MRM Research Roundup: Mid-August 2021 Edition

This edition of MRM Research Roundup features the latest facts and figures of restaurant operations, the state of business dining, and the mid-year gift card report. 

The State of the Restaurant Industry

The second quarter of this year reflects a period during which state and local governments lifted pandemic restrictions, restaurants reopened, people got vaccinated, and consumers used restaurants more than they did throughout the pandemic, reports The NPD Group. Consumer spending at restaurants was up +32 percent in the April-May-June 2021 quarter compared to the same quarter last year, and for a pre-pandemic view, flat compared to the same quarter in 2019. Restaurant visits, dining in or off-premises, increased by +22 percent in the quarter compared to the same quarter last year and were down -7 percent compared to the second quarter of 2019, according to NPD’s daily tracking of the U.S. foodservice industry.

Quick service restaurants (QSRs), representing 81 percent of restaurant visits in the U.S., realized a gain of +15 percent in visits in the second quarter compared to a year ago and a -5 percent decline compared to the second quarter of 2019. Throughout the pandemic, QSR restaurants, particularly chains, benefitted from well-established off-premises services, like carry-out, drive-thru, and delivery. During the second quarter in 2020, which covered the height of the pandemic lockdowns and restaurant dine-in restrictions, QSR off-premises orders increased by +9 percent over the same quarter in 2019, driven by solid growth in drive-thru and delivery orders. In this year’s second quarter, off-premises grew by +5 percent compared to a year ago, driven by gains in carry-out and delivery orders. 

With most of their business reliant on dine-in visits, full service restaurants (FSR) bore the brunt of the COVID dine-in restrictions. At the start of the second quarter this year, more areas of the country eased or lifted dine-in restrictions, and by the end of June, most states reopened. Total FSR visits, dine-in and off-premises, increased by +60 percent in the second quarter over a year ago and were down -17 percent compared to second quarter 2019. Dine-in, or on-premises, visits to FSRs increased by +214 percent in the quarter compared to a year ago when they declined by -80 percent. Despite the gains, FSR dine-in visits are down -37 percent from the second quarter of 2019. With dining rooms opening in the quarter, off-premises FSR visits were down -9 percent compared to an +83 percent gain in the same quarter in 2020. 

“The U.S. restaurant recovery is underway, but it will take time for it to return to pre-pandemic levels fully,” said David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “Commercial restaurants overall remain below 2019 traffic levels. The QSR segment, ideally suited to today’s new consumer realities, is performing very near pre-pandemic traffic levels with dollar volumes well ahead of that pace. On the other hand, FSRs still face headwinds such as dining room capacity in some places. Even where restrictions are minimal, labor shortages may keep operators from realizing their full operational capacity.”

Rising Labor Costs

The US restaurant industry is experiencing increased labor cost and inflationary pressure exiting the pandemic, but pent-up demand and fiscal stimulus have supported a strong recovery in restaurant sales, enabling companies to pass rising costs through to customers, says Fitch Ratings. Increased operating efficiency achieved during the pandemic has enhanced restaurants’ ability to manage through the labor shortage, better positioning them to absorb higher compensation and benefit costs where necessary, reducing credit risk for many operators.

Restaurant labor costs are rising as the industry attempts to lure back employees who were laid off or voluntarily left the workforce during the pandemic. The shortage of workers is putting upward pressure on wages and other labor costs, as some operators are offering signing bonuses and extra benefits to be more competitive in a tight job market. Based on data from the Bureau of Labor Statistics National Compensation Survey, accommodation and food service industry compensation costs for the 12-month period ended June 2021 were up 6.2 percent, compared with 3.1 percent overall.

Food service and drinking places had 12 million employees in February 2020, but the number employed in the industry declined nearly 50 percent to 6.4 million in April 2020, per the Bureau of Labor Statistics. The restaurant industry has made progress restaffing, but job recovery for the industry is lagging the overall economy. As of June 2021, food service and drinking places employed 11.3 million, or 94 percent of the total number employed pre-shutdown. By comparison, total nonfarm payrolls were 146.5 million as of June 2021, 97 percent of the 151.1 million employed as of February 2020.

