Customer transactions at major U.S. restaurant chains declined by 10% in the week ending July 5 compared with the same period one year ago, an improvement over the previous week’s decline of 14%, reported The NPD Group. All the improvement can be attributed to major quick-service restaurant chains (QSRs), where customer transaction declines improved by four points from the prior week’s decline of 13% versus one year ago. Full-service restaurants (FSRs) continued to struggle in the week with customer transactions down 30% compared with a year ago, a five-point decline from the prior week, according to NPD’s CREST Performance Alerts.

“We are entering a new phase of the restaurant industry evolution: the divergence of quick-service restaurants and full-service restaurants,” said David Portalatin, NPD food industry advisor and author of Eating Patterns in America, in a press release. “Long before anyone ever heard of social distancing, consumers were showing an increasing preference for off-premise restaurant meals. Then suddenly this March, we entered a reality where the entire restaurant industry was off-premise only. That harsh reality was far harsher for FSRs, a segment that saw transaction declines near 80% or worse at the depth of the pandemic in the United States. In contrast, QSR declines were roughly half as severe thanks to their abundance of drive-thru windows, capacity for high volume pick-up, and the ability of large QSR chains to leverage digital apps as an accelerant as well as provide a contactless experience.”

Two things have happened since dine-in services were closed in mid-March, according to Portalatin. The first is that QSR chains have doubled down on their off-premise prowess with streamlined menus optimized for volume and efficiency and by expanding drive-thru capacity with reconfigured traffic flow and added lanes. These changes are among the reasons QSRs have continued to improve, irrespective of whether their state and local authorities have granted reopening of dining rooms. Given this new off-premise capacity, many QSR chain operators have found the incremental cost of opening a dining room to be greater than any incremental margin dollars they might gain and are remaining closed even when governing bodies allow reopening.

Secondly, FSR performance remains largely at the mercy of governmental regulation and the persistence of COVID-19. For many FSRs, making the pivot to off-premise is far more difficult, said Portalatin. These restaurants can employ similar tactics as QSRs, like streamlined menus and temporary drive-thrus, but none of these tactics play to the inherent strengths of these restaurants. Furthermore, as on-premise dining restrictions are lifted, many FSR operators are forced to dismantle much of their temporary off-premise infrastructure so that guests can park, have a waiting area that allows for social distancing, and labor can be redirected to the front of the house.

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