Have Restaurants Found the COVID-19 Game-Changer?

April 15, 2020

Panera Bread wasn’t the first restaurant chain to start selling groceries, but it was the biggest. And similar moves have echoed across the industry in recent weeks as restaurants claw for share with grocers, which have seen their financial fortunes turn in the opposite direction during the COVID-19 pandemic.

According to Black Box Intelligence, grocery store growth lifted 15.5 percent in the week ending March 27. Yet that was muted only because the previous week saw sector sales skyrocket 73.6 percent, year-over-year. Online grocery growth, even with the moderate stabilization, was up 62.3 percent.

In the 73.6 percent lift (the week ending March 22), consumer visits declined industrywide for restaurants and increased for all forms of grocery stores, Black Box said. To put this into perspective, full-service restaurant share-of-stomach spend fell below 5 percent.

Also to note, grocery momentum likely slowed because people stocked up the week before. It may very well spike again this coming week.

PAST REPORTS

1. Coronavirus & The Impact on Eating

2. Fear and Response

3. Into the Home

4. Hands Off

5. Sheltered

6. Pent-Up Demand

7. The Operator Story

8. Making Money Move

STAY UP TO DATE WITH OUR CORONAVIRUS LANDING PAGE

So, restaurants are, for once, competing less with each other and more with a common, colossal target. It makes adding essential items to the menu a natural step for operators on a multitude of levels. For starters, it can help move inventory left idle by a lack of dine-in service. Naturally, it can also infuse some much-needed revenue. Yet perhaps the biggest gain isn’t found on the balance sheet, but rather with broadening the restaurant’s purpose. If a brand, for instance, can now add toilet paper to orders, it may rewrite the narrative for what role restaurants are meant to play throughout this crippling crisis.

Panera brought its grocery service to Grubhub in addition to in-house channels, like its app and website. The result being that consumers looking for dinner can now also tack on grocery items, such as milk and fruit. And they’ll do so under the Panera banner.

The Daily Room, a café located in an office building in Plantation Florida, told QSR in an email that sales had slowed to about 10 percent of normal under COVID-19 conditions. All the offices in the building closed and people started working remote.

In an effort to generate business, the concept reached out to friends and contacts, increased the amount of social media and marketing, added delivery through Uber Eats, family meal options to the menu, and, notably, started selling sliced deli meat by the pound. It also created a small marketplace for household items, owner Lester Galarza said.

While a small sample size, The Daily Room’s business jumped 100 percent, week over week. “It’s tough for all us, but I believe these steps and strategies will help us survive the storm and make us more profitable moving forward,” said Galarza, who’s business received a $3,000 advance on its Economic Injury Disaster Loan, or EIDL, to pay sales, tax, payroll taxes, and May rent. (Here’s more on applying for loans).

EXAMPLES OF BRANDS DELIVERING ESSENTIALS

Ohio fast casual turns to grocery program

Frisch’s add groceries to serve guests

Newk’s opens up the pantry to customers

Potbelly launches ‘Pantry’ Program

Pollo Tropical rolls out ready-to-cook line

Just Salad unveils a NYC delivery service

Edible starts serving fresh vegetables

Little Greek adds grocery element

Additionally, this is an opportunity for restaurants to offer some items that are vanishing on grocery shelves nationwide. Or simply present day-to-day items that people want, but don’t want to wait two weeks to grab (like alcohol). The high-level goal is to become a very real bridge between grocery stock-up trips, which is an especially critical role for customers who don’t feel comfortable dishing out significant income on massive trips. Or even people who simply want to cut back the amount of times they go so they can social distance.

Could a few items on a Wednesday keep them from making the harrowing journey for another week? Could ordering a family bundle, with some add-on groceries from a nearby restaurant, keep their checkbooks happy? Given that 49 percent of people live paycheck to paycheck, according to a study from the First National Bank of Omaha, not everybody can shell out hundreds of dollars in survival-fueled tours multiple times a month.

And that’s a place, led by value, restaurants can step in. Also, it’s a chance to leverage the frictionless platforms at an operator’s disposal that many grocers don’t have—things like curbside, takeout, drive thru, and delivery. Grocery delivery, while surging, isn’t easy to come by in every market. Windows close. It often carries fees, too, and the mystery of somebody else shopping for your groceries. There are less touchpoints in the restaurant process, as this article explores.

Datassential’s latest 1,000-consumer study report, “Reinvention,” explored the creative ways restaurants are getting food into people’s homes, and which innovations are making the biggest impact.

But let’s start with the grocery-restaurant angle.

“Pop-up provisioners,” as Datassential calls them, are making significant inroads with consumers, especially Gen Z and millennials, no matter the grocery category. “But execution will be crucial, given all the forms this new idea could take,” the company said. “Will customers be able to pre-order online? Curbside pick-up, or delivery? Bundled meal kits, or customizable orders? If a restaurant figures out which combination works for its operation, the potential is there for a big audience.”

