Description

“Virtually all restaurants became takeout and delivery providers overnight as a result of COVID-19, and the ones that had made prior investments in off-premise business are unsurprisingly weathering the storm the best thus far. Restaurants of all types must continue to invest in takeout and delivery services as consumer behaviors and preferences continue to shift in this direction – exponentially accelerated by COVID-19.”

– Jill Failla, Senior Foodservice Analyst

This Report looks at the following areas:

  • The impact of COVID-19 on restaurant ordering, takeout and delivery
  • How restaurant takeout and delivery will fare in a recession
  • How restaurants can improve their off-premise business

This Report was written June 9-June 23, 2020.

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Definition
        • Executive Summary

            • Top takeaways
              • Market overview
                • Figure 1: Total US revenues and forecasted sales ranges of restaurants and eating places*, at current prices, 2014-24
              • Impact of COVID-19 on restaurant ordering, takeout and delivery
                • Figure 2: Short-, medium- and long term impact of COVID-19 on restaurant ordering, takeout and delivery, July 2020
              • The challenges
                • The recession slows down delivery business
                  • Figure 3: Restaurant delivery, September 2019 and May 2020
                • Core delivery consumers driving demand for grocery delivery
                  • Figure 4: Restaurant vs grocery delivery attitudes, by generation, May 2020
                  • Figure 5: Coronavirus lifestyle changes, April-July 2020
                • Operators need to convert young consumers into restaurant-direct users
                  • Figure 6: NET any third-party use, by generation, May 2020
                • The opportunities
                  • Increased online ordering gives the gift of data
                    • Bad press for third-party companies means more opportunity to support restaurant-direct options
                      • Figure 7: Third-party company fee attitudes, May 2020
                    • Increased work from home offers breakfast and lunch delivery opportunity
                      • Struggling FSRs should cater to off-premise celebrations
                        • Figure 8: Restaurant delivery interest for celebrations – NET any restaurant segment, May 2020
                      • Alcohol delivery can help boost profits
                      • The Market – What You Need to Know

                        • Restaurant takeout and delivery transforms into primary point of sale overnight
                          • High unemployment rates during recession hurt delivery business
                            • Legislation lassos third-party companies
                            • Market Size and Forecast

                                • Figure 9: Total US revenues and forecast sales ranges of restaurants and eating places*, at current prices, 2014-24
                            • Market Breakdown

                              • Off-premise business will accelerate LSRs’ market share growth
                                • Figure 10: Total US revenues and forecast sales ranges of restaurants and eating places*, by segment, at current prices, 2014-24
                            • Market Perspective

                              • Grocery delivery surges in wake of COVID-19
                                • Figure 11: Coronavirus lifestyle changes, April-July 2020
                            • Market Factors

                              • Concerns over catching COVID-19 will drive off-premise business
                                  • Figure 12: COVID-19 exposure concern, March-July 2020
                                  • Figure 13: Future activities, April-July 2020
                                • Dine-in restrictions will also continue to drive off-premise business
                                  • ADA compliance
                                    • Bills emerge to regulate third-party companies
                                      • Menu labeling laws ease up during COVID-19
                                        • Spiking unemployment will curb all restaurant spend, including delivery
                                          • Figure 14: Unemployment rates, 2008-June 2020
                                        • Increased work from home offers breakfast and lunch off-premise opportunity
                                          • Figure 15: Parental employment status during COVID-19, June 2020
                                      • Key Trends – What You Need to Know

                                        • Third-party delivery turmoil is center stage during the pandemic
                                          • Crisis breeds innovation: contactless off-premise solutions, alcohol delivery
                                            • Off-premise-focused prototypes speed up growth exponentially
                                            • Third-Party Delivery Company Advertising Spend

                                              • Uber Eats’ ad spend gives DoorDash a run for its money in 2020
                                                • Figure 16: Online advertising spend volume for top four third-party delivery companies, October 15, 2019-June 16, 2020
                                                • Figure 17: Monthly online advertising spend for top four third-party delivery companies, October 15, 2019-June 16, 2020
                                                • Figure 18: Uber Eats’ waived delivery fee Facebook ad, April 2020
                                                • Figure 19: Uber Eats’ BOGO Facebook ad, March 2020
                                            • What’s Working?