We anticipate the industry’s employment situation will continue to improve as vaccination rates increase and more individuals seek employment after the supplemental unemployment benefits fully expire in September. The appeal of low-wage restaurant jobs may have declined due to the availability of supplemental unemployment benefits and the attraction of remote or hybrid work situations offered by other sectors during the pandemic.

Government data provides evidence that restaurants are raising menu prices to help offset higher labor costs. The monthly Food Away from Home Consumer Price Index rose to over 4 percent in June, after pacing mostly in the lower single-digit range since 2H09, according to Federal Reserve Economic Data.

The restaurant industry has proven its ability to take pricing to offset inflation, but increased operating efficiency is also helping to protect profitability. Many operators revamped their labor models, simplified menus to lower complexity and reduce waste, and are using technology, such as self-serve kiosks, to become more efficient during lockdowns. This will provide greater flexibility around pricing should demand ebb and flow during the pandemic.

CGA’s COVID-19 On Premise Impact Report

CGA’s latest sales data reveals On Premise velocity in outlets currently trading is +60 percent higher than the same time last year in the week to August 7. The comparable week last year (to August 8 2020), while in recovery compared to the height of restrictions, was still lower than the same week in 2019. 

Total U.S. 

• Across all states, value velocity remains strongly positive compared to last year, with all key states ahead of 2019
• Average outlet $ sales (velocity) trends have leveled off in the latest 2 weeks, with velocity still in line with levels seen in mid-July – remaining strong vs 2019 (+18 percent)
• Daily velocities have fluctuated between -11 percent and +8 percent in the latest weeks, with the key states experiencing flat or slightly negative trends for the most part as growth in the country levels off
• 100 percent of states have bars and restaurants open indoor completely (with no capacity restrictions)

Florida

• Florida has seen the biggest declines of the key states in recent weeks, down -3 percent and -4 percent over the last two weeks respectively, although it is still one of the best performing states vs 2019 (+21 percent).
• Sales velocity is now +21 percent vs August 10, 2019
• Sales velocity is now +66 percent year-over-year (comparing the same week one year prior)
• Sales velocity is now -4 percent vs July 31, 2021

Illinois

• Following four consecutive weeks of growth, Illinois is down -3 percent in the latest week, driven by both Chicago and the rest of the state
• Sales velocity is now +3 percent vs August 10, 2019.
• Sales velocity is now +66 percent year-over-year (comparing the same week one year prior)
• Sales velocity is now -3 percent vs July 31, 2021

California

• In California, negative trends in San Diego (-5 percent) and Los Angeles (-1 percent) result in week-on-week declines of -1 percent for the state, although San Francisco is slightly positive in the latest week (+1 percent).
• Sales velocity is now +20 percent vs August 10, 2019
• Sales velocity is now +85 percent year-over-year (comparing the same week one year prior)
• Sales velocity is now -1 percent vs July 31, 2021

New York

• After trends of -4 percent in the week to July 31, New York is flat in the latest week (to August 7), with both the city and the rest of the state performing similarly.
• Sales velocity is now +1 percent vs August 10, 2019
• Sales velocity is now +84 percent year-over-year (comparing the same week one year prior)
• Sales velocity is now 0 percent vs July 31, 2021

Texas

• The last two weeks in Texas has seen negative trends (-4 percent) to July 31, followed by flat trends in the latest week, with both Houston (+2 percent) and Austin (+1 percent) positive in the week to August 7.
• Sales velocity is now +25 percent vs August 10, 2019
• Sales velocity is now +47 percent year-over-year (comparing the same week one year prior)
• Sales velocity is now 0 percent vs July 31, 2021

Matthew Crompton, CGA Client Solutions Director, Americas, said: “Average outlet sales trends have begun to level off in the last two weeks, following months of growth, and still remain strong versus 2019. COVID-19 has had a significant impact on consumer behaviors, and with restrictions lifted and consumer confidence increasing, suppliers and operators will need to identify how to maximize the opportunities these trends present.”

