Full service restaurants (FSRs) have had a number of problems to solve over the years. Restaurants still recovering from the great recession that ended over a decade ago have now faced mandatory dine-in closings due to the recent COVID pandemic.
Most of the FSR companies are local table restaurants, and visits to these FSRs in the April, May and June quarters, the height of dine-in closings, were down 47% from the year-ago quarter, according to the NPD group. Quick service restaurants (QSRs) that operate take-out and drive-thru restaurants also fell -17% in the same quarter.
Moving to an off-premise business during dine-in closings has been a challenge for FSRs. Before COVID, only 19% of FSR traffic was off-site consumption in February 2020. And in June, when the dining rooms reopened, 55% of FSR traffic was off-site consumption. FSRs tried to turn around to save their businesses by ramping up delivery schedules, streamlining their menus, and repurposing their parking lots as temporary passageways. However, relocating to serve their customers off-site has been difficult and costly.
In the week ending July 19, the most important customer transactions in the FSR chain were already down 27% yoy. "Long before COVID consumers preferred fast food and off-site restaurants," said David Portalatin, advisor to NPD food industry and author of American Eating Habits. "And the trend has accelerated during the pandemic and will most likely be behavior that will continue."
But all is not lost. According to the report, returning consumers still value the on-site experience. In June, FSR traffic increased 152%, and 69% of that increase was due to the return of dine-in service traffic. According to Portalatin, the pivotal point for the US restaurant industry means that full-service restaurants must offer more flexible options in order to offer the on-site experience and optimize the on-site services.