A ‘Once-in-a-Lifetime Opportunity’ Emerges Out of the Pandemic.
Think of it this way. Could you throw a dinner party for 100 people with 24-hour notice? What if you had zero idea how many people would show up? Could be 50, might be 300. Sounds nonsensical, but it really isn’t all that different from the stop-start-stop-start expectations placed on restaurant operators during COVID-19. The process isn’t like flipping a switch. And fresh food doesn’t sit on a shelf like retail products do.
This has forced a lot of restaurants to get lean, reduce inventories, and develop menu items executable with skeleton crews. In the National Restaurant Association’s State of the Restaurant Industry Report for 2021, 63 percent of fine-dining operators and roughly half of casual and family-dining restaurants said they have fewer items on the menu today than before coronavirus.
Naturally, given the off-premises DNA, the trend was less dramatic in limited service, where half of operators kept their menus about the same. More than 60 percent of restaurants surveyed said they plan to keep offerings where they are in the coming months. Meaning, these smaller menus could have lasting power.
Back in June, Darden CEO Gene Lee said COVID opened a “once-in-a-lifetime opportunity” for some. A chance, “a lot of us had been waiting for,” he said.
Lee was referencing the Olive Garden and LongHorn parent’s efforts to streamline menus, processes, and procedures during the crisis. Lee called it “the most prominent and the most significant thing we’ve done.”
“And that’s forever,” he said.
This is often a slick slope for restaurants, especially those with generational equity and strong core demand. You don’t want to cede share simply because you took a menu classic off.
But, of course, everything has trade-offs. Lee said COVID helped illuminate this challenge a bit. Consumer habits of late shed light on menu favorites people couldn’t live without. Want to know what someone really craves? Take it away.
So Darden paid devout attention to what guests started ordering when they either made the trip back to dining rooms out of quarantine, or decided to give takeout a shot. “That’s been the biggest insight—that some of what I would call the superfluous menu items that are on our menu that one out of 100 people were buying when they were coming in, just aren't important, and most of those created the complexity in the kitchen,” Lee said over the summer.
“I think that's what's going to be the lasting change. It's going to have significant impact two years, three years, four years from today.”
Both Outback and Darden spoke to the ancillary benefits. Lee said Darden sliced a lot of prep work that will never go back in. Outback CEO David Deno echoed that. Also, the steakhouse enjoyed “record low levels of waste” over the back half of the year thanks to a more efficient menu design released in September. In terms of four-quarter adjusted performance by cost category, COGS was 60 basis points favorable, year-over-year, thanks to that cutback, the company said.
In another example, Red Robin sliced options more than a third, which the company said led to more than $2 million in annual savings.
Broadly, Outback adopted a similar stance as Darden. The new menu is steak forward, with a nod toward value with lower-priced appetizers, like its famed Bloomin’ Onion. A balance of paring down yet also accentuating brand affinity. Can casual chains actually emerge from COVID stronger in their identities than before? Did the crisis helped erase some of the “all-things-to-all-people” pitfalls brands fell into around the Great Recession, when they began to chase millennial customers?
Bennigan’s CEO Paul Mangiamele explained the trap.
“People always say, ‘We’re going back to the basics.’ Well, never leave them,” he said. “Never leave your basics, because it brought you to the party in the first place.”
Yet there is a caution point. “Those of us in casual dining have to be very, very careful now,” he said of COVID changes. “… There are [brands] cutting back portions, raising prices. And then failing to deliver the value that their brand is supposed to espouse. They’re only going to find themselves in more trouble later on.”
Put another way, restaurants cutting back should do so without changing what they stand for. Look at it as an opportunity to become a stronger and more focused version of yourself, rather than an excuse customers might accept because life is full of them during COVID.
Tom Cook, a principal at consulting firm King-Casey, suggested operators conduct a TURF Analysis to determine the shortest list of menu items to satisfy the vast majority of customers. “Streamlining your menu will speed up back-of-house menu item preparation time, reduce inventory levels and improve customer ease and speed of ordering,” he said.
