Once restaurants began closing their dining rooms in mid-March 2020, it was like removing a log from a delicately crafted dam. McDonald’s, Chick-fil-A, Starbucks, and a host of mega-chains flipped the locks as operators tried to strategize a virus that’s only blueprint was 7,000 miles away in China. From “15 Days to Slow the Spread” to hopes of shaking off the pandemic by Easter, the reality was hardly the prognosis, to put it rather lightly.
At this stage, though, restaurants are experts on the fallout. Years of tech innovation took hold in months. Socially distanced prototypes, patios, and plastic bubbles, double- and triple-lane drive-thrus and curbside became routine parts of industry vernacular.
Yet with any disruption, guessing the future is as much a predictions practice as it is a hindsight one. And one early doomsday topic under the hot lights: Would COVID kill the dining room as we knew it?
“Kill” is hardly the right label, says Ricky Richardson, CEO of Eggs Up Grill, a NextGen Casual brand that reached 50 locations last August. Richardson, also the former president and chief operating officer of TGI Fridays, says the breakfast concept has seen “phenomenal growth” in its total sales—a combination of off-premises gains joined by in-store returns. Eggs Up Grill’s comps are 20–30 percent above 2019 levels. “I think fundamental behaviors have shifted with a lot of our consumers in their acceptance of off-premises that wasn’t there before,” Richardson says. “But fortunately, we’re not seeing that as a replacement to the dine-in experience.”
Recent data pulls back the curtain on the potential Richardson references. Visits to dine-in at breakfast jumped 51 percent last September through November compared to the same period in 2020, when on-premises traffic plunged 55 percent, according to The NPD Group. Lunch, in the same window, rose 44 percent.
Online and physical orders/visits from and to full-service restaurants rose 8 percent, year-over-year, from January to October.
And all of this has transpired as 75 percent of restaurant visits remain off-premises. That latter category, which includes carryout, drive-thru, and delivery, climbed 9 percent versus 2020 and 19 percent over pre-COVID marks.
In simple terms, consumers’ appetite for restaurants didn’t wane during lockdowns. And the idea that fervor will subside when novelty does is a narrow one at best. Accessibility and connectivity broadened restaurants’ ability to drive revenue via multiple channels. That shift is where the dining room has started to evolve.
So what common COVID tactics are here to stay, which are falling off, and what does 2022 and beyond hold? It depends on the consumer, Richardson says.
“I think all of the things like social media—those types of channels—are very complementary. But you can’t replace in-restaurant observations to really see how the [new] tools are working,” he says. “I think you’ve got to look across all channels, but what you can’t ever defeat is what you see inside your restaurant.”
Randy Sharpe, CEO of multi-concept operator Xperience Restaurant Group, which directs El Torito, Chevys Fresh Mex, Acapulco, and others, believes pay-at-the-table is one adjustment with legs. Consumers are touching fewer things. The idea of a credit card not leaving their sight is a win.
But QR codes are a more convoluted matter. In terms of resuscitated technology, the QR code might have been COVID’s true poster child. The ability for guests to pull up menus on their phones was one of the most widespread introductions. Companies like OneDine and Olo made it possible to order and pay, too. This was a disruption that can’t be understated. In Q2 2021, delivery, all buzz included, represented just 8 percent of the industry’s overall transactions, according to NPD. That 92 percent “non-delivery” world was changing. And so was the makeup of the digital transaction itself. “Digital delivery” comprised 6 percent, whereas digital overall was 17 percent. The other 11 percent? The confines of “non-delivery digital.”
Ten percent of the block, to nobody’s surprise, flowed from takeout. For the first time in restaurant history, though, 1 percent of transactions belonged to “digital on-premises.” When you consider restaurants generating some 60 billion transactions in a typical year, kiosk and QR code ordering enjoyed a significant COVID moment.
At some of XRG’s restaurants, Sharpe says, QR codes performed well. “The vast majority,” he adds, “was rejected. Guests wanted to touch the menu.”
That was especially true at XRG’s upscale locations. “We started out all QR codes, and this is the wave of the future,” Sharpe says. “There are a lot of benefits, obviously, from the back end, too. You want to make a menu change—it’s super easy. It just didn’t work in a lot of our restaurants.”
