Restaurants in 2021: Takeout and Delivery is Now Essential to Customers

Note: This is part two of a three-part series on the state of the restaurant industry in 2021. Read the first part, on the future of guest demand, here, and the second part, on technology and hospitality, here.

“Pivot” became a tired term in the months following COVID-19’s introduction. The pandemic lit as many trends on fire as it did invent others. So the idea restaurants collectively repositioned overnight doesn’t quite do it justice. And it doesn’t encapsulate just how long-term and solid some of these changes were.

This was especially true for quick-service restaurants, which were already searching for tech-based answers to age-old consumer questions. The clock on innovation stopped ticking. Restaurants arrived in weeks where they thought they’d get in years. It was a no-choice kind of environment.

Naturally, the biggest shift keyed early survival—the move toward off-premises. Operators made hefty investments in customer-facing technologies. Delivery and curbside spread. Ghost kitchens and virtual brands sprung up. Drive thrus became the present (and future) of development.

The National Restaurant Association’s State of the Restaurant Industry Report examined some of the pandemic’s biggest off-premises shifts and how these operational trends will influence consumers’ restaurant decisions in the coming months.

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Unlike past disruptors, such as the Great Recession, for instance, what made COVID so unique was how it stripped capacity out of dining rooms through mandates. Restaurants weren’t crippled by softened demand, the economy, or spending trends—they couldn’t seat guests. At points in March and April, there were markets faced with nonexistent capacity. It left restaurants no other option but to focus on off-premises or shut the doors and try to wait it out.

Roughly half of full-service operators in the Association’s report said they devoted more resources to expanding off-premises business since the onset of COVID. The shift was well-received by consumers, as takeout and delivery were already part of their day-to-day habits.

Now, 53 percent of adults say purchasing takeout or delivery food is essential to the way they live. This is a statistic many restaurants currently embrace as they invest in accessibility—opening channels to get food to guests in additional ways, like curbside and digital ordering.

Across each of the six major segments, off-premises dining represents a larger proportion of sales than it did pre-coronavirus. Important to note, too, is it’s still not nearly enough to offset on-premises sales losses for the vast majority of full-service restaurants. But what it does signal, potentially, is brighter days on the backside of COVID. A dynamic where dine-in returns and yet many delivery, digital, and takeout awareness hurdles are gone. Higher off-premises sales not at the expense of on-premises business.

Let’s take Texas Roadhouse as a case study. Units of the steakhouse chain averaged $118,512 per week in the seven-day period ending March 3. Of that, only $9,115 stemmed from to-go business.

By September, average weekly sales ran $95,803 and to-go mixed 21.1 percent. Rebalancing that is critical for full-serves after COVID because check trends generally work in reverse from counter-service peers. Checks are higher at the table than via delivery and to-go thanks to beverages. Margins are less as well. As Texas Roadhouse CEO Kent Taylor put it earlier, “Soft drinks, beer, and margaritas.”

Yet the question is, will that 21 percent, even as it slides back in terms of overall sales mix, still represent a higher dollar figure than before? Meaning operators would get to pre-COVID levels inside restaurants, and yet have more business coming from off-premises. Taylor, among other sector leaders, including Chili’s CEO Wyman Roberts, believe that will be the case. Sit-down restaurants will hold some off-premises gains as guests add the occasion to their consideration set. Say takeout once a month when they would have just gone fast food before. How much, though? Nobody can truly say until operators work in a 100 percent capacity environment for some time, one that also doesn’t require 6 feet of distance.