Operators can then use menu operations analytics and item complexity ratings to further streamline. This could entail simplifying the preparation of certain items and eliminating those determined to be too labor intensive.
From the Association’s survey, here’s a look at the number of menu offerings now compared to pre-pandemic.
Family dining
More menu items: 5 percent
Fewer menu items: 47 percent
About the same number of menu items: 48 percent
Casual dining
More menu items: 5 percent
Fewer menu items: 53 percent
About the same number of menu items: 42 percent
Fine dining
More menu items: 7 percent
Fewer menu items: 63 percent
About the same number of menu items: 30 percent
Quick service
More menu items: 9 percent
Fewer menu items: 35 percent
About the same number of menu items: 56 percent
Fast casual
More menu items: 12 percent
Fewer menu items: 34 percent
About the same number of menu items: 55 percent
Coffee and snack
More menu items: 12 percent
Fewer menu items: 38 percent
About the same number of menu items: 50 percent
And what about six months from now?
Family dining
More menu items: 6 percent
Fewer menu items: 30 percent
About the same number of menu items: 65 percent
Casual dining
More menu items: 7 percent
Fewer menu items: 31 percent
About the same number of menu items: 63 percent
Fine dining
More menu items: 8 percent
Fewer menu items: 30 percent
About the same number of menu items: 62 percent
Quick service
More menu items: 13 percent
Fewer menu items: 20 percent
About the same number of menu items: 67 percent
Fast casual
More menu items: 7 percent
Fewer menu items: 22 percent
About the same number of menu items: 71 percent
Coffee and snack
More menu items: 11 percent
Fewer menu items: 21 percent
About the same number of menu items: 68 percent
Prior to COVID, roughly 80 percent of full-service traffic took place on-premises, according to The NPD Group. It’s why, of course, menu disruption in 2020 leaned heavily toward sit-down brands over those already invested in delivery, takeout, and drive-thru. Fifty-six percent of fine-dining operators said they added menu items made specifically for takeout or delivery. Nearly four in 10 family dining and casual-dining operators said the same.
Percentage of operators who say their menu is more tailored to off-premises than it was before COVID
Family dining: 39 percent
Casual dining: 47 percent
Fine dining: 55 percent
Quick service: 34 percent
Fast casual: 47 percent
Coffee and snack: 36 percent
Percentage of operators who say their restaurant added menu items that are specifically designed for takeout or delivery
Family dining: 36 percent
Casual dining: 37 percent
Fine dining: 56 percent
Quick service: 22 percent
Fast casual: 27 percent
Coffee and snack: 33 percent
Anybody who claims to know exactly how much off-premises business will stick when dine-in returns might have some lottery tickets to sell, too.
Yet it’s pretty safe to bank on elevated volume compared to before, especially if it was less than 10 percent of mix pre-COVID. This will stem from new customers who found the brand, either on third-party apps or via review sites, etc. And also those core users who searched for an outlet to get food from the brands they missed during lockdown. That same customer, while a sure candidate to return for dine-in, might just turn to takeout or delivery now when the occasion speaks to them. They’ve crossed the awareness gap and have confidence in the process. Even if it’s just once a month, it’s still a transaction that was off the map pre-virus.
Generally, this accelerates something that was on the minds of restaurants ahead of the crisis. It’s worth thinking about packaging and portability when it comes to off-premises menu development.
So some of these new, added menu items will likely stick around. If not, thinking through what travels and how it travels is now a tangible part of the day-to-day. COVID lit the ignition on that trend for anybody lagging behind. Other opportunities emerge
With travel discouraged, 77 percent of adults in the Association’s survey said they’re more likely to stay at home and watch on-demand TV and videos than ever. To satisfy restaurant cravings (and maybe relieve cooking duties), 52 percent of adults, including 63 percent of millennials, said they’re more likely to incorporate restaurant fare into their home-prepared meal.
Think dessert, appetizers, even alcohol. A restaurant’s off-premises offerings can get specific, a la carte even, to help guests.
