Checking in on the State of the Restaurant Consumer

    How has guest behavior changed throughout the pandemic? It’s an ever-evolving debate.

    Fast-food customer on their mobile phone while eating.
    Adobe Stock
    Sixty-four percent of consumers going to eat said they were looking for a certain type of food.

    Trying to pin down consumer behavior from March 2020 on has taken operators through a web of preferences and technology solutions to deliver those demands. The climate has begun to settle a bit, although a potential recession looms and inflation continues to drive prices higher from both avenues, inside and away from the home.

    According to a new study by data intelligence company Near, released Wednesday, one thing that’s become clear is there’s no longer a singular dining experience.

    Using privacy-led, human movement data (compliant-collected location information from mobile phones) along with survey results, the report explored themes such as whether or not consumers are ready to eat out again, top priorities for restaurants, trends to watch, loyalty programs, and the ever-evolving future of takeout and delivery.

    “The fact that dining behaviors have shifted greatly since the beginning of the pandemic is no surprise,” says Anil Mathews, the company’s founder and CEO. “However, aside from growth in takeout and delivery, the report shows that dining-in remains at the industry core and that consumer expectations for the dining experience are even higher than pre-pandemic levels. The high-level consumer expectations include waiters, ambience, and other personalized touches.”

    The high-level point is demand to eat from restaurants is visible at this turn. But what actually constitutes “eating from restaurants” isn’t.

    Diners reported getting food from restaurants, on average, 9.1 times per month, compared to 9.7 pre-pandemic.

    How it breaks down:

    Pre-COVID:

    • Dining in: 5.7
    • Delivery: 1.6
    • Takeout: 2.5

     

    Present

    • Dining in: 4.1
    • Delivery: 1.8
    • Takeout: 3

     

    What’s flashing over recent months is there’s been a type of bifurcation in the consumer dining space. When customers want to go out in-person, they seek a specific, high-level experience that is often quite traditional. This includes waiters, ambience, and other personalized, human touches, the report showed. But in all other cases, they’re chasing a multitude of options and conveniences catered to personal preferences. And the more restaurants are able to meet those demands, the more satisfied and loyal guests become.

    “It’s a challenge as well as an opportunity for dining brands to use creative and innovative approaches to build relationships with customers, through physical and digital touchpoints,” Mathews says.

    He points to some case points: 72 percent of diners in the study said they enjoyed the traditional waiter experience, while 17 percent liked QR code ordering, and 18 percent kiosk ordering.

    “Generational differences also have an influence on ordering and dining preferences,” Mathews adds. “Half of Gen Z and millennial diners said they’re more likely to eat at a restaurant if it’s on a delivery app, while only 13 percent of respondents over the age of 45 agreed with the statement.”

    Whether it’s the higher cost of doing so or cashing in on pent-up demand, diners eating out inferred they have higher expectations than pre-virus. Sixty-four percent of consumers going to eat said they were looking for a certain type of food; 58 percent wanted to celebrate a special occasion; and 43 percent said they craved the ambience.

    Top reasons to dine at a restaurant:

    • I’m craving a certain type of food: 64 percent
    • To celebrate a special occasion: 58 percent
    • I don’t want to cook: 58 percent
    • I enjoy the ambience: 43 percent
    • To meet friends: 39 percent

     

    How much do you enjoy the following ordering experiences?

    • Traditional waiter experience: 72 percent
    • QR code/mobile ordering experience: 17 percent
    • Fast casual (order/pay at a counter, with a food runner): 39 percent
    • Kiosk experience: 18 percent
    • App-based ordering (for pickup or delivery): 28 percent
    • Online website ordering (for pickup or delivery): 36 percent
    • Fast-food experience (order/pay at counter, pickup from the counter when called): 40 percent

     

    Near explored some delivery trends as well. Namely, how customers will evolve alongside what’s no longer a coming trend. The rise of digital and delivery (the latter 84 percent higher, per The NPD Group), helped quick-service chains push same-store sales growth of 10.15 percent across 2021 through mid-October. The rest of foodservice was closer to 3 percent. While much of that growth stemmed from higher check, it’s also buoyed from an omnichannel reset.

    Chipotle, in Tuesday’s Q2 report, saw in-restaurant sales lift 35.9 percent in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021. Digital sales represented 39 percent of total food and beverage revenue. Overall, total revenue was $2.2 billion—an increase of 17 percent, year-over-year as same-store sales lifted 10.1 percent.

    In Near’s study, 57 percent of diners considered it a “nice-to-have” option to be able to order takeout or delivery from a restaurant. Eight percent of respondents said they’d only consider a restaurant that does takeout and delivery.

    Why do you get delivery/takeout?

