It’s no secret that the COVID-19 pandemic has had a catastrophic impact on the F&B industry. While the news is filled with stories of communities coming together to pour out support for their local restaurants, the harsh reality is that restaurants are severely struggling when you dig into the numbers.
As always in the Avero index, we show you three different groups of full service restaurants: all Avero customers in the US, the 500 top performing businesses among those, and the top 100 restaurants in NYC. To help you understand how businesses are faring if they’ve stayed open, we’ll be looking at trends year over year for the month of April.
ALL AVERO INDEX: Over 70% of Businesses Recorded No April Sales
During the US’s April shutdowns, 72% of restaurants in the All Avero Index recorded no sales in their POS system. While many of these businesses were likely fully closed, some may have also shifted entirely to third party ordering systems like Grubhub or Doordash. We already know that these companies are thriving as guests move to takeout and curbside pick-up, so given low-to- non-existent dining options in-restaurant, it’s possible some operators removed the extra step of keying these online orders into their POS.
Because of the high rate of restaurants that did not send us data in April, we’ve based the rest of our analysis solely on businesses that recorded data in their POS system last month.
Within the All Avero Index, sales were down 85% across the country for this subset of businesses. Average spend and total number of transactions also decreased drastically, with around one fifth the number of transactions vs. April last year, and average spend down 22% for each check.
Beyond the obvious closures and social distancing policies that have led to dramatic decreases in volume, there’s additional, less visible factors that could be exacerbating these declines:
- People are spending less in general as they contend with unemployment and fears about the economy’s ability to recover.
- Guests may order less when getting takeout vs. dining in, decreasing average check – you’re may not have that second cocktail if you’re not sitting at a table for a few hours.
- Even if it’s not rational, many are still afraid to order takeout due to concerns about safety and contamination during the prep and delivery process.
To help overcome these roadblocks, here are a few tips on ways you may be able to continue driving guest volume and spend based on what we’ve seen in the industry:
- Try featuring set menus or package deals with a beverage or appetizer at the top of your menu, so it’s eye catching as guests start to put together their order.
- Consider offering meal kits to help mitigate concerns about human contact with food.
- Explore trends by reading about what your peers are doing across the web — we’ve gathered some resources that may help on our Coronavirus landing page and our latest “Fresh from the Oven” post.
NAT 500: Top Restaurants Mirror Larger National Trends
Within the NAT 500 index, we saw similar closure rates versus the industry as a whole, with 71% of businesses recording no POS data in April. Overall, the sales drop was comparable to the what we saw in the All Avero Index, though there was slightly less of a decline in avg. check at 19% for NAT 500 vs. 22% for all businesses.
NYC 100: Average Spend Suffers as Many Restaurants Close
It’s no surprise that NYC restaurant sales have seen more of a downturn than the US in general – with over 20% of total Coronavirus cases in the country and strong social distancing measures still in place, restaurants have been struggling to meet basic costs like rent. There have been many permanent closures announced, a trend which we‘re unfortunately likely to continue seeing.
Versus the 72-73% closing rate we saw in the other two indexes, a whopping 83% of our NYC 100 index had no data rung into their POS in April. Restaurants that stayed open for business saw a similar decline in sales to NAT 500 operations, with an average 86% drop in sales. Compared to the other two indexes, NYC 100 restaurants also saw the largest drop in avg. spend per check, coming in at a 28% decrease versus last year.
This drop may be related to a few different factors: first, many of the top restaurants in NYC are fine dining establishments that drive average check through guest experience and set menus. While they may still be offering these experiences through delivery, they may be priced a bit less than usual to stay competitive with more casual restaurants that are accustomed to operating in a delivery/takeout model.
Second, as mentioned before, many restaurants may rely on upselling tactics to further boost guest spend. Just imagine the helpful questions and suggestions you’re used to hearing throughout your meal: “Can I get you started off with some drinks?” “Would you like to add some seasonal white truffles to your pasta dish?” “Would you like to see a dessert menu? The flourless chocolate cake is simply divine.” These opportunities have understandably suffered with the loss of face-to-face interaction with a server.
In conclusion, the numbers clearly show that April has been a devastating month for F&B operators – which means it’s more important than ever to get out there and support your local restaurants! Treat yourself to a weekly meal, and maybe order that extra cocktail you’re considering. If you’re still worried about food safety, remember to look for other ways to support your friends and family in the industry through resources like #saveNYCeats.
Next week, we’ll be coming to you with more detailed insight into weekly trends across the country. As we analyze the data for May, we hope to see the industry we know and love start to recover.