                                              • During height of COVID-19 pandemic precautions, all restaurants became to-go restaurants
                                                • Contactless off-premise solutions proliferate
                                                    • Figure 20: Chick-fil-A email, “A Contactless Experience!” March 24, 2020
                                                    • Figure 21: Papa John’s email, “No Contact Delivery Is Here,” March 24, 2020
                                                  • Curbside pickup rapidly expands
                                                    • Figure 22: Panera Bread’s email, “Order for Drive-Up & Pick Up Curbside,” April 17, 2020
                                                  • Delivery-friendly foods are in demand
                                                    • Heat-and-eat options on the rise
                                                    • What’s Struggling?

                                                      • Recession hurts delivery business
                                                        • Figure 23: Restaurant delivery, September 2019 and May 2020
                                                        • Figure 24: Restaurant off-premise attitudes, by gender, May 2020
                                                      • Third-party app tensions rise between operators, consumers
                                                      • What’s Next?

                                                        • Third-party consolidation, restaurant self-delivery
                                                          • Alcohol to go
                                                            • More mobile and ghost kitchens
                                                            • The Consumer – What You Need to Know

                                                              • Restaurant pickup service jumps as dine-in service nosedives
                                                                • Overall delivery use is down, but third-party use is up
                                                                  • Online ordering adoption is most likely to outlast COVID-19
                                                                  • Restaurant Ordering, Pickup and Delivery

                                                                    • Off-premise purchases don’t make up for dine-in losses during COVID-19
                                                                      • Figure 25: Restaurant ordering, pickup and delivery – NETS, June 2016, September 2018, September 2019 and May 2020
                                                                    • Pickup service is the most popular way to order food during COVID-19
                                                                        • Figure 26: Restaurant ordering, pickup and delivery, September 2019 and May 2020
                                                                      • Gen Z drives delivery growth
                                                                        • Figure 27: Restaurant ordering, pickup and delivery, by generation, May 2020
                                                                      • White consumers are most likely to order from restaurants directly
                                                                        • Figure 28: Restaurant ordering, pickup and delivery, by race and Hispanic origin, May 2020
                                                                      • About a fifth of digital delivery orders were spurred by COVID-19
                                                                        • Figure 29: Restaurant delivery ordering online first-time status, May 2020
                                                                      • Third-party ordering is even higher than digital delivery services overall due to COVID-19
                                                                        • Figure 30: Restaurant third-party ordering first-time status, May 2020
                                                                      • Curbside is most prevalent method of restaurant pickup
                                                                        • Figure 31: Restaurant curbside pickup, May 2020
                                                                    • Delivery Frequency, Motivations and Barriers

                                                                      • Half of delivery users are ordering delivery more frequently than usual
                                                                        • Figure 32: Change in delivery frequency, May 2020
                                                                      • Men aged 35-54 are driving increased delivery frequency
                                                                        • Figure 33: Change in delivery frequency, by gender and age, May 2020
                                                                      • White and Hispanic consumers are driving increased delivery orders
                                                                        • Figure 34: Change in delivery frequency, by race and Hispanic origin, May 2020
                                                                      • Convenience remains top delivery motivator during COVID-19
                                                                          • Figure 35: Restaurant delivery motivators – NET any rank, May 2020
                                                                        • Older consumers are ordering more delivery to support local restaurants
                                                                          • Figure 36: Restaurant delivery motivators – NET any rank, by age, May 2020
                                                                        • Concerns of catching COVID-19 are leading deterrents to delivery service
                                                                          • Figure 37: Restaurant delivery barriers – NET any rank, May 2020
                                                                      • Pickup Frequency, Motivations and Barriers

                                                                        • Pickup frequency has not increased quite as much as delivery frequency during COVID-19
                                                                          • Figure 38: Change in pickup frequency, May 2020
                                                                        • Men aged 35+ drive increased pickup frequency
                                                                          • Figure 39: Change in pickup frequency, by gender and age, May 2020
                                                                        • White consumers are much more likely than counterparts to report increased pickup
                                                                          • Figure 40: Change in pickup frequency, by race and Hispanic origin, May 2020
                                                                        • Consumers are ordering more pickup to support restaurants
                                                                            • Figure 41: Restaurant pickup motivators – NET any rank, May 2020
                                                                          • Young men are ordering more restaurant pickup for a convenient treat
                                                                            • Figure 42: Restaurant pickup motivators – NET any rank, by gender and age, May 2020
                                                                          • Similar to delivery, top pickup deterrents are fears of catching COVID-19
                                                                            • Figure 43: Restaurant pickup barriers – NET any rank, May 2020
                                                                        • Delivery Interest by Occasion and Segment

