The pandemic has permanently altered the consumer-restaurant relationship with operators investing in technology and real estate to align with changing consumer preferences, according to the 2021 Restaurant Franchise Pulse survey, conducted by TD Bank, America's Most Convenient Bank.
Early in the pandemic, 72% of operators invested in delivery and mobile/online ordering to boost revenue during mandated stay-at-home orders according to TD's 2020 survey, and it appears the popularity of these offerings is here to stay.0
This is inline with research from market research firm The NPD Group. In an interview with HT, David Portalatin, the NPD Group’s food industry advisor and author of Eating Patterns in America, said, “Our outlook is that online ordering will continue to grow,” adding that future increases will be more tempered and “not triple-digit growth.”
Investment in delivery and mobile ordering pays off
According to this year's survey, restaurant operators' early investment in delivery and mobile ordering has paid off in a big way.
- 71% rely on delivery for 11% or more of sales
- 33% rely on delivery for more than 20% of sales
- 65% rely on mobile ordering for 11% or more of sales
- 25% rely on mobile ordering for more than 20% of sales
To keep up with changing consumer preferences, operators noted that their top areas of investment in 2022 include mobile ordering (54%); delivery services (47%); technology such as new POS digital signage or other in-store tech (45%); and alternative payment methods (37%).
Enabling new payment options is the top business driver impacting POS upgrades for 64% of restaurants, according to HT's 2022 POS Software Trends report.
"Consumers have become accustomed to the speed and convenience of mobile ordering and delivery, which in turn, has changed the restaurant franchise landscape," said Mark Wasilefsky, Head of Restaurant Franchise Finance Group, TD Bank. "Even once there is no longer the active threat of the pandemic, consumers will still turn to these mediums. Mobile ordering and delivery have become a part of everyday life and are no longer nice to have, but expected, and operators need to continue to enhance these offerings to keep up with competitors."
Changes to align with consumer preference
Along with furthering their technological investments, operators are also altering their physical restaurant locations to cater to delivery. While only 15% plan to reduce the number or size of their franchise locations, operators are making other adjustments to their real estate.
- 55% plan to add more space for pickup
- 45% plan to provide additional drive-thru locations
- 43% plan to add an outdoor on-site dining space
Operator optimism and investment fuels future credit needs
Despite the challenges the restaurant industry has faced since the start of the pandemic, operators have learned to pivot and as a result, 81% of respondents feel optimistic about the future. More than half even feel very optimistic and 47% believe their revenue will increase significantly. This optimism and operators' planned investment lead to strong credit needs. In fact, 61% of respondents plan to apply for a loan or line of credit within the next year.
This study was conducted among a representative group of 251 restaurant franchise owners and operators across the United States from November 10-22, 2021. The survey was hosted by global research company ENGINE INSIGHTS.