Technomic: Covid-19 – the foodservice view

Chicago / IL. (tni) Within the past week, it became clear that the timing and scope of the pandemic will be highly localized because of fragmented government actions and variable social distancing practices by location. This will likely lead to a geography-dependent economic recovery timeline, with early adopter states experiencing a potentially quicker return to normal compared to later adopters. This Covid-19 update from Technomic’s Foodservice Impact Monitor explores the continued effect on the industry, including consumer spending leveling off and some innovative initiatives from operators.

Industry Impact

Unemployment claims have grown from 3 million the previous week to over 6 million in the last report. It remains to be seen if the government stimulus will be enough to counteract that extreme shock to employment. Presently, our industry forecast outlook remains the same as last week. We expect declines in year-over-year industry revenue to be:

  • Nominal: minus 12.4 to minus 27.5 percent
  • Real: minus 14.5 to minus 29.3 percent

The decrease in consumer spending levels off slightly

We are seeing a potential leveling off of consumer spending after notable decreases during the first three weeks of March. Even though consumers report that they will continue to reduce their spending, their actual spending pattern has flattened within the survey’s margin of error. Spending per 1,000 consumers is still 21 percent lower than prior to the pandemic. However, this represents an improvement of 3 percentage points from the week before. The level of consumers ordering more restaurant food for drive-thru and delivery is unchanged from last week, potentially indicating that consumers are settling into a new routine.

Consumers increasing delivery and curbside orders as operators offer more options

Consumers may be settling into a more predictable pattern of behavior. Our research points toward an uptick in the incidence of delivery and takeout/curbside/drive-thru orders compared to the previous week – the week consumer spending may have bottomed out.

Operators are shifting their messaging, rethinking LTOs and innovating

Operators are seeking to create experiences for their customers at home. To fill the void of the community and social aspects of dining, restaurants are seeking to create experiences for their customers that promote connections to family and friends through shareable family meals and meal kits, as well as promoting virtual shared meals or happy hours online. The traditional idea of an LTO has changed in response to the new environment. Instead of single innovative, buzzworthy menu items, operators are turning to family and boxed meals as a new type of LTO. Some other innovative initiatives we’ve seen include:

  • Evolved meal kits. Chains are generally looking to fulfill two demands: replicating the dining-out experience at home and offering solutions that provide families relief from cooking and shopping. In China, Banu Hot Pot developed a platform for guests to experience the communal hotpot meals in their homes. And, in Indonesia, Es Teler 77 offers heat-and-serve versions of its classic dishes for busy families.
  • Grocery offerings. Some chains are expanding their product selections beyond food and drink to include basic pantry staples, groceries and cleaning products. McDonald’s this week began selling bottles of milk and bags of bread in Australia, while Domino’s partnered with consumer goods firm ITC Foods to delivery pantry essentials in India. Dodo Pizza plans to sell hand sanitizer at its shops in Russia.
  • Sharing staff. McDonald’s formed an employee sharing partnership with Aldi in Germany. The initiative allows McDonald’s staff to quickly sign up for temporary work with the retailer while restaurant operations remain limited. Staff sharing partnerships such as this solve for both companies’ temporary needs. In McDonald’s case, it reduces excess staff the chain does not need now but will in a few months. For Aldi, it addresses the short-term surge in its grocery business.

We’re here to help. We will release weekly updates from original research as Covid-19 continues to unfold and will be offering ongoing insights into consumer preferences, impacts and guidance on off-premise occasions as well as the rapidly shifting state of the industry. Sign up to receive these updates directly to your inbox.

For additional information please read the following news release (PDF | 2290 KB):


Covid Update 3/27

The second update on Covid-19 from Technomic’s Foodservice Impact Monitor explores the continued effect on the industry, including economic projections, restaurant adaptations for dine-in alternatives, increased strain on particular segments and efforts being put toward policy changes and government support.

Projection: Will Covid-19 be an economic shock with a sharp recovery?

There is wide disagreement about whether Covid-19 will be an economic shock with a sharp recovery or if it will pull the economy into a sluggish recession. The previous worst quarter in U.S. history for GDP was Q2 2009, immediately after the economic crash. That quarter, the GDP dove by 3.9 percent, a fraction of the projections we are seeing as a result of Covid-19. The economic shock from this event is unprecedented.

