Few segments of commercial real estate were hit as hard by the pandemic as restaurants, with many closing their doors permanently. A year into the pandemic, though, the National Restaurant Association is reporting significant recent upticks in both sales and employment. By another metric—foot traffic—Placer.ai says the data show that various dining subcategories are all experiencing “a slow but steady recovery, with varied strength across segments.”
Unsurprisingly, says Placer.ai, the hardest-hit dining segment was sit-down dining, which saw a dramatic drop of around 40% in year-over-year visits during the winter months. “In contrast, QSR chains, which tend to fare well during periods of economic uncertainty and benefit from high off-premise sales and takeaway services, have been performing relatively well, seeing a drop of only 25% to 30% in Y-O-Y visits during those same months,” according to a Placer.ai whitepaper. “The coffee segment also saw an impressive recovery, with similar year-over-year visit rates to those of the QSR category.”
Even as an overall recovery is occurring, Placer.ai says the magnitude is expected to differ across states and regions. Data show that declines in restaurant visits have been highest in states centered around high-density urban areas, like Illinois, California, and New York, with Y-O-Y visits in those states down by 38.1%, 36.1%, and 32%, respectively in 2020. In contrast, lower populated states like Mississippi and New Hampshire have had milder drops, with Y-O-Y visits down by only 17.7% and 20.3%, respectively.
Besides population density, tourism and travel have a significant impact on the local dining scene. “Restaurants in major cities like New York and Los Angeles were the first to get hit once business and pleasure travel was limited since they rely heavily on tourists,” Placer.ai says.
The dining sector has not only seen a dramatic decline in restaurant visits throughout the pandemic, but also a significant decrease in the average number of visits per visitor. Although sit-down restaurants and fast-casual dining were the segments that saw larger annual declines in visits during 2020, they saw smaller drops in the average number of visits per visitor.
While QSR and coffee establishments saw Y-O-Y drops in the average number of visits per visitor of 15.0% and 19.7%, respectively, the sit-down and fast-casual segments experienced drops of only 13% and 13.5%.
“Chains that can retain a high percentage of their frequent customers will have an easier time reaching their pre-pandemic visit numbers as the recovery proceeds and the competition over regular customers increases,” according to Placer.ai.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism.
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