Digital restaurant orders and delivery orders were up for the month of March, according to new numbers from The NPD Group. Despite — or more likely because of — state-mandated dining room closures, NPD reported digital orders for restaurant meals increased by 63 percent and delivery orders by 67 percent.
Quick-service restaurants (QSRs) represented the majority of the increase in digital and delivery orders. That’s no big surprise, as many of these types of restaurants were already primed for off-premises ordering before the pandemic ever hit. In fact, as far back as November of 2019, the National Restaurant Association predicted that off-premises orders would drive the bulk of QSR restaurant sales over the next decade. Chains like McDonald’s and Chipotle were already running $1 billion-plus digital businesses, and Starbucks said recently that 80 percent of its U.S. orders were to-go orders before the pandemic.
The bigger hit was taken by full-service restaurants. According to NPD, full-service restaurants “realized traffic declines of 35 percent in the month of March compared to year ago March.” The firm also noted that “On-premise traffic share prior to the pandemic represented 80% of the FSR business and off-premise 20%.”
Shelter-in-place orders obviously changed those numbers. Many full-service restaurants have tried to pivot to off-premises strategies. NPD notes that “FSRs able to offer carry-out and delivery were able to lift the segment’s off-premise traffic share by 31%.” But as we’ve covered before, switching from a model that’s built primarily around dine-in traffic to one that relies on things like delivery and curbside pickup can be a complicated process that restaurants aren’t operationally equipped to handle. Meanwhile, some restaurants, unable to weather the current storm, have closed permanently. Others have ceased operations citing health concerns for their staff.
Even as states slowly begin to reopen, businesses won’t be pivoting back to their former dine-in models. Most restaurants will have to operate at reduced capacity — down to 25 percent in some cases — and consider implementing things like reservations systems and store redesigns to accommodate social distancing guidelines.
That said, transactions at full-service restaurants have improved slightly, declining only 67 percent for the week ending on May 3 compared to 71 percent the previous week. This is the third consecutive week these declines have improved, according to NPD. Dine-in restrictions have lifted for roughly 192,000 restaurant units in the U.S., though many more challenges remain for the coming weeks. Those include adopting technologies to enable more digital orders, setting up contactless payments, and preparing for another possible wave of pandemic at some point in the future.
NPD’s numbers echo what the firm’s Executive Director Susan Schwallie mentioned last week at The Spoon’s virtual fireside chat. “COVID has been an accelerator for everything online and digital,” she said at the online event. In addition to online ordering, ghost kitchens are another tech-driven initiative that will stick around in the restaurant world over the long term.