    • I don’t want to cook: 65 percent
    • It saves time: 53 percent
    • I’m craving a certain type of food: 53 percent
    • The location is convenient for me: 32 percent
    • I want to avoid COVID: 27 percent
    • To celebrate a special occasion: 13 percent
    • To try a place friends have told me about: 11 percent
    • To have friends over: 14 percent

     

    Outdoor dining also has staying power. Fifty-two percent of respondents said they consider outdoor seating essential or nice to have. Forty-five said it was not important.

    “Restaurants that know their audience includes diners with a preference for takeout and delivery can use this information for site selection,” the company said. “They can choose new locations that may have smaller footprints, less space for indoor tables, and also locations with good road traffic to allow for smooth takeout and delivery options. They can also select sites that are close to popular outdoor seating areas, making takeout more appealing and removing the need for more indoor seating and other indoor maintenance.”

    A reason why off-premises business sustained isn’t as much about external conditions (no dine-in, pandemic fears) as it is about the evolution of what’s powering it. Pre-COVID, mobile app-based delivery was an infant headline. Online ordering via websites was mostly uncommon. Takeout, particularly in full service and casual dining (and even pizza), was often over the phone. Otherwise, it generally came in person or via drive-thru. All of these, Near said, have progressed from differentiators to table stakes. “They’ve become necessities,” the company said, “critical to restaurants who want to reach a wide range of dining audiences, particularly those not interested in dining in.”

    It’s taken shape in the hands of consumers. Mobile is a drive-thru (or kiosk) screen in a guests’ pocket. However you compare it, the ability to order via app enabled operators to meet guests at the screen. Per research by Sensor Tower, quick-service app downloads in 2020 lifted 21 percent to 83 million.

    According to App Annie data in January, users spent 49 percent more sessions year-over-year in food and drink apps, reaching 62 billion sessions in 2021.

    In Near’s study, for diners between the ages of 18–44, 48 percent said they’d be more likely to order food from restaurants that are listed in takeout and delivery apps.

    Loyalty and digital relationships have become operational currency in a post-pandemic landscape.

    How have you selected the restaurants where you participate in loyalty programs?

    • I eat there frequently: 60 percent
    • They had a compelling pitch: 8 percent
    • They have good rewards for participating: 50 percent
    • I got a discount or bonus for signing up: 23 percent

     

    The average diner said they participated in three loyalty programs, with consumers aged 18–44 upping to four. Fifty percent said they out at restaurants where they are a part of the loyalty program. That was even higher (60 percent) for Gen Z and millennials.

    How many restaurant loyalty programs do you participate in?

    • 1: 26 percent
    • 2–3: 48 percent
    • 4–5: 16 percent
    • 6–10: 7 percent
    • 11-plus: 4 percent

     

    “While establishments have always relied on punch cards and coupon offers, digital loyalty programs offer a huge opportunity to create a deep relationship with customers that our report shows leads to increased loyalty and revenue,” Mathews says.

    “The restaurants that best weathered the pandemic have embraced digital technology and invested in loyalty programs,” he adds. “Digital loyalty programs provide a cohesive digital touch point that allows restaurants of all kinds to create an interconnected customer experience. Mobile apps in particular have enabled a whole new wide swath of loyalty-based incentives. They allow restaurants to offer customized experiences such as remembering customers’ typical orders, the ability to offer location-based promotions, streamline customer order preparation and the pickup process, as well as acting as a portal for updates and communication with the customer to strengthen brand loyalty.”

    Looking at demographic trends, although diners aged 18–44 do enjoy or very much enjoy the traditional waiter experience (59 percent), it was specifically diners 44-plus who said they have an extremely high preference for the traditional waiter experience (83 percent). Younger guests also appeared more amenable to new technology solutions such as QR codes, though they still don’t prefer it (only 27 percent said they enjoy it). However, very few older diners told Near they found the QR/kiosk experience enjoyable (9 percent).

    Loyalty programs were less important to older consumers, too. The 44-and-over crowd enrolled, on average, in about two loyalty programs. Similar to the use of QR codes and kiosks, loyalty programs were largely driven by digital technologies, such as mobile apps, and were used less frequently by the older cohort.

    “Restaurants that want to appeal to diners aged 44-plus can be creative with this knowledge, by taking non-dine-in options and adding more personal touches similar to a traditional waiter experience [similar to quick-service chains adding human touches to the drive-thru]. This would have the benefit of appealing to diners aged 18–44 as well, as they too show a preference for a more personalized experience,” the company said.

    Adds Mathews: “Restaurants know that it can be difficult to appeal to a wide and varied customer base, while also building a single, cohesive brand. The two priorities can often feel at odds, but when restaurants combine global trends with local demographic data, they can navigate this new landscape of dining experiences. They can make smart choices about site selection, technology infrastructure, and customer service that satisfy their customer base while building a one-of-a-kind and consistent experience.