In this edition of MRM Research Roundup, we feature the impact of third-party delivery in a revealing study from SevenRooms, stats on the pandemic year, the tales told by foot traffic and the increasing popularity of breakfast items.
Third-Party Delivery Impact
American restaurants are facing a threat from the very technology that they have turned to for support this past year.
SevenRooms divulges these findings in its “Data & Dollars: Revealing the Impact of Third-Party Marketplaces” report.
With third-party delivery platforms like UberEats, Grubhub and Postmates costing restaurants significant dollars in commissions and fees, nearly 20 percent (16 percent) of Americans believe that third-party platforms do more harm than good for restaurants. As consumers have become more aware of the obstacles restaurants face in their day-to-day operations, going direct creates opportunities and benefits for operators to align with the changed diner expectations uncovered in this report. The study was commissioned through independent third-party research firm YouGov, with additional data from various resources1 relating to the average cost of rent, PPE, hourly pay, third-party commission rates and more.
SevenRooms compared the amount of money that could be saved by shifting a percentage of online orders to a direct ordering solution to offset the real costs associated with operating a restaurant, revealing the following:
Consider a high-end Italian restaurant in New York (think: Luca, Bar Primi or Marea). In this example, the restaurant fulfills an estimated 1,500 combined delivery and take-out orders at an average cost of $144 per order over a six-month period. With 75 percent of their business as delivery (at 30 percent commission) and 25 percent of their business as pickup (at 10 percent commission), a direct ordering solution would save the restaurant approximately $54,000 over the course of that six-month period.
That $9,000 dollars a month saved by utilizing a direct ordering solution could be put towards more worthwhile causes and tools to keep their doors open, including:
- Nearly an entire month of rent (NYC rent averages between $10K and $30K a month)
- 904 hours of pay for waiters (at $9.95/hour in NY)
- Six igloos for outdoor dining or 27 propane heaters or 183 tanks of propane to keep guests warm
- 69 boxes of gloves or 300 boxes of masks or 333 gallons of hand sanitizer
For a high-end steakhouse/American restaurant in Los Angeles (think: Del Frisco’s or Morton’s) that, in this scenario, fulfills an estimated 1,500 combined delivery and take-out orders over six months with an average order cost of $167. If 75 percent of their business is delivery (at 30 percent commission) and 25 percent of their business is pickup (at 10 percent commission), the restaurant would save approximately $63,000 over the course of six months if it utilized a direct ordering solution.
Instead, that $10,500 dollars a month could pay for:
- Nearly two months of rent in LA (LA rent averages between $6K and $15K)
- Over 41,000 takeout containers
- 875 hours of pay for waiters (at $12/hour)
Lastly, for a high-volume casual restaurant in California (think: Urth Caffe or Coral Tree Cafe). In this scenario, the restaurant is fulfilling 19,000 combined delivery and take-out orders over a six-month period. Assuming their average order is $33, and that 75 percent of their business is delivery (at 30 percent commission) and 25 percent of their business is pickup (at 10 percent commission), the restaurant would save approximately $154,000 if it used a direct ordering solution over the course of that six months.
If the restaurant utilized a direct ordering solution, savings of $25,600 dollars a month could be put toward:
- 2,150 hours of pay for waiters (at $12/hour)
- Over 101,000 takeout containers
- 198 boxes of gloves or 860 boxes of masks or 1,172 gallons of hand sanitizer
Both consumers and restaurant operators have relied on third-party delivery platforms since the onset of the pandemic. However, over the past few months, the true costs of third-party platforms and benefits of utilizing a direct ordering solution have come to light, and it’s imperative that the conversation move forward to help restaurants stay in business for the long-term.
Of Americans who say they’re motivated to order directly from a restaurant instead of a third-party delivery platform, nearly 3 in 10 (28 percent) say it’s because they’ve seen their favorite restaurants struggle and want to help out others as much as possible. While 30 percent say it’s because they know that third-party delivery platforms charge too much in fees from restaurants.
Americans know that third-parties stand in the way of restaurant recovery, and, while 4 in 10 Americans (37 percent) say they want to do all they can to directly support restaurants, they know more is needed. Nearly half of Americans (47 percent) want to see increased and/or additional aid for restaurants from the federal government, while 43 percent want to see increased and/or additional aid from local and state governments.
This past year has shown us that the restaurant industry is incredibly resilient. Restaurants across the country have adapted, creating offerings and incentives including to-go cocktails, in-home experiences, and tailored customer promotions that have increased customer loyalty tenfold. So much so that, of Americans planning to order from a restaurant for delivery or takeout, more than 1 in 3 (36 percent) say they would be incentivized to order directly versus from a third-party delivery platform if they were offered a personalized promotion for their meal (i.e., discount code, complimentary drink or appetizer).