F&B Outlook

Nixon Peabody's Q3 Food & Beverage Outlook Report offers trends its attorneys are keeping an eye on. Among the key takeaways:

Restaurants face labor shortages. The story remains the same in many cities across the US—restaurants are hanging “Help Wanted” signs in the windows, decreasing business hours, or worse, shuttering doors because of the current labor shortage. Fast-food establishments with traditionally lower wage work are promising hourly rates of up to $15/hour. Many believe that the pandemic exacerbated problems that existed pre-COVID: stressful work environments, low wages, long hours, and a lack of benefits. Some owners are attempting to entice workers back by changing the environment—altering menus, shortening restaurant hours, investing in newer and/or better equipment—while others are promising higher wages and benefits. While there is not a one-size-fits-all approach, restaurants, regardless of size or locale, may need to find a way to address these challenges in some manner. According to Labor & Employment counsel Jessica Schachter Jewell, “As restaurants seek to increase labor forces to meet increased consumer demands, it is pivotal that employers consult a labor and employment attorney before instituting changes to ensure they comply with federal, state, and local laws.”

Ransomware disrupts meat processing industry. A ransomware attack on Brazil-based JBS, the world’s largest meat processor, forced the shutdown of nine beef plants in the US in early June and also affected production at poultry and pork plants. Ransomware attacks continue to surge throughout the world, and no industry is immune. While no one can predict the next industry to be targeted, the frequency of these incidents underscores the importance and urgency of every company to take steps to harden their network defenses and to develop disaster recovery plans. According to Intellectual Property partner Jason Kravitz, “There are many legal considerations companies should be mindful of to prepare themselves for the possibility of a ransomware attack, and legal counsel should play an integral role in any response taken in the event of an attack.”

Wildfires impact West Coast wineries. In 2020, the West Coast wine industry was heavily impacted by wildfires. This summer, many parts of the West Coast are already under drought conditions and wineries are focusing on wildfire prevention efforts—from installing perimeter sprinkler systems, to clearing brush to increase defensible space around the wineries, and training teams to combat small spot fires. Despite these efforts, some wineries are finding that the property insurance they once relied on is no longer available or is prohibitively expensive. With fewer insurance options available to mitigate risk, certain contractual provisions dealing with casualties and potential smoke damage, take on new importance when parties are buying or selling wineries and vineyards in fire prone areas. According to real estate attorney Ian O’Banion, “With careful planning and cooperation between purchasers and sellers and their respective legal counsel, parties can still reach mutually beneficial agreements despite the many challenges.”

Linked here is the full report, which also includes info on Massachusetts ABCC Section 25E½ decision and how it’s affecting brewery distribution agreements.

State of Business Dining

Dinova Inc., released its Q3 2021 State of Business Dining Report that covers the road to recovery, top business trends, benchmarks and data-driven predictions for Q4 and beyond.

While Dinova is the only organization with the ability to aggregate actionable data specifically related to business dining, the report also provides context for interpreting the impact that business travel, remote work, duty of care and other key topics are having on the industry’s recovery. Based on analysis of nearly $20B business dining sales transactions over the past three years, Dinova is expecting results to end up -18.74 percent of 2019 sales by year-end.

“We’ve taken the time to analyze our data, study the trends and influencing factors, and assess how 2020 continues to affect business diner behaviors in order to predict what might happen next,” says Alison Galik, CEO of Dinova. “One thing we can say for sure is that 2020 was a ‘reset.’ So much of how we lived our daily lives changed because we had no choice. Today, companies, restaurants, and business diners are using that disruption to make deliberate choices about how they want to proceed from here. Dinova has a pulse on what that might look like for business dining, and we’re thrilled to share our insights through this report.”

