The Restaurant Industry Closes the Books on an Extremely Difficult Year

COVID-19 hit the restaurant industry hard in 2020.

But the industry recovered as the year went along, according to The NPD Group. After suffering a 35% traffic decline in April, it rose to a -11% visit decrease in December compared to December 2019. The industry was able to weather the storm by offering a host of off-premises services, like digital ordering, delivery, drive-thru and carry-out.

Restaurant digital orders, which were growing before COVID, skyrocketed during the pandemic, going from 19% year-over-year (YOY) in January 2019 to 145% YOY in December, according to NPD’s daily tracking of consumers’ use of restaurants and other foodservice outlets.

Carry-out, delivery and drive-thru were also growing before the pandemic. The most popular off-premise ordering mode, carry-out, increased orders by 3% YOY in January 2020 and 10% YOY in December versus a year ago. At the end of 2020, it held 46% of the off-premises order share.

Delivery began 2020 with orders up +1% YOY. It ended the year with a YOY gain of +137% in orders. Even with that triple-digit growth, delivery still holds the smallest off-premises order share at 11%. Drive-thru orders rose 4% YOY in January 2020 to 22% YOY at the end of the year. It ended the year with a 44% share of off-premises orders.        

“Digital orders for pick-up and all off-premises modes will be a growth engine for the U.S. restaurant industry moving forward,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America, said in a statement.

Separately, the National Restaurant Association recently reported that total sales for the year  fell $240 billion below their pre-pandemic forecast. It anticipates double-digit growth in sales in 2021, though that won’t be nearly enough to make up for the substantial losses experienced in 2020.

The pandemic hit restaurant workers hard, with more than 8 million eating and drinking place employees laid off or furloughed during the peak of the lockdowns, the association also said. At the end of 2020, the eating and drinking place sector finished 2.5 million jobs below its pre-coronavirus level.

A staggering amount of eating and drinking places, 110,000, closed long term or for good. The majority of those permanently closed restaurants had been in operation for 16 years, while 16% had been open for at least 30 years.

The restaurants that did survive shifted to off-premises foodservice, streamlined menus, set up outdoor dining, marketed discount deals, bundled and blended meals, and sold alcohol to go. The National Restaurant Association says operators adopted contactless order and payment technologies at an accelerated pace. The vast majority of these operators plan to keep at least some of the changes they made to their restaurant during the pandemic.