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Off-premise sales have settled. That should impact your plans

Technomic's Take: Takeout and delivery sales have slowed as in-restaurant sales have returned. Operators should adjust accordingly.
Takeout sales
Major drive-thru initiatives like the four-lane Taco Bell have proliferated. But on-premise sales are gaining. / Photo courtesy of Taco Bell.

Technomic's Take

Editor's note: Technomic's Take is a weekly column featuring experts from Restaurant Business sister company Technomic.

On Friday, my newly teenaged son did what he does well and that is to request a last-minute change to our nightly menu.  Fifteen minutes ahead of me breaking out the steaks I planned to grill on that surprisingly nice October evening, I instinctively knew what was coming. Typically, there is a 50% chance that this change in the menu will involve some form of Korean cuisine. It could be BBQ, perhaps a Kimchi burger or Bulgogi. The other 50% of the time he asks for sushi, pizza, a chain burger, or some international cuisine.

That last one was seemingly picked at random, with the sole purpose of testing his dad’s food-sourcing capacity. But with my folder of food delivery apps at the ready, I felt prepared for the challenge. That’s the power of the 3rd party ordering apps. They solve the customer search problem in the most efficient way possible. I can satisfy the whims of a grumpy teen or his even grumpier data quickly with them. I can find something new. Read a review. Do it all in one space. When I was a grumpy teen, I was stuck with the limited consideration set defined by the roads and highways of my town. Now that competitive landscape is folded together in a searchable screen. No car required, at least my car wasn’t on this day.

With that type of decision-making power, it’s no wonder restaurants are gearing up to evolve their businesses in dramatic ways. They’ve spent the past couple of years investing in digital infrastructure to capture the type of cravings driven demand I just described.  Now they have designs on their physical infrastructure. The need to evolve with those investments is literally putting pressure on the four walls of restaurants. Our customers always ask what the magic bullet is here. What square footage should be devoted to front and back-of-house? Where do I put the cubbies to pick up the food? Do I need them? Should they be more automated? Do I even need a dining room?

The answer to all of those questions is not a cop out, but it does depend. The biggest risk here is with the square footage question. The answer will depend on the volume changes a restaurant experience on and off-premises and whether their current makelines can handle both or not. If not, then yes the kitchen needs to expand so it doesn’t disrupt order flow. The risk is in over-correcting, however. While it is true that we’ve just lived through a digital transformation of the restaurant market, the evolution will only go so far.

The consumer’s appetite for human interaction has not gone away. That need is showing up in our numbers, because on-premise sales have gained ground and the split between on and off-premise sales has started to normalize. At present, total off-premise orders are 9% higher than they were pre-pandemic (as a share of all restaurant orders). It’s not 50% or 25%. It’s 9%. What this means is all those futuristic drive-through-only stores, while having a right time, right-place, will not be overwhelming the restaurant landscape, or at least should not be. There is a place where the return of the carhop and even automat restaurant formats make sense, but where, well, it depends. High-density commuter corridors, mostly.

What this implies is that the restaurant of the future will most likely be different by a matter of degrees. Perhaps 9% different on average, but that only works if that provides enough space for a new makeline to service the elevated volume of orders coming from outside the four walls. But like anything, the exact percentage will depend on kitchen capacity and the volume of off-premise orders by location. That volume will be dependent on people like myself and whether we give into our children’s demands or not. At some point, I’ll have to grill these steaks myself.

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