Key components of the report include:

1)    Road to recovery

2)    Three trending business topics and what they mean for business dining

3)    Industry focus on healthcare and pharmaceuticals

4)    Benchmarks for sales growth and performance

Dinova’s preferred business dining solution has delivered spend visibility, cost savings and an employee rewards program for companies since 2010. This State of Business Dining Report, which the company will update and release on an ongoing basis, further solidifies Dinova’s reputation as the business dining authority.

The full report can be found here.

The Value Combo

Nearly 70 percent of respondents see takeout as a vital channel going forward and nearly 50 percent of Gen Zers see no difference between off and on-premise (Wendy’s ghost kitchen anyone?) A majority of respondents also expect staff to keep wearing their masks, according to Revenue Management Solutions. 

A few more highlights: 

• On-premise took off last quarter – 62 percent of respondents in May reported at least 1 weekly dine-in visit vs. 42 percent in Feb 2021.
• 6 of 10 of those that dined out were craving “experiences,” yet the majority of respondents ran into a snag when dining out: limited operating hours, limited menus, long wait times. Respondents overwhelmingly gave restaurants the benefit of the doubt, but long wait times are a prohibiting factor. 79 percent of those who experienced disruptions would return, but if long wait times were the problem, that number dropped to 67 percent (as noted in Restaurant Consumer Insights, Q2 2021: Changing Customer Expectations).
• Physical menus remain an expectation when dining out with older generations, but 1 in 2 Gen Zers expect a digital menu.
• A majority of all respondents expect to see COVID related processes when dining out (masks, social distancing, hygiene and cleaning practices. (as noted in Restaurant Consumer Insights, Q2 2021: Changing Customer Expectations).
• For these reasons and more, 67 percent of respondents think takeout will be a primary channel going forward, and 74 percent among Boomers.

RMS also looked carefully at combo and value meals – their clients are asking lots of questions, as the meals are rising in popularity and increase check sizes for operators. RMS also believes the menu options give operators a much needed opportunity to raise prices. More information on consumer preferences and use of combo meals can be found in Restaurant Consumer Insights, Q2 2021: Changing Customer Expectations.

The State of Gift Cards

Paytronix Systems, Inc.,  published the Paytronix Mid-Year Gift Card Report 2021, which finds that restaurant gift card sales appear to be making a strong recovery after a trying 2020. What’s more, 2020 redemption rates aren’t far behind those of 2019, demonstrating steadfast consumer demand more than 15 months after the onset of the pandemic. 

The report examines year-over-year comparisons of gift card sales during the spring holiday period, as well as six-month redemption curves based on factors like service type and card type. Its highlights include:  

Moms, Dads, and Grads: Consumers came out in force in 2021, with the number of cards sold in May and June up more than 54 percent over the same period in 2020. That represents 91 percent of 2019 gift card sales for the same two months, indicating a healthy recovery. 

Overall Redemption: The redemption rate for gift cards sold in 2020 tracked higher during the initial seven weeks after purchase, as compared to 2019 and 2018. But after the nine-week mark, 2020 gift cards were redeemed at a rate that was slightly lower than 2019 and significantly lower than 2018. Because the majority of gift cards are sold at the end of the year, those that would have been redeemed in the early months of 2020 were likely impacted by the rise of COVID-19 in the U.S.  

Redemption by Segment: QSRs saw redemption rates decline the least. Although gift cards sold by QSRs in 2020 were redeemed 3.6 percent less often through six months when compared to 2019, this difference was considerably smaller than those for casual-dining and fast-casual restaurants, which saw redemption rates fall by 5.4 percent and 5.8 percent, respectively. Meanwhile, fine-dining gift cards were actually 0.9 percent more likely to be redeemed within six months than those sold in 2019. 

“Gift card sales from the spring holiday season – the first since the pandemic began to wane – show promising recovery,” said Lee Barnes, Head of Data Insights for Paytronix. “This surge happened even as many areas still faced pandemic restrictions. All of this provides a good reason to expect a strong winter holiday sales season.”  

