Impact of Covid-19 on US Restaurant Businesses

COVID-19 and social-distance measures have made unavailable a variety of customers' preferred activities, such as a night at the movies or professional sports games. But the biggest change is probably that many places in the U.S. no longer have spaces to eat inside.

Before the Pandemic, Digital and Custom Mobile Apps Delivery Penetration Were Increasing.

A transition that was anticipated to take years is now occurring in a matter of months. "Total online food delivery — via online delivery platforms and restaurant ordering system apps — was expected to reach $45 billion in 2021, up from $41 billion in 2020, accounting for 13% of the addressable market this year and 16% by 2022, compared to 2025 in our previous forecast. This is the first time in almost three years that consumer spending has grown faster than delivery platforms.

Working from Home

It has affected the amount, timing, and frequency of restaurant expenditures. According to the US Bureau of Labor Statistics, the percentage of people working from home increased to around 50% during the crisis, up from 15% before the crisis, and is expected to remain elevated even after the pandemic.

Restaurants Ordering System App Chains' Market Share could Consolidate.

During the COVID-19 era, the fate of independents and smaller chains has been one of the most closely observed and discussed topics. Before the crisis, there were about 370,000 independent restaurants in the United States. This accounted for approximately 57% of all restaurants, the majority of which were full-service. According to estimates, COVID-19 could force the closure of 5 to 30% of these restaurants, or between 20,000 and 110,000 establishments.

"Assuming 10% to 15% of independents close, we estimate that $20 billion to $35 billion in sales would become available, primarily in the full-service sector. Using the same assumptions, we found that between 2% and 4% of sales in the online food ordering app for restaurants could be freed up.

Real estate footprints

It may diminish after COVID. As chains think about giving customers more access to their brands, store footprints, like the number and location of stores, and multi-brand location strategies, in which two or more chain businesses share a building, are likely to become more important.

The acceleration of digital will also increase the importance of curbside pickup windows and lanes. To make room for more takeout orders, full-service restaurants may make their dining rooms smaller and their takeout areas bigger.

Consumer Expenditure on Groceries

Food at home may retain a portion of the market share gained during the pandemic. Since roughly 2015, restaurant expenditure (food away from home) has absorbed approximately 53% of consumer spending, compared to 47% for meals at home. This pattern appears to have reversed.

We now expect that these two relative market shares will reverse, adding that food away from home is unlikely to reclaim its earlier percentage of consumer spending until at least 2022. Still, being able to work from home and get groceries delivered may make up for some of the higher costs of eating at home.

Conclusion

In addition to these five long-term patterns, additional adjustments are occurring. For instance, the trend toward "ghost kitchens"—warehouse-style structures that hold many delivery-only restaurants—could gain momentum.

Amid the rising importance of scale and market share, especially the technological benefits of a shared services model, the industry may also experience a rise in mergers and acquisitions. Lastly, as concerns about the health of workers continue, kitchen automation and custom mobile apps for restaurants may become more important.