“What is your interest in purchasing the following grocery categories from restaurants during the COVID-19 crisis?”

Breads/bakery items

Total: 72 percent
Gen Z: 75 percent
Millennials: 80 percent
Gen X: 75 percent
Boomers: 58 percent

Fresh Produce

Total: 70 percent
Gen Z: 80 percent
Millennials: 80 percent
Gen X: 73 percent
Boomers: 52 percent

Fresh meat/seafood

Total: 70 percent
Gen Z: 78 percent
Millennials: 81 percent
Gen X: 71 percent
Boomers: 53 percent

Deli or cured meat products

Total: 66 percent
Gen Z: 69 percent
Millennials: 76 percent
Gen X: 67 percent
Boomers: 51 percent

Dairy items

Total: 65 percent
Gen Z: 78 percent
Millennials: 76 percent
Gen X: 66 percent
Boomers: 48 percent

Pantry items and dry goods

Total: 64 percent
Gen Z: 77 percent
Millennials: 77 percent
Gen X: 65 percent
Boomers: 44 percent

Paper goods

Total: 63 percent
Gen Z: 73 percent
Millennials: 77 percent
Gen X: 64 percent
Boomers: 42 percent

Non-alcoholic beverages

Total: 59 percent
Gen Z: 74 percent
Millennials: 71 percent
Gen X: 59 percent
Boomers: 39 percent

Baking ingredients

Total: 58 percent
Gen Z: 70 percent
Millennials: 73 percent
Gen X: 60 percent
Boomers: 35 percent

Adult/alcoholic beverages

Total: 52 percent
Gen Z: 58 percent
Millennials: 69 percent
Gen X: 56 percent
Boomers: 28 percent

These numbers look optimistic for Panera, which is selling freshly baked breads and bagels. Jimmy John’s is also delivering its fresh-baked bread to customers. This might be a good time to think about how you can deconstruct them menu to serve this very surreal—but real—new occasion of essential eating.

Throughout these last few weeks, we’ve also seen a surge in do-it-yourself options from restaurants. On average, people have expressed they feel safer when they get to prepare their own food. Despite there being no evidence to support transmission of COVID-19 associated with food, people still like to see it being cooked. In a past study, Datassential found that 62 percent of consumers believe that cooking food kills coronavirus, agreeing that “coronavirus cannot be contracted through food that has been thoroughly cooked.”

It doesn’t really matter whether this is a misconception or not. Hospitality is all about tossing aside logic in favor of pleasing customers’ needs.

This is one reason DIY and “take-and-bake” meals have been so popular during COVID-19. People don’t care quite as much about where their food comes from as they do how it was prepared. Another past Datassential study said that 41 percent of consumers were most worried about “how food was prepared,”—well above the next ranking item: “How food was delivered” at 30 percent.

To put it simply, there’s leverage to be had in letting guests cook the food at home.

“Consumers can make home-cooked meals without all the hassle and it can also be a form of entertainment for the family,” Datassential added.

Millennials and households with kids reported the strongest interest across all options, while take-and-bake comfort foods and desserts were popular with Gen Z. Singles preferred more casual options, better suited for one person, like pizza, burger, cocktails, and dessert decorating kits.

“How interested are you in ordering these DIY/take-and-bake options from restaurants during COVID-19?”

“Very interested” or “somewhat interested.”

Take-and-Bake Comfort Foods: 73 percent
Build-Your-Own-Pizza Kit: 68 percent
Build-Your-Own Tacos or Burritos Kit: 64 percent
Ready-to-Grill Restaurant Steaks: 63 percent
Take-and-Bake Desserts: 63 percent
Signature Seasonings, Sauces, and Dressings: 62 percent
Build-Your-Own-Burger Kit: 61 percent
DIY BBQ Kit: 60 percent
Decorate-Your-Own Dessert Kits: 51 percent
Cocktail kits: 48 percent

The other big movement among restaurants chains during COVID-19 has been family bundles. This is another area operators can grab share by presenting bulk options at affordable prices. Once more, a way to hold people over between grocery trips. Or even just a break from cooking for their family. And to the other point, presenting something that doesn’t run into the triple digits dollars wise, since people are trying to make as few grocery store trips as possible.

Datassential said Americans are plenty interested in family-sized meals to go, especially if it comes with a deal. Millennials, who consider themselves foodies but shy away from too much meal planning, showed the most interest. Households with kids were also interested in group meals.

“How interested are you in ordering the following family/group meals from restaurants during COVID-19.”

“Very interested” or “somewhat interested.”