Download the Paytronix Mid-Year Restaurant Gift Card Sales Report 2021: Gift Card Sales Data in the Recovering Economy 

QSR Marketing Forecast

New research from Celtra on the QSR industry suggests that while the pandemic gave the QSR industry an extra push, QSRs need to rethink their marketing strategies, especially with indoor dining in jeopardy, once again! Findings I think may resonate with your coverage are: 

• Localized creative drives consumer loyalty: 64 percent of consumers say they have a stronger sense of loyalty to restaurants that localize creative content to their specific region or current events.
• Personalization performs best in driving sales: 45 percent of consumers say that personalized offers/discounts would entice them to increase the amount they spend on a food order and visit more often, compared to 32 percent for loyalty programs and 23 percent for a greater variety of menu items. 
• Email communications > social: 45 percent of consumers said that email was the most relevant platform for content and news from QSRs, whereas 30 percent say Facebook, 15 percent say Instagram, and only 4 percent said Twitter.
• Restaurant apps and loyalty programs continue to see momentum: 45 percent have enrolled in a restaurant/food chain loyalty or rewards program in the last six months.

QSRs have always been a part of the American dining culture. Yet, to win consumers’ stomachs and mind share, QSRs need to rethink their marketing, particularly now with COVID cases surging. Every day presents a new challenge, and how QSRs engage and market to consumers will ensure they stay top of mind. 

For more insights on Celtra’s QSR survey, feel free to check out their latest blog – Chew On This: What Diners Are Saying About QSR Marketing.

Key Food Delivery Trends

Service Management Group (SMG) published its fourth annual food delivery report: The state of the delivery experience. In this latest installment of the longest-running study of food delivery research, SMG analyzes the performance of third-party delivery providers and in-house offerings while providing insight around topics like business cannibalization, the cost of a bad experience and how satisfaction compares across delivery types.

Using a combination of customer feedback and real-time behavioral metrics, SMG launched the longitudinal study in late 2017 and has collected four waves of consumer feedback about the food delivery experience. In collaboration with a special interest group comprised of leading convenience store and restaurant brands, SMG collected feedback from 20,000 consumers and non-purchasers in the United States and United Kingdom and summarized more than 500,000 data points to understand the state of the industry and how consumer expectations have evolved.

“Restaurant delivery is a critical growth channel that is still very much in its infancy,” said SMG SVP of Client Insights Jacqui Mueller. “As the leading experience management partner for the restaurant industry, our hope is that this report further exposes the urgent need for brands and third-party providers to prioritize collaborating on how to build a better experience management approach that can drive loyalty and profitability.”

The fourth annual report analyzes consumer behavior and feedback across delivery types to identify seven trends restaurant brands can use to improve the delivery experience and capitalize on this growing off-premise channel. To learn more, download a copy of the complimentary report.

People Love Plant-Based Pizza

Pizza has repeatedly ranked in the top foods ordered at U.S. restaurants. According to The NPD Group, in the quarter ending June 2021, there were 1.2 billion servings of pizza ordered, up +4 percent from the same quarter last year. An aspect of pizza’s popularity is that it can be customized to serve many different tastes and needs, like the growing interest in plant-based proteins. Units of plant-based protein meat analogues and ingredients shipped from broadline foodservice distributors to pizza operators increased by +56 percent in the second quarter compared to a year ago, reports NPD. 

There is a lot of attention in the marketplace and media about plant-based foods, but there is also interest in these foods from consumers, chefs, and restaurant operators. Based on NPD research, about 20 percent of consumers say that they want to increase the amount of plant-based proteins they consume, and this sentiment has held steady throughout the pandemic. Chefs and operators see the plant-based protein category as a flexible option for developing recipes and menu offerings that taste good and their guests enjoy. Plant-based is now a staple in their repertoire.

