansion of off-premises business in restaurants across all segments, the impact would have been much worse.

To boost their off-premises business, many restaurant operators added new options for their customers. The most common addition is curbside takeout, which was added by 67% of operators since the beginning of the COVID-19 outbreak in March. That’s according to a survey of 3,500 restaurant operators conducted by the National Restaurant Association August 26 – September 1.

Twenty-seven percent of operators say they added third-party delivery, while 17% added in-house delivery. Three percent of operators say they added a drive-thru option since March. Among the restaurant operators that added any of these off-premises options, a majority say they plan to continue offering it after COVID-19 passes.

As a result, 71% of operators say off-premises sales currently represent a higher proportion of their total business than they did prior to the COVID-19 outbreak. While this doesn’t come close to making up for lost on-premises sales for most restaurants, it provides a potential opportunity to help stay afloat until the coronavirus clouds part.

Consumers responded

Due in large part to these added options, a higher proportion of consumers are ordering off-premises meals from restaurants than before the pandemic – particularly for the lunch and dinner dayparts.

Prior to the coronavirus lockdowns, just under 60% of adults said they ordered takeout or delivery from a restaurant for their dinner meal during the previous week, according to weekly surveys conducted by the National Restaurant Association. During the last four months, an average of 65% of adults ordered takeout or delivery for dinner on a weekly basis. 

The trend is similar for the lunch daypart. Over the last four months, an average of 45% of adults ordered takeout or delivery for their lunch meal during the previous week. In early March, only 37% of adults reported similarly. 

During the early weeks of the coronavirus lockdowns, only about one in five adults said they picked up a breakfast meal or beverage from a restaurant or coffee shop during the week. This was down about 10 percentage points from pre-coronavirus levels, and likely due to the fact that many people were not going into work. However, in recent weeks, this proportion returned to pre-COVID levels of about 30%.

Pent-up demand divergence

The uptick in off-premises usage is reflected in the consumer-reported measures of pent-up demand tracked by the Association. In mid-January, 44% of adults said they were not ordering takeout or delivery from restaurants as often as they would like. This rose to 52% in late April, and then trended lower in recent months to settle at just 36% by early September.

Not surprisingly, the story is quite different for consumers’ on-premises usage of restaurants. In late April, 83% of adults said they were not eating on-premises at restaurants as often as they would like. This was up sharply from 45% in mid-January, and was easily the highest level ever recorded in the two decades that the Association has been fielding this survey question.

While this measure of pent-up demand drifted somewhat lower to a level of 71% in early September, it clearly indicates that consumers would be visiting restaurants more frequently if they could.

Read more analysis and commentary from the Association’s chief economist Bruce Grindy.