Buy-One-Take-One Entrée Deals (Olive Garden is doing this)

Total: 78 percent
Millennials: 86 percent
Households with kids: 85 percent

Full 3- or 4-Course Family Meal Deals

Total: 68 percent
Millennials: 80 percent
Households with kids: 81 percent

Sunday Roast Sunday Supper

Total: 64 percent
Millennials: 76 percent
Households with kids: 75 percent

“Dinner and a Movie” Deals

Total: 63 percent
Millennials: 81 percent
Households with kids: 75 percent

Breakfast/Brunch Boxes

Total: 62 percent
Millennials: 76 percent
Households with kids: 71 percent

Holiday Feast

Total: 59 percent
Millennials: 73 percent
Households with kids: 71 percent

Upscale Dinner

Total: 58 percent
Millennials: 74 percent
Households with kids: 68 percent

Kids Eat Free

Total: 47 percent
Millennials: 63 percent
Households with kids: 73 percent

Kids Party Packs

Total: 41 percent
Millennials: 58 percent
Households with kids: 64 percent

If you’ve noticed a rise in promotions and discounts in recent weeks, don’t expect a slowdown. Datassential said, consistent with past results, the idea of ordering now and getting a discount to dine-in later is a strong motivator to generate business. One in three consumers said they would also be swayed by knowing their order would benefit charities.

Convenience-driven factors proved top motivators for parents, who would like expanded delivery zones, as well as singles, who would prefer expanded hours.

“What would motivate you to get food from restaurants during the COVID-19 crisis?”

Order takeout/delivery today and get a discount to dine-in later: 42 percent
Portion of your order donated to support people affected by coronavirus: 34 percent
Expanded delivery zones: 32 percent
One free roll of toilet paper or bottle of hand sanitizer with your order: 25 percent
Containers of your favorite restaurant’s sauces, dressings, or seasonings: 24 percent
Expanded delivery hours: 23 percent
To purchase gift cards: 15 percent

Staying tethered to customers remains a key part of this coronavirus-dragged stretch as well. We all know millennials look at food as an experience, so how can operators capitalize during social distancing?

Datassential discovered that three out of four young consumers are interested in cooking/baking classes, tastings, and DIY project kits, “so if a chain’s core customer group skews younger, it could maintain connection to its guests with virtual events or video content,” the company said.

“How interested are you in participating in the following social/experiential options from restaurants?

Restaurant cookbooks

Total: 58 percent
Gen Z: 76 percent
Millennials: 73 percent

Virtual cooking classes/tutorials

Total: 56 percent
Gen Z: 71 percent
Millennials: 72 percent

Virtual game night

Total: 55 percent
Gen Z: 74 percent
Millennials: 76 percent

Virtual baking classes/tutorials

Total: 53 percent
Gen Z: 76 percent
Millennials: 71 percent

Tasting menu

Total: 52 percent
Gen Z: 70 percent
Millennials: 70 percent

At-home “quarantine project” kits

Total: 50 percent
Gen Z: 74 percent
Millennials: 71 percent

Virtual cheese plate/charcuterie tasting

Total: 47 percent
Gen Z: 67 percent
Millennials: 63 percent

Virtual bartending classes/tutorials

Total: 43 percent
Gen Z: 62 percent
Millennials: 63 percent

Virtual wine tasting

Total: 42 percent
Gen Z: 61 percent
Millennials: 60 percent

Datassential then asked consumers to point out some of the most interesting promotions during the coronavirus pandemic. As always, there’s no shame in “borrowing” ideas. That’s how the game has always been played in foodservice.

“One of my favorite restaurants is offering a 1:1 gift card; every dollar spent now will be gifted back into a gift card.”

“Jimmy John’s is selling their fresh baked bread. I like their bread, I hope they continue to sell it after this is over.”

This brings up a good point. Can some of the crisis practices that prove popular carry over into life after COVID-19?

“Take and bake from my favorite local shop. All proceeds went directly to supporting furloughed workers.”

“A French restaurant offering comfort food.”

It goes back to catering to what guests need today. There are no laurels left to sit on.

“Basket including a handmade mesquite board for bread, cheese, and meats, plus a bottle of wine, things to put together your own charcuterie and/or cheese board at home, as well as a gift card for later use when restaurant re-opens.”

“Buy one burger, one gets donated to front-line workers.”

“Family fajitas dinner. It came with everything needed: chicken fajitas, rice, beans, tortilla, salsa and cups, cheese dip, and chips for a great price.”

The last two words might be the most important. Especially if we emerge from this in a recession.

“The ideas surrounding delivery fees and donations toward healthcare.”

“$2 six-pack of beers, free T-shirt, and free toilet paper with food purchase.”

Sometimes, you just need to pull out all the stops.

You May Also Like…

Share This