Pizzas enable chefs and operators to easily customize with plant-based ingredients beginning with cauliflower crusts. Broadline shipments of cauliflower dough and crusts to pizza operators increased by +46 percent in the quarter ending June compared to the same quarter year ago. Unit shipments of plant-based meat analogues to pizza operators, like Italian sausage, chicken, and beef analogues, grew by double-digits in the quarter. Plant-based chicken analogue shipments to pizza operators increased by +98 percent and plant-based Italian sausage analogues by +72 percent in the second quarter compared to a year ago, according to NPD’s continual tracking of shipments and dollars from broadline foodservice distributors to commercial and non-commercial foodservice outlets. 

“Plant-based is no longer just a niche player in the foodservice market. It’s a mainstream ingredient that appeals to a broad section of consumers,” says Tim Fires, president of NPD’s SupplyTrack® service. “It makes perfect sense that a popular food, like pizza, would now offer plant-based options.”

Signs of Recovery

Americans are apparently loving coffee more than ever, for instance, according to the Q3 Fiscal 2021 resultsthat Starbucks released recently (on July 27). Its earnings showed a massive increase in revenue. The earnings release showed a 73 percent increase in same-store sales from the previous year and net revenues of $7.5 billion.

This jump in revenue was apparent in a recent report, called “Starbucks Recovery Hits New Gear,” from foot traffic analytics firm Placer.ai. Here’s what that report had to say:

“By June, visits for Starbucks and Panera were down just 3.1 percent and 7.6 percent respectively compared to June 2019, the best mark for both brands since the start of the pandemic’s retail impact. …

Looking at weekly visits to Starbucks locations shows growth of 2.6 percent and 1.5 percent respectively the weeks beginning June 28th and July 5th. These are the strongest comparative weekly metrics since the start of the pandemic and show that not only are visits recovering – the pace of recovery appears to be improving as well.

Likewise, fast food stalwart McDonald’s announced its Q2 2021 earnings on July 28, which also showed a big rebound. Global comparable sales increased 40.5 percent year-over-year, and were up nearly 7 percent compared to the same quarter during 2019. Another Placer.ai report, titled “The McDonald’s Recovery Continues,” similarly saw McDonald’s big quarter coming down the pike:

“Since June, the fast-food giant has made impressive strides. The week beginning July 12th marked McDonald’s first week of year-over-two year visit growth since the start of the pandemic, with the visit gap moving from -10.9 percent to 2.1 percent in just four short weeks.

Restaurant Brands International (also known as RBI, and as the parent company of Burger King and Popeyes) released its Q2 2021 earnings results (on July 30), which also topped expectations. Its report showed that revenue topped $1.44 billion with net income of $391 million, and net sales growth of 37 percent. Burger King saw same-store sales growth of 18.2 percent for the quarter, and Popeyes saw same-store sales decline by less than 1 percent.

Placer.ai’s report that covered RBI, “Placer Bytes: RBI, Chick-fil-A and GameStop,” once again saw a strong quarter coming. From the report:

“Looking at two of the top Restaurant Brands International chains shows the continued strength of QSR. Burger King saw the further shrinking of the year-over-two-year visit gap with visits down just -4.5 percent the week beginning July 12th. It was the strongest mark of 2021 for Burger King and continues the strong trend the brand has seen in in-store visits…

In the latest example of its newfound strength, Popeyes is again showing tremendous visits growth compared to 2019. Looking at the weeks beginning June 28th, July 5th and July 12th showed visits up 9.5 percent, 11.6 percent and 22.6 percent compared to the equivalent weeks in 2019.”