Percentage of consumers who say they’re more likely to stay home and watch on-demand TV and videos than they were before COVID
All adults: 77 percent
Gen Z: 84 percent
Gen X: 79 percent
Millennials: 79 percent
Baby Boomers: 72 percent
These so-called “blended meals” are on the rise.
Percentage of consumers who said they’re more likely to mix restaurant items—such as a main dish, side, or dessert—into their home-prepared meals than they were before COVID
All adults: 52 percent
Gen Z: 58 percent
Gen X: 58 percent
Millennials: 63 percent
Baby Boomers: 49 percent
Let’s get into the meat of menus today. Most operators surveyed said their current best-selling food and beverage items were already on the menu before the pandemic. In the full-service segment, burgers and beer were the most popular. Sandwiches and soft drinks lead the quick-service group. Fine-dining operators (11 percent) were the most likely to say their current top-selling menu item was newly added to their menu after the outbreak. That’s understandable considering fine-dining menus were hardly built to travel.
But overall, this speaks to Darden and Outback’s directives. Cutting back a menu does not have to mean reinventing the wheel.
Restaurant operators’ reporting of their most popular food item right now Full-service operators
Burgers: 19 percent
Seafood items: 13 percent
Pizza: 11 percent
Steak: 9 percent
Chicken items (excluding wings): 8 percent
Breakfast items: 8 percent
Pasta: 6 percent
Mexican food: 5 percent
Sandwiches/subs/wraps: 5 percent
Chicken wings: 4 percent
Limited-service operators
Sandwiches/subs/wraps: 18 percent
Pizza: 14 percent
Burgers: 12 percent
Chicken items (excluding wings): 7 percent
Ice cream/cookies/cakes: 7 percent
Baked goods: 7 percent
Breakfast items: 7 percent
Mexican food: 5 percent
Barbecue items: 3 percent
Seafood items: 3 percent
On the beverage side …
Full-service operators
Beer: 29 percent
Soft drinks: 16 percent
Wine: 15 percent
Coffee: 9 percent
Margaritas: 6 percent
Limited-service operators
Soft drinks: 44 percent
Coffee: 25 percent
Beer: 8 percent
Bottled water: 5 percent
Iced tea: 4 percent
When it comes to top sellers, it’s more tried and true than new at this juncture.
Percentage of operators who say their restaurant’s current top-selling food and beverage items were newly added to the menu after March Family dining
Most popular food items on menu: 4 percent
Most popular beverage items on menu: 4 percent
Casual dining
Most popular food items on menu: 4 percent
Most popular beverage items on menu: 5 percent
Fine dining
Most popular food items on menu: 11 percent
Most popular beverage items on menu: 7 percent
Quick service
Most popular food items on menu: 3 percent
Most popular beverage items on menu: 4 percent
Fast casual
Most popular food items on menu: 5 percent
Most popular beverage items on menu: 5 percent
Coffee and snack
Most popular food items on menu: 4 percent
Most popular beverage items on menu: 5 percent
Menu wins to be had
Bundling has become good pandemic business. Fifty percent of fine-dining operators polled by the Association and more than four in 10 family dining and casual dining ones, said their restaurant added family or bundles meals during COVID.
Looking forward, 30 percent of off-premises customers said they’d be more likely to choose a restaurant that offers meal bundles during the next few months.
Percentage of operators who say their restaurant added family or bundles meals since the beginning of COVID
Family dining: 45 percent
Casual dining: 43 percent
Fine dining: 50 percent
Quick service: 28 percent
Fast casual: 35 percent
Coffee and snack: 14 percent
What this signals is sit-down operators can close some of the value gap, compared to quick service, with bundled meals.
Percentage of customers who say they’re more likely to choose a restaurant that offers multi-course meal bundles, such as an appetizer, entrée, and dessert
All adults: 30 percent
Gen Z: 34 percent
Millennials: 27 percent
Gen X: 30 percent
Baby Boomers: 31 percent
Perhaps the COVID sister menu to bundles of late was meal kits. It’s an effort to take away some of the meal prep duties, but also still let guests control the experience. Additionally, some people perceive cooking food as safer than buying cooked food.