Other top incentives include:
- A restaurant’s own app for ordering, tracking, communications, etc. – 41 percent
- A personalized promotion for a subsequent delivery order or visit – 32 percent
- A menu and experience that was personalized for them based on previous orders – 17 percent
“As the hospitality industry reels from the pandemic’s harsh economic effects, it’s imperative that we come together to advocate for an industry in need of our support,” said Joel Montaniel, CEO & Co-Founder at SevenRooms. “Restaurants singularly relying on third-party delivery platforms as their sole source of revenue are putting themselves in a very challenging situation. Operators are struggling to cover the most basic costs for their businesses and are faced daily with the very real possibility of having to close their doors. Without technological, financial and governmental solutions that enable them to thrive, and the actions of customers themselves, the restaurants and culture that are at the core of our cities and communities are very likely to fade away.”
The full report is available at sevenrooms.com.
Our Pandemic Year
As the nation marks the one-year anniversary of the COVID-19 pandemic, MarginEdge released an industry performance report assessing the state of restaurants at this pivotal milestone. MarginEdge analyzed sales and operational data from close to 2,000 restaurants in 47 states to assess how one of the hardest hit industries fared over the last twelve months.
The full report found here, relies on data from a large and diverse sample set and illustrates just how catastrophic this pandemic has been on restaurants. Some key takeaways:
Sales Experienced a Catastrophic Dropoff. Restaurants experienced a 66 percent drop in sales by March 22, 2020, when most of the country was under strict lockdown. While the industry has faced recessions in the past, a contraction this precipitous had never before been seen. For comparison, the S&P fell 28 percent between February 19 and March 25, whereas the economy contracted at a pace of 31.4 percent in the second quarter, the worst the government has seen since record keeping began.
The Delivery Pivot. Pre-pandemic, delivery sales from third party partners represented just seven percent of restaurant revenue. At its peak, this portion grew to almost a third of sales, an increase blunted by high delivery commissions. While this share of sales will decrease as the pandemic subsides, it is not expected to return to pre-pandemic single digit levels.
Survival of the Fast Casuals. Fast casual restaurants outperformed their full-service counterparts as they were best equipped to adapt to take-out and contactless features. The worst sales day for fast casuals saw a 62 percent drop in year-over-year sales, whereas the same measure for full-service restaurants saw an almost 84 percent decrease in sales. Weather and optimized outdoor dining helped full-service operators close this gap during the warmer months.
A Tale of Four Regions. One of the most volatile trends is seen in a graphic of sales broken down by region: West, South, Northeast and Midwest. By the fall months, each region coalesced around a 15 percent drop in year-over-year sales. Outdoor dining and relaxed restrictions directly affected each region, with the South largely buffered by weather impacts and looser restrictions.
Sluggish Restaurant Recovery. While holidays like Easter and Labor Day provided sales bumps, restaurant recovery remained sluggish months into the pandemic. Three months after hitting the lowest point, the seven-day moving average for sales was down 26.46 percent in June and six months after, was still down by 17.59 percent.
Who is Comfortable Returning to Work?
Qwick recently set out to find out the frequency of Professionals returning to work, if they feel comfortable returning to work, and what might enhance their feelings of safety while working Qwick shifts. After surveying 408 Qwick Professionals, the results show that the majority of respondents feel very comfortable returning to work. For those who are not returning to work as frequently, fear of contracting COVID-19 is their main obstacle.
The survey results found that 36.8 percent of Professionals were picking up Qwick shifts pre-pandemic but are now not, 21 percent of Professionals were picking up Qwick shifts pre-pandemic and are currently picking up shifts, 17.8 percent of Professionals started working with Qwick after the pandemic started, and 32.5 percent of Professionals weren’t getting Qwick shifts before or during the pandemic. The survey found that, on a scale of 1-10, 76 percent of Professionals rated their comfortability of returning to work at a 6 or higher. The survey also found that access to more personal protective equipment would enhance Professionals’ feelings of safety while working shifts (66 percent). Staffing smaller events and working outdoor shifts were also factors respondents indicated would enhance feelings of safety.
The survey also revealed that 82.3 percent of respondents are working less now than prior to the pandemic and 53.4 percent of respondents are using their time searching for employment opportunities.
