Restaurants Shift Strategy to Meet Pandemic-Fueled Changes In Consumer Behavior

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Welcome to your weekly food & beverage report, where we cover everything you’ll need to know for the week ahead. This week, pandemic-induced changes in consumer behavior hold strong, fast-casual restaurant chains work to adapt, and a new type of alternative milk hits the market. Let’s dig in.  

The COVID-19 pandemic may feel like the past, but its impact can still be seen through lasting changes in how consumers purchase restaurant meals

While for many the COVID-19 pandemic feels over, its impact on consumer trends is still holding strong. Pandemic restrictions coupled with the ease and convenience of mobile transactions saw a drastic increase in drive-thru orders, delivery, and mobile ordering. McDonald’s (MCD) has boiled down the ongoing social automation into “The Three D’s”: digital, drive-thru, and delivery. These trends are holding strong, and fast-casual restaurants are working to increase efficiency, cut costs, and reap the reward. 

• Why dine in?... Chipotle’s (CMG) in-restaurant sales currently account for only a third of its revenue. Panera (PNRA), which recently opened its inaugural to-go-only locations this summer, attributes only 20% of its revenue to in-restaurant sales. 
• Just in time for spooky season… These shifts in revenue have resulted in some chains like Qdoba (APO) and Wendy’s (WEN) looking to “ghost kitchens” to fulfill delivery orders. Ghost kitchens are unmapped, closed-door locations where delivery orders could be prepared for multiple different restaurants at once. 
• Tables have turned… Mark Landini, a retail designer who’s worked with McDonald’s and other brands, said “Pre-pandemic, about 50% of food was consumed on premise, and 50% was drive-thru and delivery.” Thanks to the pandemic? “That’s now changed to 20-80.” 
   

Across the fast-casual restaurant industry, companies across the supply chain are shifting strategies to increase their bottom lines

Food service financials… Kraft-Heinz Co.’s (KHC) global chief financial officer Andre Maciel is expecting the foodservice business to grow at mid- to high- single digits. At the Barclays Consumer Staples Conference in Boston, the CFO said that “if you do it well, [foodservice] can become the most impressive penetration machine in the market… If you sell branded products, you are basically teaching consumers about how great our products are.”

• School’s cool… Specifically, the brand is focusing on continuing to bring its products to schools, where it already has a significant footprint with ketchup, Mac & Cheese, and Lunchables. 

Royal revamp… Burger King (QSR) has announced a new $400 million strategy to revamp its advertising and renovate its restaurants in an attempt to boost dragging US sales. The price tag is projected to impact the chain’s adjusted earnings per share for 2022-2023 by around 11 cents annually, with the investment paying off by 2025. 

• Trying it out… Last year, Burger King rolled out a new, slimmed-down menu aiming to speed up drive-thru times. The restaurant also tried decreasing its paper coupons to drive customers to its mobile app. An additional $30 million will go towards improving its mobile app through 2024.ed a new CEO last Thursday, effectively ending Howard’ Shultz’s interim position as CEO. 

Other stories…

• Diction in the kitchen… Pumpkin spice, omakase, ras el hanout, mojo, birria, oat milk, sessionable, plant-based, and banh mi are the nine food and beverage words that Merriam-Webster has added to the dictionary this September. 
• Calorie cutting commitment… The candy industry has met a goal made by Mars Wrigley, Ferrero, Ferrara, Lindt, Ghirardelli, and Russell Stover, with each of the brands offering sizes at or under 200 calories. 
• Talk about alternative milk… Kellogg (K) has released its new “instabowls'' product, which are single-serve bowls of cereal. The bowls also contain milk powder: adding cold water and stirring rehydrates the milk. 

That’s all we have for you this week, do you have anything for us? We’d love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input. 

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