Tech enters the equation
As the pandemic’s initial crater settled, XRG restaurants, where guests seek experience over just getting a meal, held their identity as places where people craved the “ways things were before.”
The same was true at Ascent Hospitality Management’s Huddle House and Perkins brands. Alison Glenn Delaney, the company’s chief brand officer, says they’ll keep the QR code option available for those who want it. Yet generally, it wasn’t in line with what diners expected, and so there’s been a backslide to old dining room staples. “We find QR codes are much more applicable to somebody applying [their information] right away,” she says. “Or sign up for loyalty … something like that. Not so much on the menus.”
Justin Bartek, marketing director at Jinya Holdings (Jinya Ramen Bar and fast-casual spinoff Bushi) says there’s space for both, which is a mindset that applies to a lot of what’s taking shape within today’s four walls.
“How do we make the QR code experience better?” Bartek says. “I think the future is going to be [augmented reality]. If you use a QR code menu, you’ll be able to point your phone at the table and see the dish in front of you in new and exciting ways.”
This vision differs from the current sentiment in which guests assume technology in restaurants is an extra step or even a hassle “But the future is going to be much different from today,” Bartek adds.
In reality, much of the technology ignited by COVID is still in its infancy for restaurateurs, even after a year for the record books. Where operators have arrived at is a search for balance.
To Sharpe’s point, getting customers off the couch and into the restaurant is often a task of providing a familiar escape. But there’s a line to walk. Consumers’ standards for cleanliness aren’t just higher than before—they’re far more demanding. Brands are under a constant microscope, Sharpe says. Employee protocols. Where other guests sit and how they act. How servers and staff respond.
Meanwhile, brands can’t push the envelope so far that diners feel they’re grabbing a meal in some apocalyptic dystopia where efficiency and cleanliness trump experience and hospitality.
All-you-can-eat brunch is one of XRG’s biggest draws at some of its brands, including El Torito, where it’s the No. 1 daypart. Sharpe says this came “roaring back” when restrictions were lifted. “Not crawling, [but] roaring back when we reopened,” he reiterates.
Instead of abandoning the feature, XRG reconfigured the setup, erected plexiglass, and put attendants behind the barrier at each station to guide diners through the entire process.
Even when mandates dropped, XRG left updates in place. It helps with cleanliness and sentiment, speed, portion control, and even guest experience by providing service at every station.
It’s an example, Sharpe says, of how the return of the dining room remains an exercise in feedback and flexibility.
Edithann Ramey, chief marketing officer at On The Border, notes guest listening is an area COVID lifted the lid on in myriad ways. Interaction and engagement across social skyrocketed as it became the only connective avenue for many people. On Cinco de Mayo, typically On The Border’s biggest day of the year, it hosted a Facebook Live where the brand talked to guests and “had a party through social.”
“As such, it’s been two-way communication channels,” Ramey says. “Not just to talk about complaints, but also to give us feedback on some of the things that are working and some that are not.” Everything from menu changes or pare-downs to the aforementioned QR codes.
Preserving the guest experience
Quick serve Fazoli’s has also been on a mission to drive more guest reviews as it tries to sort operating myth from reality, CMO Jodie Conrad says. “The majority of those come through Google,” she says. “But that really is a way to get real-time feedback on what the experiences are like and where the pain points are. And what people find is working for them versus not working for them.”
Has this been a frustrating process at times? No question. Higher prices, standards, and elastic regulations stir a cauldron of problems that make it difficult to deliver the experience consumers demand. Limited-service turnover was 106 percent in June 2021, according to Black Box Intelligence. It was 144 percent for quick serves. Both are higher than 2019 levels of 102 and 135 percent, respectively. More than 25 percent of employees claimed less than a year on the job.
The number of hourly workers in a limited-service restaurant was down 1.2 percent and 6.2 percent for full serves (but only 2.8 percent in the full-service back of the house).
“The classic review [today]: I know we’re in a pandemic, but …” Sharpe says.
Consumers want service, supply, and labor from two years ago in the dining room, Bartek adds. In recent months, he’s noticed a slight decline across the board with Jinya’s reviews.
“It is those little things, but it makes a huge difference for these people now because it’s more expensive; it’s taking the family out,” Bartek says. “We want that thing we had. But it’s different. Why is it different? That’s something [customers] are not thinking through. … How do we combat that? The labor isn’t going to change. The supply chain isn’t going to change immediately.”