More than half of adults said they’d likely purchase a meal kit if it was offered by one of their favorite restaurants. The number rises to 75 percent for millennials and Gen Z (generations that value experience over material wealth).
Kits package pre-measured ingredients and instructions to make the restaurant meal at home.
Twenty-three percent of fine-dining operators and 20 percent of family dining and casual dining said their restaurant added meal kits post-outbreak.
Percentage of operators who say their restaurant added meal kits since the beginning of COVID
Family dining: 20 percent
Casual dining: 20 percent
Fine dining: 23 percent
Quick service: 12 percent
Fast casual: 15 percent
Coffee and snack: 14 percent
Younger consumers, to the earlier point, like DIY restaurant meals most.
Percentage of consumers who say they’d be likely to buy a meal kit if it was offered by one of their favorite restaurants
All adults: 56 percent
Gen Z: 75 percent
Millennials: 75 percent
Gen X: 56 percent
Baby Boomers: 38 percent
Another opportunity has come via meal subscription programs. Customers sign up to receive a set number of meals each month, for pickup or delivery, at a discounted meal price. This idea is nothing new. But the role restaurants can play is novel—only 1 percent of family dining, quick-service, casual dining, and coffee and snack; 2 percent of dine dining; and 3 percent of fast casual operators added them of late.
Still, the Association said it’s an attractive option. More than half of consumers surveyed said they’d likely participate in a meal subscription program if it was offered by one of their favorite restaurants. For millennials and Gen Z, it was roughly seven in 10.
Percentage of consumers who say they would be likely to participate in a meal subscription program if it was offered by one of their favorite restaurants
All adults: 55 percent
Gen Z: 67 percent
Millennials: 71 percent
Gen X: 60 percent
Baby Boomers: 36 percent
Remember those early days when restaurants began offering groceries? That was more of a survival tactic than a strategic one out of the gate. Brands had too much inventory. They also recognized customers wanted to cut down on grocery trips.
However, it’s holding value. More than half of consumers—and nearly 70 percent of millennials—said they’d buy groceries (things like meat, produce, dairy, bread or pasta) if restaurants offered them.
Some complied. Fourteen percent of fine dining and fast casual operators said their restaurant started selling grocery goods. Roughly one in 10 did so for casual dining, family dining, and coffee and snack.
Percentage of operators who say their restaurant started offering grocery items for sale since the beginning of the outbreak in March
Family dining: 11 percent
Casual dining: 12 percent
Fine dining: 14 percent
Quick service: 7 percent
Fast casual: 14 percent
Coffee and snack: 11 percent
Percentage of consumers who say they’d be likely to purchase fresh, uncooked food items such as meat, produce, dairy, bread or pasta, if they were offered by one of their favorite restaurants
All adults: 52 percent
Gen Z: 61 percent
Millennials: 69 percent
Gen X: 54 percent
Baby Boomers: 35 percent
The alcohol possibility
Restaurants took advantage as more jurisdictions allowed them to toss to-go drinks into off-premises orders. Roughly seven in 10 full-service operators that offer alcoholic beverages said they started selling them with takeout or delivery since March. It was more than half with limited-service operators.
Alcohol to-go might be one of those pandemic-accelerate trends here to stay, the Association said.
Thirty-five percent of-premises guests (53 percent of millennials) said they’d be more likely to choose a restaurant if they could get an adult beverage with their food order. And this might just favorite sit-down concepts in the broad scheme of things. It’s something they can offer a lot of quick-serves cannot.
Percentage of operators who say their restaurant serves alcoholic beverages
Family dining: 79 percent
Casual dining: 93 percent
Fine dining: 98 percent
Quick service: 24 percent
Fast casual: 52 percent
Coffee and snack: 24 percent
It’s picking up industrywide.