Percentage of restaurant operators who say they devoted more resources to expanding the off-premises side of their business since the beginning of the outbreak in March

Family dining: 49 percent
Casual dining: 52 percent
Fine dining: 54 percent
Quick service: 35 percent
Fast casual: 45 percent
Coffee and snack: 27 percent

Restaurant operators reporting of their current off-premises sales compared to pre-COVID-19 levels

Family dining

Larger proportion of sales: 69 percent
Smaller proportion of sales: 18 percent
About the same: 13 percent

Casual dining

Larger proportion of sales: 70 percent
Smaller proportion of sales: 14 percent
About the same: 16 percent

Fine dining

Larger proportion of sales: 63 percent
Smaller proportion of sales: 19 percent
About the same: 18 percent

Quick service

Larger proportion of sales: 74 percent
Smaller proportion of sales: 17 percent
About the same: 18 percent

Fast casual

Larger proportion of sales: 74 percent
Smaller proportion of sales: 15 percent
About the same: 11 percent

Coffee and snack

Larger proportion of sales: 56 percent
Smaller proportion of sales: 18 percent
About the same: 27 percent

Percentage of consumers who say purchasing takeout or delivery food is essential to the way they live

All adults: 53 percent
Gen Z: 54 percent
Gen X: 57 percent
Millennials: 64 percent
Baby Boomers: 43 percent

Percentage of consumers who say they’re more likely to purchase takeout food from a restaurant than they were before the outbreak

All adults: 68 percent
Gen Z: 62 percent
Gen Z: 68 percent
Millennials: 73 percent
Baby Boomers: 67 percent

The takeaway: There isn’t a single generation that expects to completely abandon their increased off-premises behavior. It will undeniably decrease as dine-in options emerge, but it’s safe to assume it won’t ever go back to where it was, either.

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Curbside was broadly the single-most adopted off-premises jump of the pandemic. At least when you consider what was on the table already (delivery) and what wasn’t (creating a makeshift drive thru in the parking lot of a Texas Roadhouse). It was one of the least capital-intensive offerings operators could stand up during the pandemic. Not to say it was always easy.

A major slice of restaurants said they added curbside takeout this year, per the Association. Eight in 10 fine dining, family dining, and fast-casual operators did so.

Percentage of restaurant operators who say they added curbside takeout since the beginning of the outbreak in March

Family dining: 78 percent
Casual dining: 73 percent
Fine dining: 81 percent
Quick service: 58 percent
Fast casual: 77 percent
Coffee and snack: 64 percent

And if you’re still not convinced, just take a look at the restaurant of the future designs coming from some of the industry’s top chains. Many include not only dedicated curbside parking spots, but also integrated smart kitchen technology that alerts employees of a customer’s impending arrival.

All of this isn’t to discount the impact of delivery. Nearly half of full-service operators introduced delivery in 2020, and slightly fewer fast casual and coffee and snack operators reported similarly, the Association said.

Operators in every segment were more likely to add third-party delivery than set up in-house service. Some did both. This could eventually change now that everyone isn’t grabbing a bucket to throw water on a blazing fire. Third party was the only feasible option to get going in a hurry for many. And, in a lot of cases, it’s still the quickest path to expand reach to an already dedicated customer base. There are pros and cons to both paths, of course. Restaurants simply have more time today to think through it than they did on day two or three, or 30. COVID has stretched a long, long time.

Six in 10 adults said they’re more likely to get their food delivered than they were before the outbreak. For millennials, it’s 71 percent. COVID narrowed the adoption gap.

Nearly two-thirds of current delivery customers said they prefer to order directly from the restaurant; 18 percent prefer to do so through third-party; 18 percent don’t care. Baby Boomers (79 percent) said they prefer to order directly through the restaurant for delivery.

There is opportunity for brands to capitalize on this and soften some of the margin compression tied to third-party delivery. Or commit to offering both, like McAlister’s Deli and others. In addition to avoiding some fees and taking price, white-label delivery allows restaurants to curate customer journeys. McAlister’s president Joe Guith said check averages have been significantly higher through McAlister’s direct delivery. “Because we designed the experience differently,” he told QSR. “We upsell better. We can feature our products in a different way that are more compelling.”

Percentage of restaurant operators who say they added delivery since the beginning of COVID-19

Family dining: 46 percent
Casual dining: 44 percent
Fine dining: 46 percent
Quick service: 31 percent
Fast casual: 44 percent
Coffee and Snack: 42 percent

Percentage of restaurant operators who say they added either third-party or in-house delivery

Family dining

Third-party delivery: 33 percent
In-house delivery: 21 percent

Casual dining

Third-party delivery: 31 percent
In-house delivery: 21 percent

Fine dining

Third-party delivery: 30 percent
In-house delivery: 24 percent

Quick service

Third-party delivery: 28 percent
In-house delivery: 7 percent

Fast casual

Third-party delivery: 34 percent
In-house delivery: 16 percent

Coffee and snack

Third-party delivery: 25 percent
In-house delivery: 20 percent

Here’s a deeper look at the opportunity with direct delivery.