Indeed, Conrad says, it’s challenging for consumers today to find a great experience, whether they’re spending $5 or $50. You can say the same of retail and grocery, where supply has stretched expectations of time and availability.
Navigating this current stretch has become the present and future of the dining room. Per a Q3 dive from Black Box, as quarter-over-quarter traffic growth eased and restaurants caught their breath, a new connection emerged.
In full-service restaurant reviews, when “speed of service” and “attentiveness” net sentiment improved, perception of “food quality” often did as well. When positive chatter around “fast,” “quick,” and “prompt” coincided with quality mentions of “attentive,” “refills,” and “checking back,” upbeat comments of “fresh,” as in the food was “hot and fresh,” trended higher.
One example: “They were short on staff, but the manager stepped in to help. We had hot, fresh food. The server and manager were friendly and checked on us several times.”
Richardson says restaurants have to be careful at this inflection “to not let our expectations of what makes us different and what makes guests choose our slip.
“There are so many very significant and real challenges in our business,” he says. “It would be very easy to start rationalizing because we experience it everywhere else we go. But the minute you start letting your teams think that way it becomes corrosive,” Richardson says. “It is a reality they have to deal with. But it also becomes an excuse to not be passionate about those standards.”
Eggs Up Grill is a predominantly franchised system. So the message from corporate down, he says, has been to remember why consumers picked the brand in the past and find ways to make it right for every guest in the restaurant, in a positive and memorable way.
Sharpe agrees. “You are who you are,” he says, “and your guests use you for who you are. I think there’s a perception—and some of it is real—that during the pandemic a lot of brands tried to make it a little easier on [franchisees], which is completely understandable. But if you go too far you actually lose your identity, and your sales are going to fall.”
Putting sanitation front and center
That identity, as mentioned earlier, needs to include what Conrad calls “sanitation theater.” It’s an operating practice she believes won’t ever go away. Hand sanitizer on display. Guests watching employees clean tables.
“I think, formerly, the expectation for all of us was to provide a clean and safe environment,” she says. “But the point was, I didn’t need to see you cleaning; I just needed to notice the place was clean. Now, I need to see you cleaning. I need to see you demonstrating these steps for my safety and my crew’s safety.”
Gregg Koffler, vice president of franchise development at Roy Rogers, had a unique challenge at hand when COVID arrived. The classic quick-serve has long differentiated with a “Fixin’s Bar” where guests self-serve their add-ons. Once dining rooms reopened, Roy Rogers had to remove it. Guests could request a “Fixin’s Cup,” but it was a feature outweighed by a new expectation of cleanliness and safety. That’s come back, however. “But we’re still cleaning at a level that we’ve never had before,” Koffler says.
And speaking of operating on the fly in the dining room, dividers and other physical changes have propped up and come down, too. Richardson says in Eggs Up Grill stores that have removed partitions, there’s been “no pushback from our guests.” Again, what has fundamentally changed, however, “is the expectation around sanitation,” he says.
About 40 percent of XRG’s units are in Los Angeles County, a market where a health order claimed dividers didn’t, in fact, compensate for 6 feet of distance. “So that went out the window [more than a year] ago,” Sharpe says. “The dining room looks like it did before at this point. The cleanliness theater is predominant.”
“People are very, very conscious nowadays of cleanliness in a restaurant environment,” says Nils Hughes, executive vice president of sales in the Americas for FLAT Tech. “And it’s almost become a show. People are over-exaggerating the cleanliness and getting rid of things like menus and putting a QR code on the table. So there’s been some fundamental shifts that have definitely happened. Creating environments is more important than ever. ‘Micro-social environment’ is becoming the buzzword now of the industry—to make sure that people do feel protected.”
Sharpe and Richardson say their brands’ dining rooms are stuffed these days. It’s one reason patio extensions, originally made to combat fears of dining inside and expand capacity, aren’t going away. Richardson says they’re a near requirement for new builds at Eggs Up Grill.
That’s important considering the density inside restaurants doesn’t appear to have changed all that much, a fact, Richardson admits, surprised him. “If you had asked me a year ago, I would have told you that new restaurants would have been less dense in terms of seating,” he says.
