TD Bank: COVID-19 Has Permanently Altered Consumer-Restaurant Relationship



The COVID-19 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 TD Bank’s 2021 Restaurant Franchise Pulse survey.

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 the 2020 version of survey, and it appears the popularity of these offerings is here to stay. According to the 2021 survey, restaurant operators’ early investment in delivery and mobile ordering has paid off in a big way, as 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 and 25% rely on mobile ordering for more than 20% of sales.

To keep up with changing consumer preferences, operators said 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%).

“Consumers have become accustomed to the speed and convenience of mobile ordering and delivery, which, in turn, has changed the restaurant franchise landscape,” Mark Wasilefsky, head of the restaurant franchise finance group at TD Bank, said. “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.”

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, as 55% plan to add more space for pick-up, 45% plan to provide additional drive thru locations and 43% plan to add outdoor dining spaces.

“What we are seeing is that the pandemic has permanently altered consumer expectations and behaviors to the point that operators are comfortable enough to make long-term capital investments,” Wasilefsky said.

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 in 2022. This optimism and operators’ planned investment could lead to strong credit needs. In fact, 61% of respondents plan to apply for a loan or line of credit within the next year.

The study was conducted among a representative group of 251 restaurant franchise owners and operators across the United States from Nov. 10 to Nov. 22, 2021. Global research company Engine Insights hosted the survey.


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