Consumer spending on foodservice continues to drop. For the average consumer, Technomic research suggests that spending has declined by an estimated 45 percent from a typical week in February, with further planned reductions expected to come. Consumer demand is still present in the marketplace, but as the pandemic has heightened and concerns have grown, a new normal is setting in. Shelter-in-place and social distancing actions have resulted in fewer occasion-oriented opportunities for foodservice usage. Office closures enforcing more telecommuting means fewer off-premise lunch occasions, especially in urban and suburban locations. This is having an impact on QSR and fast-casual business in particular.

Operators increasingly concerned with the negative impact of Covid-19

While operators are most likely to feel the virus is most negatively impacting the U.S. economy, sales and profits, a staggering 70 percent of operators are concerned that Covid-19 will have a negative impact on their ability to even remain in business.

Majority of states have instituted stay-at-home orders for all or some of the state

Stay-at-home and shelter-in-place orders force the closure of all nonessential businesses (the definition of which varies from state to state). Residents are generally still permitted to go outside, to the grocery store or to the doctor, but these orders represent a significant shutdown of state economies and stricter enforcement of social distancing. Along with these orders, most states are prohibiting dine-in services or placing strict capacity limits, allowing only for pickup, drive-thru and delivery services.

Although many restaurants were participating in delivery and takeout prior to the outbreak, operators have adjusted their offerings and added promotions to encourage dine-in alternatives. Promotions include free or discounted delivery, curbside pickup, digital payment options, daily deals or specials and adult beverage options. Some are scaling back menu offerings or promoting family meals to improve operational efficiencies. Many have partnered with third-party delivery apps to increase their visibility and delivery radius.

Operational changes critical to Covid-19 response

Among half of operators, the closure of dine-in service has also led to a reduction in staff and operating hours. A renewed attention to sanitation practices has also been at the forefront of operation reaction to the virus – 51 percent have retrained staff on food safety and cleaning practices, 44 percent have introduced new food safety measures and 40 percent have started cleaning kiosks more often.

Operator relief efforts

In terms of operator relief efforts, we’re seeing:

  • Royalty relief with franchisors extending deadlines
  • Rent deferments
  • Crowdfunding to assist struggling restaurants
  • Government relaxation of alcohol delivery restrictions
  • Waiving of delivery subscription fees
  • Delays for remodeling and other reinvestments
  • Shifting menus to focus on the most important and operationally effective menu items
  • Chains tapping into credit

As part of the federal stimulus package, restaurants with more than one location and fewer than 500 employees can borrow up to 2.5 times their monthly payroll or USD 10 million, whichever is lower. Chain affiliations are not a factor in determining eligibility, which is a major win for franchisees.

We’re here to help. We will release weekly updates from original research as Covid-19 continues to unfold and will be offering ongoing insights into consumer preferences, impacts and guidance on off-premise occasions as well as the rapidly shifting state of the industry. Sign up to receive these updates directly to your inbox.

Covid Update 3/20

Covid-19 continues to disrupt the entire foodservice industry and will only continue to have significant consequences. Using our current understanding of the crisis, we modeled out numerous scenarios to understand the scope of its impact. Presently, the expected foodservice impact ranges from a decline of 11 percent to 27 percent in year-over-year growth for 2020. But while most of the changes seem grim, there are also signs of hope, specifically from the operators who are adapting their service model in response to the new environment.

It’s no surprise that travel and leisure will take the biggest hit. The business and industry sector is being severely impacted by office closures and plant shutdowns, and educational losses will be steep but tempered slightly by schools continuing to serve impoverished members of the community. Full-service restaurants are impacted by state and local mandates to close dining areas. All segments are impacted by the increasing number of municipalities and states enacting shelter-in-place orders. At face value, one would assume that hospital foodservice would benefit from the outbreak, however, patient quarantines limit guest visitation.

Operators pivoting to off-premise models and helping each other with crowdfunding campaigns and lobbying for aid packages have showcased the resilience of the industry. For those who are operating, a pivot to meet the needs of underserved communities or the underserviced needs of consumers who seek connections at a distance has proven to be the best path forward.

