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Pent up Demand for Restaurants

Posted by Dave

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The one year anniversary of Covid-19 in the United States has come and gone, and vaccines are going into the arms of people faster than we expected back in December. It's only a matter of time when everyone who wants a vaccine has received it. There is light at the end of the tunnel.

Huge Growth

Economists appear to be tripping over themselves to find the best adjective to describe what they see as a huge growth in the US GDP. These projections are based on the belief that at some point, a huge amount of pent up demand will be released to the markets. The language has gotten a bit silly with hyperbole, but due to the severely depressed restaurant sales from 2020, it surprises no one that the recovery will make for interesting growth numbers, but only for a while, right?

The chart below shows, by week, restaurant sales and traffic from the start of 2020 to just recently. It shows the devastation of March 2020 and the slow recovery since then. Then, starting in March 2021, you see a vertical line of growth in sales and traffic, but the traffic growth is muted compared to sales.

How does this compare to your company's experience?

Restaurant sales and traffic 2020 to early 2021

Looking Ahead

You might ask, what will the rest of the year look like? Under normal conditions this is a very tricky question to answer. With Covid, it is just much harder. So much has changed in the past year, and that makes navigating today's waters even more difficult.

The chart below is an example of how your sales comparisons between 2021 and 2020 may look through the rest of 2021. I have used 2019 values from Mirus Index for future 2021 values through the end of 2021. The assumption is that restaurants will be able to return to patterns that are similar to 2019.

2021 vs 2020 Restaurant sale comparison

The first conclusion you can take from this chart is that the high levels of sales increases that happened in March and early April will not continue. We will certainly continue to see percentage changes that are unprecedented, but eventually, your brand may see the percentages moderate in the 30% range in late Q3 and Q4. Eventually, maybe in Q1 or Q2 of 2022, we should be able to get back to measuring performance using techniques that are more traditional.

Reporting Changes

In previous blogs, I have described alternative comparisons that are useful in the Covid age. For example, comparing to the same day last period, or the same day last week, may be more useful until we get well beyond Covid.

Reporting and analyzing restaurant performance will be a challenge for a long time. In addition to the challenges illustrated in these charts, many restaurants have made significant changes to the way they interact with their customers.

These changes include:

  • Curbside
  • Delivery
  • Online ordering
  • Hours of operation
  • Menu changes

All of these changes makes it much more difficult to understand the profitability of a restaurant going forward.

Restaurant Labor

A final thought is labor. Restaurants had to furlough or lay off hundreds of thousands of servers, cooks and cashiers. As demand returns to 2019 levels, there will be intense competition for workers.

Expect to pay more for labor and if you can, plan on passing those additional costs through to your pricing. With the government's support of unemployed workers, there are fewer people than normal looking for a job in this type of market.

If you'd like to learn more about how you can easily adjust your reporting and analysis solutions, please let us know.

Or, if you prefer, learn more about Analyzing Restaurant Performance in 2021 by clicking the link below.

How to Analyze Restaurant Data in 2021


About Mirus:

Mirus is multi-unit restaurant reporting software used by operations, finance, IT, and marketing.

For more information, please visit www.mirus.com

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Topics: Restaurant Profit, Restaurant Performance, COVID-19 Restaurant Impact


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