Percentage of operators who say their restaurant started offering alcoholic beverages for takeout or delivery since the beginning of the outbreak in March
Family dining: 68 percent
Casual dining: 72 percent
Fine dining: 73 percent
Quick service: 53 percent
Fast casual: 52 percent
Coffee and snack: 44 percent
Which groups are ordering?
Percentage of off-premises customers who say they included an alcoholic beverage with a takeout or delivery order from a restaurant since the beginning of the outbreak in March
All customers
With a takeout order: 20 percent
With a delivery order: 18 percent
Millennials
With a takeout order: 33 percent
With a delivery order: 28 percent
Gen X
With a takeout order: 20 percent
With a delivery order: 22 percent
Baby Boomers
With a takeout order: 9 percent
With a delivery order: 1 percent
Percentage of off-premises customers who say they’re more likely to choose a restaurant if it offers the option of including alcoholic beverages with the to-go order
All: 35 percent
Millennials: 53 percent
Gen X: 39 percent
Baby Boomers: 13 percent
The comfort food effect
Nearly a third of fine-dining operators, and one in five family and casual dining operators, said they added comfort items to menus.
Why? Thirty-eight percent of on-premises and 33 percent of off-premises guest said their restaurant choices over the next few months will be influenced by whether the menus include the comfort foods they crave. There’s some insecurity in discover lingering.
Percentage of operators who say their restaurant added comfort food to the menu since the beginning of the outbreak in March
Family dining: 18 percent
Casual dining: 20 percent
Fine dining: 31 percent
Quick service: 10 percent
Fast casual: 13 percent
Coffee and snack: 15 percent
Percentage of customers who say the availability of comfort food on the menu would make them more likely to choose one restaurant over another during the next few months
All customers
Customers that plan to eat on-premises: 38 percent
Customers that plan to order takeout/delivery: 33 percent
Gen Z
Customers that plan to eat on-premises: 38 percent
Customers that plan to order takeout/delivery: 38 percent
Millennials
Customers that plan to eat on-premises: 36 percent
Customers that plan to order takeout/delivery: 32 percent
Gen X
Customers that plan to eat on-premises: 38 percent
Customers that plan to order takeout/delivery: 27 percent
Baby Boomers
Customers that plan to eat on-premises: 42 percent
Customers that plan to order takeout/delivery: 38 percent
Yet this isn’t to say healthful options don’t matter. Customers want to get back on their diet routines. It just isn’t as important today as comfort. Could that change, however?
Fewer than one in seven customers said the availability of diet-specific food would impact their restaurant choice for either on- or off-premises dining.
Percentage of customers who say the availability of healthy options on the menu would make them more likely to choose one restaurant over another during the next few months
All
Customers that plan to eat on-premises: 38 percent
Customers that plan to order takeout/delivery: 33 percent
Gen Z
Customers that plan to eat on-premises: 36 percent
Customers that plan to order takeout/delivery: 34 percent
Millennials
Customers that plan to eat on-premises: 36 percent
Customers that plan to order takeout/delivery: 29 percent
Gen X
Customers that plan to eat on-premises: 30 percent
Customers that plan to order takeout/delivery: 31 percent
Baby Boomers
Customers that plan to eat on-premises: 45 percent
Customers that plan to order takeout/delivery: 39 percent
Percentage of customers who say the availability of diet-specific food on the menu, like vegetarian or gluten-free, would make them more likely to choose one restaurant over another during the next few months
All
Customers that plan to eat on-premises: 14 percent
Customers that plan to order takeout/delivery: 12 percent
Gen Z
Customers that plan to eat on-premises: 12 percent
Customers that plan to order takeout/delivery: 14 percent
Millennials
Customers that plan to eat on-premises: 18 percent
Customers that plan to order takeout/delivery: 12 percent
Gen X
Customers that plan to eat on-premises: 16 percent
Customers that plan to order takeout/delivery: 10 percent
Baby Boomers
Customers that plan to eat on-premises: 11 percent
Customers that plan to order takeout/delivery: 12 percent