May 2020

FROM THE DESK OF NPD
SETTING THE STAGE
Operators need to focus on winning back
customers post-COVID-19
As we ended the fourth
quarter of 2019, restaurant
growth was slowing.
Unemployment had risen,
consumer sentiment had
fallen and household debt
was at a record high. January and February
continued with the slow traffic-growth
trend of just one per cent — the lowest in five
years. When there is economic uncertainly,
one of the first things people cut back on
is restaurant meals and, with many economists
suggesting Canada will face a recession
coming out of this isolation period,
restaurants will have to work harder than
ever to win back their customers.
Here are some areas for restaurant
oper-ators to focus on based on market
trends from before the COVID-19 crisis.
LET’S MAKE A DEAL
With a high likelihood of an economic
recession as we come out of the isolation
period, expect consumers to be looking for
deals. It will be important for the industry
to avoid the pitfalls of deep discounting and
instead come up with ‘deals’ that present the
consumer with good value and not necessarily
just a good price.
Dealing is typically higher among consumers
aged 18 to 34 and those with lower
incomes. The overall deal rate has risen by
five points over the last five years to just
under 27 per cent of commercial visits, with
research showing combos and coupons are
the most popular forms of dealing.
Digital orders (placed online or via
mobile devices) generate the highest dealing
rates, approaching 50 per cent of all orders
that include a deal. Curiously,
family visits include fewer
deals than adult-only visits
so, moving forward, more
‘family-meal deal’ types of
offers could be an area where
operators can provide something
unique.
The average check on deal
visits is higher than on nondeal
visits and is rising at a
similar rate. This supports the
earlier statement that a deal
does not necessarily mean a
low price, just good value. In
other words, it’s possible to get
people to spend more to get
a good deal — for example, offering something
for free (delivery, dessert, appetizer) if
a minimum threshold is met.
DELIVERING THE GOODS
The obvious behaviour that comes to the
forefront during this time is increased delivery
use. The question on everybody’s mind is
how much of this behaviour will carry over
post-COVID-19. Will the operators who are
new to delivery realize its value and continue
to support it? Will consumers who are new
to delivery continue to order or will they go
back to their previous ways?
Delivery has been one of the fastest-growing
segments of the market for several years
and represents 300-million visits, or four
per cent of total visits. Over the past year,
delivery was up 19 per cent and represented
about half of all market-visit growth.
According to research company
CivicScience, the biggest growth in delivery
in the U.S. market at this time is displaced
office workers working from home.
CivicScience also reports that while people
are ordering more delivery, they’re also tipping
their drivers more, which is good news
for frontline workers.
FOODSERVICEANDHOSPITALITY.COM
MAY 2020 FOODSERVICE AND HOSPITALITY 7