Changes in Consumer Spending
Cardlytics’ new “State of Spend” report, which shows the dramatic change in consumer spend and purchasing trends during the COVID-19 pandemic (between February 2019 and February 2021). With insight into 1 in every 2 U.S. transactions, Cardlytics compiles the report for marketers and brands to understand and respond to current trends that are impacting their industries.
Cardlytics is an advertising platform that works directly with leading banks such as Bank of America, Wells Fargo, Chase to serve offers to an audience of more than 163 million monthly active users. Cardlytics features offers from leading marketers such as Walmart, GAP, Dunkin’, Hilton, Sephora and Wayfair.=
Key findings include:
Restaurant: Delivery FTW: Restaurant delivery is still winning. At the start of the year it was at 4.6 percent of the overall restaurant spend. It maxed out in April at ~15 percent, but has maintained close to that performance at roughly 11-12 percent of all restaurant spend in December 2020 and January 2021.
Customers are rapidly shifting back to restaurants when states open back up (indoor): Across 2020, these patterns were recognized as markets closed, opened, then closed again for example in states like Colorado and Illinois. These states reopened during August/September/October prior to re-closing back down in November. During that time, restaurant spend overtook grocery spend for the only time during COVID.
Foot Traffic Analysis
Customers are heading back to coffee chains including Starbucks, Dunkin’, and Panera Bread, according to the latest report by foot traffic analytics firm Placer.ai, titled “The Power of Coffee.” The data shows that foot traffic numbers have been improving steadily as of the middle of February — a sign that customers are finally resuming their old habits, which could mean that a big year is in store for these coffee chains.
If you were curious as to where fast food giant McDonald’s has been while others engage in a battle royale for chicken sandwich supremacy, wonder no more — McDonald’s has entered the fray. The latest report by foot traffic analytics firm Placer.ai, titled "Placer Bytes: Breaking down a Rough February and McDonald's Chicken Sandwich", shows that after debuting its own chicken sandwich on February 24th, locations saw a surge in foot traffic.
On the Wednesday that McDonald’s Crispy Chicken Sandwich hit stores, foot traffic was up 19.1 percent from the previous Wednesday. And, on Thursday and Friday, it was up 29.1 percent and 21.5 percent as well.
McDonald’s has been seeing a lull in foot traffic, and its new chicken sandwich is helping give it a boost. During the week of February 22nd, for example, visitor counts were down 29.4 percent year-over-year. But that’s an improvement from being down more than 43.1 percent the week of January 25th.The new menu item is a hit — Placer.ai’s data shows that average daily visitor counts in February were up almost 13 percent from January. That’s a sign that Americans’ appetite for chicken sandwiches is nearly insatiable.
Darden Restaurants was one of the most heavily impacted companies by the pandemic, as outlined in the latest report by foot traffic analytics firm Placer.ai, titled “Darden Restaurant Recovery” The data suggests that the dining sector likely won’t fully recover until the pandemic is fully behind us.
Darden brands continue to struggle: As of last month, all four of Darden’s brands are still behind the eight ball. Foot traffic was still down significantly year-over-year at Olive Garden (~40 percent), LongHorn Steakhouse (-21.7 percent), Yard House (-48.3 percent), and Cheddar’s Scratch Kitchen (-37 percent) in February.
Appetizing patterns? Despite the ugly statistics, things do look to be improving for most of Darden’s portfolio on a weekly basis. During February, foot traffic numbers were trending in the right direction for all of Darden’s brands, except for Cheddar’s.
The pandemic and dining: COVID cases have been tied to restaurant foot traffic, according to the data. That was on full-display during November, when cases spiked: The dining sector saw an overall year-over-year foot traffic decrease from 26.7 percent in October to 32.4 percent in November. If things improve, restaurants should benefit.
Foot traffic during the first week of March was down 21.3 percent at Starbucks, 24.6 percent at Panera, and 15.4 percent at Dunkin’ — the best numbers for the group overall since the end of December, according to CGA's COVID-19 On Premise Impact Report, powered by the BeverageTrak dataset.
The weekly numbers have been impressive for all three chains, too. Visits during the week of March 1st were up 12.6 percent at Starbucks week-over-week, 5.3 percent at Dunkin’, and 5.2 percent at Panera.
Wake up and smell the new normal: It’s hard to say what 2021 holds for coffee chains, but it should be a better year than 2020.
From the report: “There is a longer-term trend that could drive significant value to these brands. As flexible work becomes a more commonplace practice, the escape from home to local places to work – even for just a few hours – could provide a valuable asset.”