Dine-in prohibited in increasing number of states

Each day, an increasing number of states are prohibiting dine-in services in restaurants or placing strict capacity limits, asking restaurants to rely on pickup, drive-thru and delivery services. Third-party delivery apps like DoorDash and Grubhub have announced that they are eliminating, suspending or reducing commission fees for restaurants during restaurant closures.

School closures threaten USD 22.8 billion K-12 foodservice industry

All states have closed at least some school districts, with more instituting statewide closures each day. Many states, however, are continuing to provide meals during the closures that students can pick up from schools or designated distribution centers.

The spread of the coronavirus remains the top news issue

The Covid-19 situation has also increased in importance for consumers ages 18-34 from 53 percent in week one to 66 percent in week two, though not shown in the graph. Concerns over the stock market also increased as the markets reacted strongly to the spread of the virus and economic uncertainty.

In looking at consumers’ behaviors at restaurants, there is a sharp increase in those within the U.S. population who are not likely to visit restaurants. Instead, they are primarily turning to delivery or drive-thrus.


Today, however, there are specific considerations that industry participants must take to weather the storm and be in a better position when we all get to the other side. For operators, the decision they face is in regards to pivoting toward takeout and delivery (with many who have little experience in this area) versus an entire shutdown. For suppliers, it entails:

  • Being transparent with all trading partners regarding their response to Covid-19 and safeguards taking place within their organizations.
  • Start adjusting plans based on lower industry volume expectations.
  • Explore micro-niche opportunities, including products that are more conducive for delivery.

We will release weekly updates from original research as Covid-19 continues to unfold.

March 05, 2020

The coronavirus (Covid-19) has become a familiar part of our lexicon in a very short period of time. Since its appearance in Wuhan, China, in late 2019, world and government agencies are fearful that the Covid-19 outbreak could turn into the world’s most severe pandemic since the H1N1 influenza of 1918. As of March 4, more than 93,000 coronavirus cases have been confirmed, resulting in over 3,000 deaths. China represents more than 85 percent of the cases and about 95 percent of the fatalities, however, the virus has spread to over 73 countries and territories and the number of cases outside of China is growing at concerning rates. The outbreak is expected to have a major impact on an already tenuous worldwide economy, with economists recently downgrading global GDP expectations anywhere from 0.3 percent to 0.7 percent for 2020.

Within the U.S., the first confirmed case of coronavirus appeared in mid-January. Since then, the number of confirmed cases in the U.S. has surpassed 125, resulting in nine deaths. Healthcare professionals believe there are many more cases, as testing has been sporadic, and that it is not a question of if, but when, the virus will become more widespread.

Relative to U.S. impact, economists can only speculate as we are still in the very early stages. There is no question that the longer the virus is not contained and anxiety persists, few sectors will be spared. The foodservice industry could experience significant challenges, given the strong human element inherent in both preparing meals and the act of dining outside the home, presenting both supply and demand issues for the industry.

We have developed this whitepaper to provide some understanding to foodservice professionals on the consumer view of Covid-19 and its potential impact on the foodservice industry. Original research was conducted with 1,000 consumers from Feb. 28 to March 2 to best understand their behaviors, attitudes and possible reactions to a more widespread outbreak of Covid-19. It should be noted that there are certainly other far-reaching potential effects, such as those relating to supply chain and employee health, but this discussion will focus on consumer implications. Technomic will stay on top developments with new thought leadership on the impact of Covid-19 as the situation unfolds.

Coronavirus: The Top News Issue

Consumers are certainly well aware of the Covid-19 situation and outbreak taking hold. Among a number of different current events, more consumers indicate that they are closely following this story than any other story, with the next most-followed story being the Democratic primary, but by 21 percent fewer consumers compared to coronavirus.

That being said, Americans are somewhat torn on what to think about Covid-19 right now. Overall, 30 percent believe that the news is being blown out of proportion, with another 25 percent not knowing what to think about its overall impact. In terms of being a threat to themselves or their families, 42 percent believe that Covid-19 fits this description, but the remaining 58 percent disagree or are unsure.

Among Americans following the coronavirus story closely, 86 percent indicate that this situation is important to them personally, and 82 percent believe it will eventually have a negative effect on the U.S. economy. So, even though some do not see coronavirus as a health threat to themselves and their families, there are other threats related to personal financial positions and routines about which Americans are concerned.

