The pandemic has been good for the casual dining sector in one respect: It’s forced many chains to deal more effectively with their takeout strategies.
As dining rooms closed, many of the larger chains that had pre-existing takeout strategies have been able to pivot more quickly, helping them generate strong sales from people taking their food with them.
Those sales slowed once dining rooms reopened, but based on numbers released last week, they didn’t lose as much as you’d think.
Consider: Bloomin’ Brands, the operator of Outback Steakhouse and Carrabba’s Italian Grill, among other chains, peaked at $32 million in weekly off-premise sales at one point in April, more than triple the normal amount. That was about all of the system’s total sales during that week.
With dining rooms reopened, total sales increased to $52 million total last week. Off-premise sales decreased to $23 million that week. While that’s a decrease, it’s still more than double the pre-coronavirus sales levels. “That shift is going to stay,” CEO Dave Deno said, confident in the company’s ability to keep those sales.
BJ’s Restaurants had a similar result. Off-premise sales tripled when states shut down dining rooms, and as they’ve reopened those sales are more than double the pre-COVID levels.
The improving off-premise sales is the best news for casual dining chains during the pandemic. Casual dining chains have needed to take more aggressive steps to develop an off-premise business, and many of them have taken considerable steps in that direction. The lack of dine-in service forced the issue.
Both Bloomin’ and BJ’s were among the more aggressive in developing takeout before the pandemic, and it’s perhaps unsurprising to see those two chains generate strong off-premise growth after states closed dine-in service.
When consumers were stuck at home, they frequently ordered takeout, and they typically took the easy route, going through the drive-thru, ordering delivery or using mobile apps, all of which have surged in the past few months.
It’s fair to say that an elevated level of takeout is here to stay, as Deno suggests. After all, consumers are likely to stay in an elevated state of takeout-heavy restaurant usage for some time, given persistent concerns about the virus. And they were headed in that direction, anyway.
At the same time, it might be too early for these companies to take victory laps.
For one thing, both companies lost some of their off-premise business when dining rooms returned.
And while their off-premise business remains far and above where it was pre-pandemic, most of their restaurants are still not at full capacity. Adding more capacity and therefore generating more dine-in sales would likely result in further decline in takeout sales.
In short, it’s probably unrealistic to expect a fully open Outback Steakhouse chain to generate 45% takeout sales. A good portion of those sales are likely coming from consumers who do not feel confident in dining inside of a restaurant.
Once they can dine in a restaurant and feel good about it, they would seem less likely to get takeout.
Another concern is the state of the economy. As we’ve been saying for some time, much of the industry’s growth the past few months has been backstopped by federal stimulus payments, specifically $600 in additional weekly unemployment benefits. Those benefits have expired.
Some 30 million Americans receive those benefits, so the loss of that income probably hurts casual dining takeout as much as anything else. Trading down to fast casual or fast food is a time-honored tradition in the industry.
All that said, casual dining chains have been able to find some long-needed footing on takeout, making the pandemic a bright spot in that regard, at least for those chains that can make it through to the other side.
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