In other news, across the U.S., 76 percent of states have bars open indoors to some capacity (either completely, or with capacity measures in place) and 92 percent of states have restaurants open indoors to some capacity
Of those explored, Texas is the only market in growth (+91 percent), due to adverse weather conditions in the previous week causing decline in the market. Despite the impact of this weather, in the most recent week, value velocity is outperforming compared to last year (+2 percent) and is up +13 percent vs 3 weeks ago, before the storm
On Premise velocity in outlets that are currently operational has increased +296 percent in the week of February 27 v March 28 when the On Premise shutdown initially commenced; velocity in the latest week is down -14 percent compared to same time last year, February 29, 2020
Trends vs one week ago fell in all states excluding Texas, however, it is important to note that the previous week included Valentine's day (Sunday February 14, 2021)
Average outlet $ sales (velocity) are down -1 percent in the latest week (February 27 v February 20) across the U.S.
Within New York, declines of -12 percent in the week to February follow an especially strong previous week; NYC was up +74 percent in the week to February 20, and the whole state up +47 percent
Florida remains the strongest state of those analyzed when benchmarked against March 28, with velocity up +392 percent
Declines in Illinois (-7 percent), follow two weeks of double-digit growth across the state. Chicago experiences lesser declines that the rest of the state, down only -4 percent February 27 v February 20
California enters its first week of decline in 7 weeks, driven by key city performance with Los Angeles (-16 percent) , San Diego (-12 percent) and San Francisco (-12 percent) all down, pushing the state into -10 percent declines February 27 v February 20
As one of the most popular events in the On Premise, growth rates of over +100 percent on the Sunday of Valentine’s vs the week before is to be expected in the key states, with the exception of Texas
Sales velocity is now -3 percent year-over-year (comparing the same week one year prior)
Sales velocity is now -11 percent vs February 20, 2021
Sales velocity is now -22 percent year-over-year (comparing the same week one year prior)
Sales velocity is now -7 percent vs February 20, 2021
Sales velocity is now -23 percent year-over-year (comparing the same week one year prior)
Sales velocity is now -10 percent vs February 20, 2021
Sales velocity is now -36 percent year-over-year (comparing the same week one year prior)
Sales velocity is now -12 percent vs February 20, 2021
Sales velocity is now +2 percent year-over-year (comparing the same week one year prior
Sales velocity is now +91 percent v February 20, 2021
Breakfast for Breakfast, Lunch and Dinner?
Consumers are eating more breakfast foods than normal during the COVID-19 pandemic and not just in the morning hours, according to a recent nationwide online survey conducted by The Harris Poll and commissioned by General Mills Foodservice. Nearly a quarter of Americans report eating more breakfast foods during the COVID-19 pandemic than they normally would (24 percent) with items such as eggs (72 percent), cereal and pancakes (both 51 percent) and bakery items such as donuts (36 percent), cinnamon rolls (34 percent) and muffins (33 percent) among the top favorite breakfast items. Further, nearly four in five Americans (79 percent) have eaten breakfast foods outside of the traditional breakfast meal in the past year.
The nationwide poll surveyed more than 2,000 adults ages 18 and over to learn how the COVID-19 pandemic has impacted their eating habits—both at home and when dining outside of the home.
“The recent poll shows that people are eating more breakfast foods during the pandemic and enjoying them for lunch, dinner and even dessert,” said Mark Harmon, who analyzes consumer insights for General Mills Foodservice. “We also learned that consumers are eager to return to restaurants to enjoy their favorite breakfast and brunch foods, signaling that breakfast could be all the buzz on spring and summer menus.”
Results from the poll show that consumers who are eating more breakfast foods during the pandemic over the past year are doing so because they feel they have more freedom in what and when they eat, since they have more time in their schedule (52 percent), they’ve been craving their favorite breakfast foods (37 percent), they want to eat something fun that brings them joy (33 percent) or breakfast favorites remind them of childhood (24 percent).
Other findings include:
- Consumers have a deep affection for breakfast, with three in five Americans (62 percent) saying breakfast is their favorite meal of the day and over half (56 percent) saying they love breakfast food more now than they did a year ago.
- Over three-quarters of survey respondents (79 percent) have eaten breakfast foods for meals other than breakfast in the past year with more than half (59 percent) saying they have eaten breakfast foods for dinner, 49 percent have enjoyed breakfast foods for lunch and 20 percent have eaten breakfast items for dessert.
- Three-quarters of Americans (75 percent) look forward to eating breakfast/brunch at their favorite restaurant once the pandemic is over with more than a third (36 percent) saying they would like to be able to purchase breakfast/brunch meal kits (e.g., biscuits and gravy, pancakes) or ''take and bake'' breakfast items (e.g., cinnamon rolls, muffins) to cook and bake at home from their favorite restaurant.
