We are in the midst of wrapping up our recurring deep dive study into off-premises dining. The primary guiding hypothesis of the study this year was the space devoted to off-premises orders would be driven by a proportional shift in where we eat. Notice the word "proportional" was used and not "transformational." Our behavior tracking studies have been telling us for some time that ordering patterns have stabilized and that on-premises dining will remain a key pillar of the restaurant business in general. The question has always been, however, how different will it be and by how much.
When we look at where Americans are eating their restaurant food, it is clear that the pandemic’s lasting impact was to move a small but substantive portion of the business off-premises, likely permanently. Restaurants invested in ways of reaching consumers outside the four-walls rapidly to keep their businesses open and the result has enabled them to follow their customer’s off-premises. That shift is roughly a net 15% change from pre-pandemic norms for QSRs and 18% for Fast-Casuals. For full-service restaurants, that shift is substantive as well (between 11% to 14% shift to off-premises dining).
I’ve written on this topic before, but given we now have a clean Q4 comparison to make to those “before pandemic times,” the picture is starting to look clearer and is staying relatively consistent each month. The implications of this shift point to a complex service model, marketing mix and menu strategy. In short, before the pandemic, the competitive landscape had a strong division of labor between convenience restaurant concepts and experiential restaurant concepts. Today, that division of labor exists inside nearly every restaurant.
To be successful and to win an increasingly harder to find diner, it is important to note that the distinction between convenience and experience is now not as clear. For a bigger share of occasions, these two ideas are blended by the customer in ways we haven’t really contemplated before. Take for example the curious case of Fine Dining consumers who are now more likely to eat takeout food while parked in their cars. Prior to the pandemic the average full-service restaurant had just under 1% of their orders consumed in a car while parked.
But in Q4 of 2022, 8% of fine dining orders were consumed in a car while parked. Certainly, convenience is a factor here, but do we really think these consumers are willing to sacrifice the food experience (at least completely). Most probably not. For comparison purposes, this level of consumption is equivalent to the proportion of QSR orders that were consumed in a car before the pandemic (that number is now 14%). The implication here is how will this particularly nuanced “occasion” be served in the future. How will a restaurant drive the value they seek out of an interaction with their customers in a setting as humble as their car?
The other major shift almost goes without saying. Early in the pandemic we talked about the shift away from work to the home. Orders eaten at work have recovered their share from pre-pandemic times. But At-Home occasions remain significantly elevated (up 12% on net at LSRs and ~8% at FSRs). These occasions are largely driven by convenience, but with expectations that do not look much different than on-premises occasions (i.e., those same cravings driven, quality-expecting, friendly-service loving customers have those expectations when dining at home). This too appears to be a fairly stable shift that we expect to hang around for at least the foreseeable future.
The point of telling you the somewhat obvious is that there are nuances settling into the cracks of the post-pandemic “normal.” Most of what we expected to teach our clients were what percentage of the store should be reserved for on and off-premise service, which packaging solutions makes sense or how could we make the drive-thru more exciting and seamless.
These are common questions our study sponsors will get answers to soon. But the whole dining-in-the-car thing came as a surprise to me despite being guilty of it myself. I mean who else saw the family eating prime rib from plastic containers in a car and a rainstorm over by the parking lot dumpster? Yeah, that was me and my family. My son’s biggest fear in that moment was the whole world was laughing at us. Despite his embarrassment, I probably should have seen this change coming. Besides, I have the Au Jus stains on my car console and the phrase “Whatever dad” ringing in my ears to prove it. Mostly I wrote all of this to tell whoever has a solution for upscaling my dumpster-side, fine-dining experience that you have my attention.
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