                                                                          • Dinner and lunch are top of mind for delivery occasions
                                                                            • Figure 44: Delivery interest by occasion – NET any restaurant segment, May 2020
                                                                          • Gen Z drives delivery service in off-peak dayparts
                                                                            • Figure 45: Delivery interest by occasion – NET any restaurant segment, by generation, May 2020
                                                                          • Black consumers are most interested in morning delivery service
                                                                            • Figure 46: IHOP email, “Enjoy the 4th Weekend and Get Late Night Delivery from IHOP,” July 3, 2020
                                                                            • Figure 47: Delivery interest by occasion – NET any restaurant segment, by race and Hispanic origin, May 2020
                                                                          • Lunch delivery is most top-of-mind for LSRs, while dinner is most top-of-mind for sit-down restaurants
                                                                              • Figure 48: Delivery interest by occasion and segment, May 2020
                                                                              • Figure 49: Email from Red Lobster, “A Letter from CEO Kim Lopdrup about Mother’s Day,” May 12, 2020
                                                                              • Figure 50: Panera Bread’s email, “Good Eating All Day with Free Delivery, Too!” May 15, 2020
                                                                            • Young, Black and Hispanic consumers drive fast food delivery business
                                                                              • Figure 51: Delivery interest for fast food restaurant segment – NET any occasion, by select demographics, May 2020
                                                                          • Off-Premise Behaviors

                                                                            • Online ordering adoption has longest lasting potential after COVID-19
                                                                              • Figure 52: Off-premise behaviors, May 2020
                                                                            • Older consumers are the most excited to dine out, but they’re also the most unlikely to do so until it’s safe
                                                                              • Figure 53: Off-premise behaviors, by generation, May 2020
                                                                              • Figure 54: Future activities, by generation, June 2020
                                                                            • Most first-time online delivery users will not continue using the service post COVID-19
                                                                              • Figure 55: Off-premise behaviors, by restaurant delivery ordering online first-time status, May 2020
                                                                            • Third-party delivery first-timers are more likely than regular online delivery first-timers to continue using delivery
                                                                              • Figure 56: Restaurant off-premise behaviors, by third-party ordering first-time status, May 2020
                                                                          • Off-Premise Attitudes

                                                                            • Delivery service won’t be restaurants’ silver bullet during the pandemic
                                                                                • Figure 57: Off-premise attitudes part I, May 2020
                                                                                • Figure 58: Off-premise attitudes part II, May 2020
                                                                              • Men are more willing to order delivery during recession, pay third-party delivery fees
                                                                                • Figure 59: Off-premise attitudes, by gender, May 2020
                                                                              • Grocery delivery service is greatest threat among young consumers
                                                                                  • Figure 60: Restaurant off-premise attitudes, by generation, May 2020
                                                                                • Consumers of color demand more delivery innovation
                                                                                  • Figure 61: Restaurant off-premise attitudes, by race and Hispanic origin, May 2020
                                                                                • Curbside pickup users want the service to be contactless
                                                                                  • Figure 62: Restaurant off-premise attitudes, by curbside pickup usage status, May 2020
                                                                              • Appendix – Data Sources and Abbreviations

                                                                                • Data sources
                                                                                  • Forecast
                                                                                    • Consumer survey data
                                                                                      • Consumer qualitative research
                                                                                        • Direct marketing creative
                                                                                          • Abbreviations and terms
                                                                                            • Abbreviations
                                                                                              • Terms
                                                                                              • Appendix – The Market

                                                                                                  • Figure 63: Total US revenues and forecasted sales ranges of restaurants and eating places*, by segment, at inflation-adjusted prices, 2014-24
                                                                                              • Appendix – The Consumer

                                                                                                  • Figure 64: Restaurant third-party ordering first-time status, by gender, May 2020
                                                                                                  • Figure 65: Restaurant delivery ordering online first-time status, by gender, May 2020

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