- More than half (66 percent) said they love creative twists on breakfast menu items.
Tips to Boost Breakfast Business
- Serve breakfast all-day with a special menu of morning favorites or a signature breakfast item-of-the-day.
- Celebrate “Brinner” with a limited-time offer or buy-one-get-one-free breakfast menu.
- Get creative with fun menu items that feature a breakfast flair (a grilled cheese doughnut, savory doughnuts or pancakes, waffles as a sandwich carrier).
- “Plus up” traditional breakfast foods and give them a new twist (biscuit avocado toast, smoky mac & cheese waffles, cinnamon roll waffles or Fiesta French toast).
- Introduce a menu of “bresserts” or dessert items made from traditional breakfast items (cinnamon roll cobbler, strawberry scone shortcake, cereal-flavored ice cream waffles sandwiches, birthday cake pancakes).
- Offer tempting “take and bake” options for breakfast foods (a tray of cinnamon rolls or muffins, a breakfast casserole to-go or baked French toast).
- Bundle breakfast foods together for a family brunch meal kit (biscuits and gravy, pancakes with sausage or bacon and fresh fruit, breakfast sandwiches and yogurt parfaits).
Your coffee preferences may reveal more about your personality than you think. New research shows people who favor iced coffee are more likely to jam out to Megan Thee Stallion, be introverted and travel more than people who prefer hot coffee.
How Do You Take Your Coffee?
A study of 2,000 coffee-drinking Americans compared the lifestyles of hot coffee drinkers and cold coffee drinkers.
Results found that on average, those who prefer cold brew and iced coffee are more likely to prefer sunny weather (40 percent), binge-watch science-fiction shows like “Unsolved Mysteries” (37 percent), and are more likely to be part of the Gen-Z crowd (40 percent).Meanwhile, hot coffee drinkers are more likely to be extroverts (40 percent), prefer overcast weather (36 percent), enjoy comedy shows like “Schitt’s Creek” (33 percent), blast Taylor Swift (24 percent) and be a boomer — with 94 percent of people over the age of 56 wanting a hot mug of joe.
Even your zodiac sign can reveal your coffee preferences. If you are a fire or earth sign, you’re likely to lean more toward hot coffee than cold (49 percent over 44 percent). Meanwhile, water and air signs are more iced coffee prone (57 percent over 51 percent).
Commissioned by Califia Farms and conducted by OnePoll, results found that despite hot and iced coffee personality differences, coffee drinkers universally agree it’s near impossible to go without it in the mornings. Coffee drinkers would rather give up social media (22 percent), TV (18 percent), alcohol (16 percent) and video games (4 percent) than coffee.
There is a line many refuse to cross, however. Whether it’s oat milk, almond milk, soy milk, hemp milk or dairy, one in four coffee drinkers would rather go without their cup of joe altogether if their preferred milk isn’t available. Plant-based milks are a must-have for 38 percent of iced coffee drinkers, while 37 percent of hot coffee drinkers prefer old-school heavy cream. Top among these plant-based milks are almond milk (39 percent) and oat milk (34 percent). When asked why they prefer plant-based milks, respondents said they enjoy the flavor (32 percent), functional ingredients (21 percent) and low sugar content (15 percent).
Overall, a majority of respondents (59 percent) reported their coffee habits were heavily disrupted by the pandemic in a way they didn’t expect. Yet this change hasn’t been all bad for their coffee habits. Nearly half (46 percent) of American coffee drinkers have tried different types of coffee at home since they haven’t been able to visit their favorite coffee shops. Forty-two percent have even tried to recreate their go-to coffee orders at home, with one in three coffee drinkers trying their hand at latte art and one in four hopping onto the Dalgona coffee trend during their time in lockdown.
While the pandemic is keeping most people at home, cold coffee drinkers may be more likely to experience cabin fever than their hot coffee counterparts. Pre-pandemic, cold coffee drinkers said they would travel three times per year, versus two times a year by their hot java peers. Cold coffee drinkers are more inclined to spend their time browsing Instagram (27 percent), while hot coffee drinkers are more active on Facebook (35 percent).
The study also found having a preferred temperature of coffee can even affect one’s taste buds: eight in 10 cold coffee drinkers prefer sweeter, fancier drinks featuring flavored syrups, while two-thirds (67 percent) of hot coffee drinkers would rather have a simple cup with cream, sugar or both. When asked about their go-to coffee orders, respondents waxed poetic about their favorite lattes, black Americanos and new twists on old classics, like adding sea salt to a cappuccino for a savory, blooming flavor with less bitterness.