In truth, there’s been a “very small amount of guest feedback” concerning seating adjacencies. “You occasionally get that, but it’s not consistent at all,” Richardson says.
The new rules of dine-in. Quick service could end up telling a different story.
Drive-thru, which represents 52 percent of off-premises traffic, according to NPD, was up 9 percent through October last year, and 23 percent higher than in 2019. Carryout (39 percent of off-premises mix) was 3 percent better, year-over-year, and delivery 32 percent. An eye-opener—delivery was tracking 123 percent above 2019 levels.
You see this progressing with futuristic prototypes, everything from conveyor belt drop-ins to Shake Shack’s multiple-lane drive-thru entry to Taco Bell’s Go Mobile unit, which has turned a typical site pad into an omnichannel transaction center, complete with smart technology and spaces dedicated to curbside orders.
Before COVID, 40 percent of Fazoli’s sales were dine-in. Even fully open, as of December 2021, it was down to about 27–28 percent. “To be honest, I don’t think it’s ever coming back to 40 percent for us,” Conrad says. “Because people have figured out how they’re going to live their lives and adapt, and it hasn’t included eating in, at least as much, at quick-service restaurants as they used to.”
Roy Rogers has started to reexamine footprints and shrink square footage accordingly. Fewer seats can equal a lower development cost, Koffler says—“an unintended consequence of the pandemic.” And also a pretty clear answer to whether quick serves, broadly, need dining rooms as large as before.
“It gave us an opportunity to really look at what we do in our physical building and how do we increase the value proposition for our franchisees overall,” he says. “Wendy’s and Taco Bell and their new prototypes are shrinking their footprints 500–700 square feet for a restaurant, which is a big deal in the [quick-service restaurant] space.”
If COVID has proven anything, though, it’s that you can’t paint a single stroke for any trend. Jinya’s Bartek is seeing franchisees actually build larger spaces than ever. “It’s a product of the way the real estate market was and how some things became available that weren’t there before for our guys,” he says.
Lisa Lee, vice president of marketing at SPB Hospitality, a group that owns, among other concepts, Logan’s Roadhouse, Old Chicago, and J. Alexander’s, says the scope of dining rooms and what development looks like is another guest reaction that brands need to stay on top of.
“In my mind, the shrinking of the space, the adaption of technology, all of those kinds of business needs that we’re talking about, they will work when they work for the consumer,” she says. “And, at the end of the day, when the guest has a better experience because of the technology that we have embraced or the new design that incorporates third-party pickup or a better to-go experience, or more convenience … that’s when we all win.”
Put another way, some of the elements that came with COVID—those that maybe were reactionary items but not experience-driven ones—won’t last.
“And it will be interesting to see what happens three years from now,” Lee says. “What sticks and what doesn’t. And I’m not 100 percent sure there will always be QR codes on tables. But, 10 years ago, I didn’t think they would exist in our future. And here they are.”
“The problem-solving technology is the one that will win,” Hughes adds.
In some ways, the flush of off-premises business could help the dining room. Experiential dining is at the heart of everything On The Border has done to bring people back, Ramey says. There’s a certain marketing element to remind diners it’s OK to celebrate again. And with that, more advertising around alcohol, events like wine dinners, trivia nights, and other experiences that crystalize the value proposition of in-store versus off-premises dining.
On The Border has stretched this inside and outside restaurants, with family bundles still mixing a significant portion of sales. Leaning on tech, the brand used its new loyalty program to incentivize visits and talk to guests. “Remind them of who we are,” Ramey says. “Remind them to celebrate by remembering their birthdays, their anniversaries, the last time they came in. And then just talking to them about all the great things you can do to celebrate coming back to us.”
At Olive Garden and LongHorn parent Darden, Sunday has become a legitimate sales day in its fine-dining division (The Capital Grille, Eddie V’s, and Seasons 52), CEO Gene Lee said last September. Those brands captured $168.8 million in Q1 business, a 24 percent leap versus pre-COVID during a late May to late August spell that traditionally represents the slowest of the year. Average weekly sales were $148,372, up from $79,223 in 2021 and $131,757 in 2020.
Cracker Barrel CEO Sandy Cochran also observed a “general consumer preference coming out of the pandemic for more celebratory, higher-check occasions than we are known for.” So did Ruth’s Chris Steak House CEO Cheryl Henry, who described it as a “pent-up celebratory occasion.”
