Restaurants are rebounding — at least those with carryout

An employee hands out takeout orders to customers outside a Chick-fil-A restaurant in the New York borough of Brooklyn on April 15. Stephanie Keith/Bloomberg

The switch from negative to positive came so fast that it took the CEO of Dallas-based Dickey’s Barbecue Pit by surprise.

Laura Rea Dickey, who helms the chain of about 500 locations that serves spicy kielbasa sausage, pulled pork and chopped brisket, said sales plunged 38% from recent levels in March amid commerce restrictions to stop the spread of COVID-19. It was a rapid descent that she described as a “shock to the system.” But this “basement” has turned around faster than she expected.

“People are just breathing maybe a sigh of relief,” Rea Dickey said in an interview. “Whether that’s permission — or comfort — to go back to some of their normal.”

With some states reopening their economies, there’s growing evidence that cooking-at-home fatigued consumers are eager to order from restaurants again — at least those that have social distancing built in via takeout or drive-thru. Some restaurants are also adapting their offerings — think more family packages, fewer lunch specials — to meet diners’ needs.

To be sure, the situation remains dire for many restaurants that are built around the dining experience, which are facing the double whammy of nearly empty dining rooms and lost liquor sales. And any gains could quickly evaporate if COVID-19 cases take a turn for the worse.

But companies that have built their business around delivery, at least, are seeing the payoff. Papa John’s International Inc., for example, said April was the strongest sales month in the company’s history.

“All day parts are up dramatically in double digits,” CEO Rob Lynch said in an interview. “We’re seeing more disproportionate growth during the week.” That contrasts with weekends, when the company is missing out on sales related to sporting events and parties.

In Georgia, foodservice is “on the road to recovery” and the pace of growth is picking up speed, according to a report from Placer.ai, a data tracking firm. Using week-on-week data, the company cites increased visits at Chick-fil-A and Popeyes in the days through May 7.

“Fast Food is among the sectors that were best situated to sustain relative success during the pandemic,” according to Placer.ai’s report. “The combination of drive-thru, delivery, and takeaway channels gave these companies a powerful opportunity to mitigate losses.”

A report from NPD Group, which tracks retail performance via point-of-sale data, shows that declines in restaurant transactions have also steadily eased. For the week ending May 3, restaurant transactions were down 26% from a year earlier — an improvement from the declines of 32% the previous week and the 43% drop the week of ending April 12.

In contrast, transactions at full-service restaurants fell 67% in the week ending May 3 — a modest improvement from the 71% decline the previous week.

Chick-fil-A, based in Atlanta, is seeing a boost from chicken Parmesan meal kits that are available in 900 locations across the U.S. now. It’s helping the chain and its franchisees, according to Michael Patrick, the company’s head of innovation and new ventures.

“We’re in very different times where every state has different shelter in place rules,” Patrick said in an interview. Visitors are spending more per visit and purchasing more when they come for carryout, he said.

The situation remains critical for much of the restaurant industry, especially those that are focused on in-store dining. To adapt, the industry may have to change the way they operate “for the foreseeable future and possibly forever” after COVID-19, Restaurant Brands International Inc. CEO Jose Cil said on Tuesday.

Michael Halen, an analyst with Bloomberg Intelligence, said April’s complete collapse — casual-dining same-store sales fell more than 75%, according to MillerPulse data — improved as the month wore on, “signaling better results in May.”

“Restaurant same-store sales bottomed in April and will improve in May due to dining room reopenings, cooking fatigue and cabin fever,” Halen said in a report. However, growth on a year-on-year basis isn’t expected until 2021 because of the spike in U.S. unemployment, he said.

Following the rapid changes in consumer behavior, restaurants have shifted gears by changing their offerings with an eye on keeping people fed beyond just one meal at a time.

Dickey’s, for example, has seen a big boost in selling meat by the pound and family-pack meals, which are now 22% of sales, compared with 11% pre COVID-19. In fact, they sold so many half and whole briskets that they had to ramp up their supply to meet the jump in demand.

“They wanted to be able to stretch that whole meat for the whole week or the weekend,” Rea Dickey said.

WPBloom

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