- Enjoying success with delivery and online ordering, a substantial majority of restaurant operators believe their prospects are improving after two challenging years.
- 71% of operators rely on delivery for 11% or more of sales, while one-third are deriving more than 20% of their sales from delivery, the survey found.
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, according to the 2021 Restaurant Franchise Pulse Survey conducted by TD Bank. More than half even feel very optimistic, and 47% believe their revenue will increase significantly.
As restaurateurs adapt to customers’ evolving expectations, the pandemic has permanently altered the consumer-restaurant relationship, the survey found. Operators are boosting their investments in technology and real estate to align with changing consumer preferences.
Early in the pandemic, 72% of restaurant operators invested in delivery and mobile/online ordering to boost revenue during mandated stay-at-home orders, TD Bank’s 2020 survey found. Now, judging from the 2021 survey, it appears these offerings are here to stay.
According to this year’s survey, restaurant operators’ early investment in delivery and mobile ordering has paid off in a big way:
- 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.
- 25% rely on mobile ordering for more than 20% of sales.
To keep up with changing consumer preferences, operators noted that 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,” said Mark Wasilefsky, Head of Restaurant Franchise Finance Group for TD Bank. “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:
- 55% plan to add more space for pick-up.
- 45% plan to provide additional drive-thru locations.
- 43% plan to add an outdoor on-site dining space.
“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 added.
Optimism among restaurateurs and their investment goals will 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 TD Bank study was conducted among a representative group of 251 restaurant franchise owners and operators across the U.S. from November 10-22, 2021. The survey was hosted by global research company Engine Insights.