Taking care of employees
As always, all of this comes back to labor and how restaurants can actually serve that dining room demand. Technology is going to play a lead role in stripping hours out of the equation. But can it be done in a way that doesn’t threaten the customer experience?
In recent months, Huddle House and Perkins have started consumer tracking studies again. “I think with the sit-down concept, there are two things that are important: One is food, and the other is the social experience,” Delaney says.
When Delaney’s brands shifted toward to-go and got better at off-premises, it was always going to be a temporary top-line focus. “The real secret sauce to the business is being able to gather with family and friends and make it a social occasion,” she says. “So I’m sure we will always only be able to take so much labor out of it because our guests in both brands like seeing people. They like seeing the people in their small towns … that’s something that’s important.”
Huddle House and Perkins’ response was, to Lisa Lee’s sentiment, to look at technology that enhances the experience core to the brands’ respective DNAs. The chains are piloting call centers, Delaney says, to get restaurant employees off the phone and to provide a smoother process for guests.
They’ve seen an “enormous increase,” she adds, in check from orders taken by call center agents or even bots.
Jinya’s fast casual was built to grapple with labor and embrace simplicity. When it opened, there were no seats, just a counter and two people in the kitchen. Everything was ordered on a QR code or online. Jinya added shelves for drivers to pick up. Meanwhile, full-service Jinya isn’t going to drift.
“It is about the service. It is about the ambiance. There’s bars. There’s drink specials. There’s happy hour. It’s a totally different vibe,” Bartek says. “It’s tough to think through those things and what works here may not work here.”
Fazoli’s installed kiosks in company dining rooms pre-COVID, which turned out to be a shaky fit when guests weren’t sure what was safe to touch and what wasn’t in mid-2020. Today, Conrad says, adoption with those kind of self-service options is up again. And Fazoli’s, like Huddle House and Perkins, has witnessed higher check with bots and call center options. “Computers upsell 100 percent of the time,” she says.
Fazoli’s is going as far to plot a test where a robot delivers food to the table. “I don’t know if this is something that will ever come to bear in a Fazoli’s in the future,” she says. “But it’s just one of those things where we feel like we’ve got to have our minds open to try different things.”
Back on the identity angle, the Italian quick serve is known for its breadsticks brought to guests who dine in. Conrad says tech and labor fixes, and however they hold hands, need to consider that brand promise.
“If we can take some of the other responsibilities of people who are managing those dining rooms around cleaning tables, delivering food, so they can focus on ensuring people have their breadsticks, that’s the most important thing for us,” she says.
The challenge to staff dining rooms will remain problematic. In many quick serves, it’s going to keep cafes closed whether regulations ask for it or not. Koffler says Roy Rogers had to open a recent store as drive-thru only because it couldn’t find enough workers.
“It’s not just us,” he says. “Any [quick serve] you drive by these days, the first thing you see, instead of the LTO banner, you see ‘help wanted.’ Or ‘we’re hiring.’ It’s really quite a dynamic that we’re going through right now.”
With smaller staffs and, potentially, dining rooms, will come renewed focus on efficiency and where tasks get assigned out.
“One thing that we’re seeing is that a lot of the [restaurant] CEOs are very determined that if you’re going to pay staff, you want the staff looking after customers and focusing on your customer to make sure their dining experience is the best possible dining experience you can get,” Hughes says.
Still, there is blaring light at the end of the dining-room tunnel. Sharpe says when he goes out these days, he’s lucky if he can find a restaurant with less than an hour wait. For operators, focusing on throughput is going to prove the separator.
“That goes back to how you solve the labor problem, and everyone is going to have a different spin on that,” he says. “The only thing I can say is our stance is we’re going to be who we are. We’re going to navigate. We’re going to make sure our employees our safe. We’re going to make sure our guests are safe. And we’re going to maintain the vision and the essence of every one of our brands.”
Bartek adds COVID, ultimately, will prove a dark chapter for restaurants, but one that propelled the industry forward. From providers to restaurants, technology leap-frogged prior hurdles. And guests are more accepting and adept. “We know these people want to come back to us,” he says. “We know what they want. It’s just going to take some time to deliver that experience back, but I think we’re getting in a good place. … The brands that are winners are going to continue to win.” – Source: FSR.