As more states move to relax stay at home orders, talk is turning toward the “new normal”, both how we all get back to business and what that new normal will ultimately look like. For restaurants, the path back may be longer for some than others, depending on each restaurant’s business model, their digital capabilities heading into the COVID-19 crisis, and how they have adapted and weathered the prolonged shutdown.
With the ban of in-store dining impacting many states, our industry has been profoundly impacted by the global pandemic. We have seen restauranteurs of all sizes re-evaluating their strategies and getting creative as they fight through a daunting situation. Some have prioritized online ordering and digital engagement, others are taking mobile payments for the first time at curbside, and topics like contactless payments and getting employees paid faster have accelerated across our industry.
When restaurants start getting back to business, we expect much of the change we’ve seen over the last two months to have a lasting impact.
QSRs Are Uniquely Prepared for the New Normal
In general, the quick-service restaurant (QSR) segment has weathered the pandemic well, thanks in part to their advanced digital commerce strategies. In addition to established drive-thru capabilities, many QSRs offer popular mobile applications. This, in combination with robust third-party delivery partnerships with Grubhub, Uber Eats, DoorDash and others, meant QSRs were positioned to be more resilient than their full-service counterparts.
In mid-March, Barclays analyst, Jeffrey Bernstein, was quoted on CNBC as noting that 65 to 70 percent of QSR sales were already coming from drive-thru (primarily outside large cities), 10 to 15 percent from takeout, and most recently a low single-digit percent from delivery.
Digital Platforms are Key to Fulfilling Online and Mobile Trends
Restaurants that have already embraced mobile and digital platforms have had a decided advantage in this rapidly evolving marketplace. Whether it be for pickup or delivery, online ordering has become the preferred choice for consumers who are looking for a completely contactless transaction experience.
The modern consumer demands a broad range of options when it comes to completing digital transactions. Restaurants that not only accept online payment using credit and debit cards, but also Paypal, Apple Pay, Alipay, or other ACH payment options, have an advantage when catering to the digital consumer. Restaurants that don’t already have drive-thru capabilities, or an established online or app-driven portal, have been busy pivoting their operations to leverage handheld mobile point-of-sale (POS) devices to expedite curbside payment acceptance for take-out orders taken over the phone.
For those that may be reopening soon, the successes of restaurants that are effectively embracing digital – like Chipotle, which saw an 81 percent spike in digital sales in Q1, and 26 percent of total sales from online orders – may provide a playbook for future growth through digital.
Supporting Restaurant Employees is More Important Than Ever
Restaurants have had to make incredibly difficult decisions regarding staff. Without in-store service, many are running on much smaller or even skeleton crews. Meal times, such as breakfast, have seen a dramatic drop in sales. This has led some businesses to split hours to keep as many working as possible. Others are redeploying staff to make deliveries.
For some, issuing payroll, whether it be for full-time or part-time employees, can be challenging, especially with concerns over personnel having to go to the bank or a check cashing center. Reloadable payment cards are becoming highly attractive alternatives for making payroll because they eliminate paper checks and can be easily used by employees for their own online and in-store purchases. This is one small way that restaurants are supporting their employees in this challenging time, and the appeal of this type of payment is likely to last well beyond COVID-19.
Taking care of employees, implementing rigorous cleaning and safety protocols, and offering curb-side pick-up and delivery services are just a few of the more prominent ways that restaurants are relying on to reassure customers that they are doing all they can to help out in these extraordinary times.
While the restaurant industry is being challenged in ways it never has before, it remains an industry that is vitally important to both the economy and to consumers. It is true people have not been able to eat out and fewer are ordering take-out. And that’s difficult or even untenable for many businesses in the industry, but it won’t last forever. One thing we know for certain is that when the coronavirus pandemic passes, restaurants that have found a way to survive will have built tremendous loyalty to carry them into the future.