Restaurant Industry: A Diary of the Coronavirus (COVID-19) Impact

April 13 Diary Entry

The restaurant industry started the year 2020 stronger than any year in more than a decade, although the impact of Covid-19 was already working its way into the numbers. Between March 12 and March 16, city by city, state by state shut down the restaurant dining room. All of the sports leagues also suspended operations. Curbside, takeout, drive-thru and delivery were now the only service channels for restaurants. That is when it hit the fan. Since then, is there any good news?

First, it looks like we have reached another plateau in the sales trend for all Mirus clients. If you have a restaurant operating today, it is likely doing a little better than last week.

Second, the more we learn, the more complexity we see. For example, we now see in the data that there have been three cycles of decline and recovery since the end of January. The first sales decline we can see in the data is in early February, after the first set of cities had confirmed cases. The first confirmation was on January 21, 2020 in Washington state, and the first person-to-person transmission was confirmed in Chicago on January 30. The World Health Organization and the US declared a health emergency at this time, leading the first wave of restaurant sales declines.

The image below illustrates three cycles so far. This chart compares each day’s sales to the same day from the previous week. The first declines start on Feb 1 and last a week before sales recover a bit the following week. The second decline starts Feb 18 followed by the second recovery a week later. The big wave of sales declines started in early March, and by March 17 the restaurants that were still open were operating at about 50% of last year. The declines continued until about March 27, at least on a week-to-week basis. However, the first indication that a new bottom had been reached was on March 22, when the decline in sales dollars versus last week was smaller than the day before. In essence, we were clawing our way back to "0" from March 22 to March 27.

Compared to last year on a same-store basis the Mirus Index is still recording declines in excess of -50%. But, when compared to the previous week, we have seen steady positive gains for the past two weeks. For the restaurants that are still operating, things have started to improve. From March 28 to April 11, sales are have grown about 5.3% for restaurants still operating.

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March 19 Diary Entry

During the month of March 2020, we posted results of the Mirus Index on social media to keep restaurant operators informed on what is happening at an industry level. This article is intended to be a diary of observations related to how COVID-19 is changing the restaurant world from our perspective. We will update this every few days during this pandemic to keep multi-unit restaurant operators informed of the bigger picture.

What's the Mirus Index?

Mirus Index is a measurement of same store sales and traffic across the Mirus client base. This data comes directly from thousands of restaurants across the country and includes data from every type of restaurant - from ice cream stands to fine dining. Sourcing the data directly from these restaurants protects accuracy.

Over the past decade the Mirus Index has been in sync with the larger benchmark measurements. It only includes restaurants that are open each day this year, and the same days from the previous year - something Mirus calls Matching logic. So, if a restaurant was completely shut down yesterday but was open last year, it is not included in the Index. The effect is to understate the negative in the current pandemic.

March 19, 2020

The restaurant sales impact of COVID-19 continues to get worse through March 18. For background purposes, the following picture shows what Mirus Index was reporting during the first two months of the year. The results were very encouraging given the sales trends over the past few years. February was softer than January, but this was the best start to a year for the industry in years.

Jan and Feb 2020 - Mirus Index

The last two weeks of February may contain some effect from COVID-19 in a few markets but the impact to the overall industry was small. Things started changing in March, and for many restaurants the decline in sales and customer traffic drove the industry negative on or around March 3rd.

By March 16, several cities, counties, and some states ordered restaurants closed for dine-in eating, and some cities shut down restaurant operations totally. The news of new restrictions on restaurants continues through the date of this posting.

If you are a restaurant operator and your restaurants are fully operational today, you are considered lucky. We have evidence that some restaurant brands are actually seeing a small bump in sales compared to last year, mostly in locations with drive-thru operations.

Since March 1, sales and traffic have plummeted. As mentioned earlier, these measurements do not include restaurants who have ceased operations this month. Overall, we are measuring a decline in total restaurants sales around <75%> versus the same time last year.

March 2020 - Mirus Index

I feel disappointed in the local, state and federal governments with a bias against restaurant operators. There are a range of restrictions we see across the country. In some cities, restaurants can operate takeout and delivery, and others have forced complete closures, yet they allow grocery stores to operate with hundreds of people standing in line to check out.

In the US, half of the food dollars are spent in restaurants. The effect of these edicts/decrees/statues is to push the dollars that ordinarily would be spent in restaurants into the grocery vertical. I question whether grocery is any less safe than a restaurant, and I am sure the grocery chains are happy with a huge increase in their revenues.

Hopefully, cities and states with rethink their rules and allow restaurants to operate with reduced occupancy to maintain social distancing. Restaurants are trained to clean, and I believe most are able to maintain a safe environment, or at least as safe as a grocery store.

We all have a voice, and I ask you to consider letting your mayor and state government officials know that you want your local restaurants to be allowed to re-open.