Finally, Placer.ai also has fresh-from-the-fryer data in that same report for Chick-fil-A. Though Chick-fil-A is a private company and thus doesn’t report earnings, it remains one of, if not the most popular chain restaurant in the country, and thus, acts as a barometer for the sector as a whole. With that in mind, here’s what Placer.ai’s report had to say about the chain:

“Chick-fil-A, like other QSR leaders, was already showing signs of a recovery in 2020, but while takeaway, delivery, and drive-thru strengthened the brand over the last year, in-location visits are now returning as well. Looking at weekly visits compared to 2019 shows that the weeks beginning June 28th and July 12th saw visits down just 2.6 percent and 1.8 percent respectively. These are the best marks that Chick-fil-A has seen since the onset of the pandemic’s restaurant impact and indicate a full return could come by later this summer.”
 

With this big smorgasbord of data on hand, it’s clear that restaurants and the food industry as a whole are on a rapid comeback from the pandemic. With Americans hungry to get out of their homes and back to normal life, it’s likely that visit data for the aforementioned chains (and others) will continue on an upward trajectory. 

Coffee Lovers

Coffee is the fuel that many U.S. consumers turn to daily to get the day started, keep it going, and sometimes to escape from it. Wherever there is coffee, coffee-loving consumers will find it. They prepare and drink coffee at home, buy it from coffeehouses, restaurants, foodservice outlets, convenience and grocery stores, and vending machines. According to The NPD Group, last year, consumers drank approximately 44.5 billion servings of coffee, spent $2 billion on coffee makers and accessories for in-home brewing, and made 6.3 billion visits to order coffee at foodservice outlets. 

In-Home Coffee Consumption and Preparation 
Before the pandemic, consumers sourced about 73 percent of coffee servings from home and 27 percent from foodservice. The split between at-home and away-from-home coffee consumption became 81 percent from home and 19 percent from foodservice during the pandemic. With fewer opportunities to visit their favorite coffee shop, consumers re-created the gourmet coffee experience in their homes. Sales of espresso machines, French presses, and cold brew makers grew by double-digits in the year ending May 2021 compared to the same period a year ago. Coffee accessories, like temperature-controlled mugs and milk frother wands, also experienced double-digit growth. Sales of frothers, for example, increased by 120 percent this May compared to a year ago, reports NPD. 

The interest in preparing gourmet coffee at home was already in play before the pandemic. Although 82 percent of U.S. households own a coffee maker, usage of traditional coffeemakers continues to decline as consumers look for coffee appliances that offer variety and an elevated coffee experience. Sales and use of pod-style, French and other presses, and pour-over coffee makers have increased over the past three years. 

"Consumers' palates are more sophisticated now when it comes to coffee. They've invested their time and money in bringing a gourmet coffee experience into their homes," said Joe Derochowski, Home industry advisor at The NPD Group. "Even when they're back to work or school, they'll continue to get a return on their investment. Manufacturers can benefit by offering great taste, which is always key, the ability to adjust the taste, and versatility in enabling consumers to get that coffee house experience at home."

Foodservice/Restaurant Coffee Consumption 
Lockdowns and restaurant restrictions during the pandemic did impact coffee servings ordered at U.S. restaurants and foodservice outlets. In the year ending May 2021, coffee servings ordered at commercial foodservice declined by -7 percent from a year ago, and for a pre-pandemic view, it decreased by -11 percent from two years ago. Consumers also cut down on visits to their favorite coffee house and gourmet coffee chain. Visits to these types of outlets declined by -6 percent in the period compared to a year ago, and -8 percent from two years ago. Still, coffee shops, independent and chains, have been among the strongest performing restaurant channels over the long term, and as the country emerges from the pandemic, visits improve. 

When purchasing coffee at foodservice outlets, consumers prefer specialty coffee beverages over regular coffee. Specialty coffee servings orders at foodservice outlets overall represent 44 percent of orders, and regular coffee, 40 percent. Specialty coffee holds 71 percent of servings ordered at coffee shops, and regular coffee represents 29 percent of servings. 

"Coffee has been a go-to beverage in the U.S. for a very long time, but it has evolved over the last ten years," says Darren Seifer, food and beverage industry analyst at The NPD Group. "Today's consumers are looking to elevate and personalize their coffee experience with new flavors, recipes, tastes, appliances, and accessories."