All adults

Prefer to order direct through the restaurant for delivery: 64 percent
Prefer to order through a third-party service for delivery: 18 percent
No preference: 18 percent

Male

Prefer to order direct through the restaurant for delivery: 64 percent
Prefer to order through a third-party service for delivery: 23 percent
No preference: 13 percent

Female

Prefer to order direct through the restaurant for delivery: 64 percent
Prefer to order through a third-party service for delivery: 14 percent
No preference: 22 percent

Gen Z

Prefer to order direct through the restaurant for delivery: 58 percent
Prefer to order through a third-party service for delivery: 22 percent
No preference: 20 percent

Millennials

Prefer to order direct through the restaurant for delivery: 57 percent
Prefer to order through a third-party service for delivery: 27 percent
No preference: 16 percent

Gen X

Prefer to order direct through the restaurant for delivery: 65 percent
Prefer to order through a third-party service for delivery: 17 percent
No preference: 18 percent

Baby Boomers

Prefer to order direct through the restaurant for delivery: 79 percent
Prefer to order through a third-party service for delivery: 3 percent
No preference: 18 percent

Northeast

Prefer to order direct through the restaurant for delivery: 71 percent
Prefer to order through a third-party service for delivery: 20 percent
No preference: 9 percent

Midwest

Prefer to order direct through the restaurant for delivery: 72 percent
Prefer to order through a third-party service for delivery: 15 percent
No preference: 14 percent

South

Prefer to order direct through the restaurant for delivery: 62 percent
Prefer to order through a third-party service for delivery: 19 percent
No preference: 19 percent

West

Prefer to order direct through the restaurant for delivery: 56 percent
Prefer to order through a third-party service for delivery: 19 percent
No preference: 25 percent

Urban

Prefer to order direct through the restaurant for delivery: 57 percent
Prefer to order through a third-party service for delivery: 28 percent
No preference: 15 percent

Suburban

Prefer to order direct through the restaurant for delivery: 68 percent
Prefer to order through a third-party service for delivery: 15 percent
No preference: 17 percent

Rural

Prefer to order direct through the restaurant for delivery: 71 percent
Prefer to order through a third-party service for delivery: 6 percent
No preference: 24 percent

If there’s one category to circle there, it’s rural and suburban communities. Third-party delivery will always enjoy a stronghold in urban metros. But there’s delivery share up for grabs in smaller, more spread-out communities, where customers tend to be more brand loyal than product loyal (in comparison to city centers).

Shifting to drive thru, restaurants weren’t as quick to makeover operations out of the gates. Only between 1–3 percent of brands added drive-thru service. Fast casuals were the exception, at 6 percent. This is more a logistical reaction than anything else. Adding a drive thru takes space, capital, and probably some landlord sign-off. Chipotle has alluded to the latter in recent calls, saying real estate developers are becoming more open to the idea of “Chipotlanes” than before. They want the traffic and trust the investment, and understand the consumer demand. Still, it’s a developing conversation industry-wide, from walk-up windows (even Texas Roadhouse is doing this) to casual off-shots with drive thrus (like Outback’s Aussie Grill). Then, to an earlier point, large quick-serves are reimagining the traditional experience, with or without dining rooms.

Likewise, the rise of ghost kitchens remains a work in progress. Less than 5 percent of operators said they added delivery from a virtual or ghost kitchen since COVID’s onset. And it’s telling that 72 percent of adults said it’s important delivery orders come from a location that they can visit in person, the Association said.

Which brings up a question for the post-COVID world: When choosing a place to order food for delivery, how important is it to you that the food comes from a restaurant, deli or fast-food place that has a physical location accessible to the public?