Consumer Responses

Consumers feel that their behaviors and attitudes are likely to be impacted by ongoing developments. The most likely action is to avoid crowds, which translates into reducing social interactions. More concerning for foodservice, more than three in 10 consumers say they plan on leaving the house less often, not go to restaurants as often or not order food or beverages at away-from-home venues as often. And among those who say they will not go to restaurant as often, 31 percent say that decreased frequency will last for between one and three months. It is interesting to note that only 13 percent believe that they will order more via restaurant delivery because of the crisis.

The reduced foodservice visit incidence could be a boon for the grocery business, as almost half of these consumers say they will stockpile grocery foods and beverages as a substitute for away-from-home meals. Meanwhile, other consumers are concerned about their potential need to move away from foodservice due to the crisis as its benefits are ingrained into their lifestyles. These consumers may not have the cooking skills, the time nor the desire to make more meals at home.

What Should The Industry Do

In our research, consumers provide their opinions on how the restaurant industry should respond to the coronavirus situation. The top two responses cover mitigating the spread of the virus by providing necessary employees with time off and following proper sanitation procedures. Interestingly, 37 percent say that restaurants should operate «business as usual.» This indicates that many consumers are satisfied that foodservice operators are as prepared as anyone to mitigate the impact of an outbreak.


There are some very big «unknowns» relative to what impacts the coronavirus will have on the U.S. economy overall and, specifically, to foodservice at this point. We are in the «too early to tell» phase, as the broader U.S. population had not yet become concerned with this issue until just a week or two ago, when media attention proliferated. Personal consumer and business responses could thwart an otherwise serious widespread outbreak in the U.S., which would result in social distancing and cocooning. These actions would have effects on foodservice as well.

At this juncture, it is premature for us to determine what growth-related impact Covid-19 will have on the U.S. foodservice industry and its segments, as we are still very much in the beginning stages. However, we have developed some scenarios to consider as the Covid-19 event unfolds in the U.S. Obviously, the degree of impact will be dependent upon the severity and length of the outbreak in the U.S., as well as effects on supply chain, availability of healthy staff and other far-reaching industry dynamics.

Potential for Highest Negative Impact

Full-Service Restaurant On-Premise – Consumers could potentially cocoon themselves in their homes and look for eating solutions that will not expose them to unnecessary social interactions. Eating at full-service restaurants certainly can make diners feel vulnerable and would be avoided.

Business + Industry – Many companies are implementing or considering allowing employees to work from home or remotely. Some may temporarily close offices and plants, at least temporarily.

Schools – As of the time this was written, some schools in Washington state have closed due to outbreak concerns. Although makeup days are common, a more prolonged shutdown could result in lost foodservice volume.

Colleges + Universities – This segment faces the same issue as schools, especially as many students live in close quarters. A serious outbreak could cause cancellation of an entire semester. Study trips abroad are being cancelled.

Lodging – Lodging has already been affected, with cancellations from overseas travelers. According to Tourism Economics, the U.S. will lose 1.6 million travelers from mainland China – a drop of 28 percent from 2019. A drop is expected from other areas as well, as both international and U.S. businesses as well as tourists are already curtailing their travel plans. In the U.S., companies are evaluating domestic travel bans until the situation becomes clearer.

Recreation – The ultimate in crowd-gathering venues, whether it’s movie theaters, stadiums, cruise lines, concerts halls, amusement parks or museums, this segment could be among the most significantly impacted. Closures, cancellations, and postponements are all being seriously contemplated. Some contingency plans include playing some sporting events in empty stadiums and arenas.

Airlines – As with other travel and leisure segments, the airlines are also feeling the heat and will be impacted as consumers reduce their travel and company travel bans are being enacted.

Potential for Positive Impact

Limited-Service Restaurants – The off-premise nature of limited service, plus the presence of drive-thrus limits human-to-human contact. Delivery-friendly segments, such as pizza, could particularly benefit.

Delivery – As consumers leave their homes less often, potential exists for proliferation of delivery orders through both third-party and self-delivery players.

Supermarket Foodservice – Consumers will still need to visit supermarkets to buy the foods they need on a fairly regular basis. They could potentially increase their purchasing of supermarket foodservice items while grocery shopping as a surrogate for restaurant meals.