We have been sharing a story this year on the progression of Covid-19 and its impact on the restaurant industry. After months of steady improvement, there are signs that the situation is getting worse for the industry. The speed of the decline also seems to be increasing, at least in some segments.
What happened?
Well, a lot has happened since the end of summer: schools are back virtually, and face to face; travel by air has been increasing; and traffic in many cities has been increasing. We have also seen a series of spikes in infections across the US in October and November. The data indicates that sales for all types of restaurants, on average, have been in decline since late September.
Examining the data at the Month level sums up the problem nicely. According to Mirus Index, an industry benchmark across all types of restaurants measured on a Same-Store basis, the industry was down about -16% in September compared to 2019, but now is down an additional 570 basis points, to -21.7%. In normal times, this would be catastrophic, but in the Covid era, it is just the latest bump in the road. We are essentially back to where we were in August as an industry.
Downward Trend
We know that the granularity of data can affect the conclusion you take away. When you look at the same data at a Week level, you see more detail, and it is not reassuring. We see a steady decline, and maybe the decline is accelerating; however, last week is a tough one to compare due to the Thanksgiving holiday. Even if you dismiss last week, the downward trend in sales performance is well established from late September.
At Mirus we can also look at the data without using the matching logic of a Same-Store comparison. This allows us to look at total revenues last year and this year, regardless of whether the store was open last year, or this year. Unfortunately, the story does not get better when we use total revenues.
The chart above is detailed by Day, and it is easy to identify Halloween and Veteran’s Day as spikes and troughs since September, and of course, Thanksgiving. If you ignore those days, the trend is still very clear. Each day is heading in the wrong direction.
Comparing Apples to Apples
When volatility is high, comparisons to last year can be less useful because the recent data is dealing with something that did not exist last year. In these situations it can be helpful to compare each day to the previous week because it tells you quickly if things are improving or deteriorating. The chart below is detailed by Day since September 29.
The chart above shows that in early October, the sales were close to their previous week until mid-October. Then a series of negative comparisons to last week preceded the volatility of Halloween and Veteran’s Day. Since mid-October most days have been negative relative to previous week. The Thanksgiving weekend could be distorting things a bit, but things should become more clear in the next week or two.
Segment Trend
Our final look at data today is to see if one part of the industry is more or less affected by the latest troubling trend. The chart above shows a decline in all segments; Quick-service, Fast Casual, Casual Dining, and Fine Dining. It is obvious that Casual Dining has suffered the most in the recent decline, losing almost 500 basis points from its best day back in September. All segments are declining and it is not clear what to expect next.
What’s next?
Do you remember sales for last December? Mirus Index measured sales up 2.7% in December 2019 over 2018. That was the best month for the entire year (January 2020 was even better), and it will be hard to match those numbers due to ongoing shut-down orders across the country. The path to increasing sales starts with customer traffic, and time will tell what, when, and where customers will want to enjoy their food in December 2020.
Please stay safe!
Read more details about the impact of COVID-19 on the restaurant industry in our Diary Series here.
Click here to get a copy of our Restaurant Pandemic Recovery Presentation
