Radio Works for Restaurants

After losing a staggering $240 billion in sales in the past year, the restaurant industry has entered a period of transition and redevelopment in 2021. Changes in consumer behavior, and how the industry reacted to them, such as a new focus on off-premises dining and takeout, are likely here to stay. For radio to participate in the category’s ongoing rebound requires understanding how the industry is adapting and evolving.

Even the definition of what, exactly, a restaurant is continues to change.

After the public health crisis caused 2020’s projected revenues to plummet by 27% last year, the industry – which encompasses all meals, snacks and alcohol prepared away from home including all takeout meals and beverages – is forecast to book $731 billion in revenue this year.

“The trend line has been reversed and we are up about 10% over 2020,” Hudson Riehle, Senior VP of the National Restaurant Association, said Wednesday. He called 2020 “the year the industry will attempt to regain sales and employment levels pre-pandemic.”

Before the COVID outbreak, just over half (51%) of the dollars Americans spend on food went to restaurants. As of March 2021, it was 49%, a dramatic improvement over Q2 2020 when it fell into the upper 30-percent range. “As on-site restrictions have eased, that proportion is moving up and there’s no doubt as the years progress ahead that the industry will represent the majority of food spending in America,” Rihle said during “Radio Works For Restaurants,” a live streaming session presented by the Radio Advertising Bureau.

The bottom fell out in April 2020 when eating and drinking establishments, which account for 70% of industry revenues, plunged more than 50% from February. A rebound began in the second and third quarters. By March 2021, the industry saw its largest sales volume since the pandemic began, clocking in at $62.2 billion. “A lot of that March number is driven by federal stimulus payments and, as the weeks progress, the effects of those payments will start to ebb,” Rihle cautioned.

On-premises dining dollar volumes remain significantly below pre-pandemic levels. Before the outbreak, over 60% of all restaurant traffic was off-premise. That shot up to 90% in Q2 and Q3 of 2020 and is currently in the low 80% range and expected to remain high as the pandemic continues.

In normal times, one of every four restaurant dollars was related to travel and tourism. But as business and leisure travel ground to a screeching halt last spring, so did those dollars. “How these travel and tourists come back in their patronage patterns becomes very important for growing sales in the time head,” said Rihle.

Pandemic Trends Here To Stay

Looking ahead, several significant changes made by restaurateurs to adapt to the pandemic are expected to remain. Menus were streamlined to make them easier to access and read in online searches. A new type of dining experience emerged, the “streetery,” as establishments added outdoor seating on streets, sidewalks and parking lots to generate additional capacity outside the restaurant. Takeout and delivery packaging was updated and operators made greater use of technology to order and pay for meals.

Many of these changes are likely here to stay. More than 70% of operators surveyed by the National Restaurant Association say they expect to keep some of these changes post-pandemic. Off-premise opportunities are expected to fuel industry growth and data will play a more crucial role as operators translate numbers from online ordering and payments systems into operating knowledge.

In the decade ahead, Riehle foresees “intelligent” restaurants that use AI “to not only predict patronage trends but to change menu pricing by time of day and weather conditions.” The number of restaurants without public access and devoted exclusively to the delivery market will increase, along with a greater emphasis on smartphone apps and new delivery systems powered by autonomous vehicles. Another trend to watch: the bundling of big tech and food in which streaming services enable ordering meals and beverages.

As more Americans are vaccinated and get out and about, operators are feeling more upbeat. Roughly 70% expect conditions to improve in the next six months. “The consumer pent-up demand for sales is still high and will definitely bolster growth going forward with overall greater emphasis on that off-premise market,” Rihle said.

The webinar also included presentations of restaurant category case studies by Nathan James, Digital Content Manager, at SummitMedia’s Omaha cluster, and Heather Michelotti, Account Executive, for Bonneville International in Denver.