Takeaway: Black Box will now be updating sales trends weekly with a week's delay.

The survey work Black Box sent out yesterday seems contradictory to what we see in the market place and what many states and Washington D.C are suggesting consumers are doing right now.  According to Black Box, "By March 13, the industry was not yet foreseeing a dramatic drop in their traffic. Half of the companies said they expected future traffic decline as a result of COVID-19 to be less than 10%. I hope they are right, but that seems like the operators are a little too optimistic.  I wonder if that will change in a few weeks, as the data from OpenTable has continued to slide.

RESTAURANT INDUSTRY | BLACK BOX UPDATE - 3.18 v1 

BlackBox went on to say that as of March 8, "comp traffic declines continue to be worse for full service (-3.7%) than for limited-service restaurants (-3.1%).  With "outbreak centers, a major tourist and convention destinations suffer significant traffic declines. Seattle's comp traffic was (-10.4%) for the week (three times worse than the national average). In Seattle, comp dine-in traffic was (-10.2%) or 8.5% lower than the previous week. Comp traffic fell by 30% at the fine dining and upscale casual concepts.”  Now, this makes more sense and is consistent with the data that OpenTable is publishing.

As you can imagine, the data is only going to get worse from here as “60% of restaurant companies had already established contingency plans for closures as early as March 13.”

Staffing is going to be the biggest challenge the industry will face outside of the demand problem.  According to Black Box, "about a third of companies (this was consistent across all segments) reported they were already having additional staffing challenges due to the virus. This included employees calling in sick or not coming to work."

“In Seattle, restaurant spending from older guests (65+ years) dropped very significantly compared with their spending in the rest of the country during the week.  This older age group whose consumption is likely to be the most affected going forward as well.”  The first thing that came to my mind reading this was Olive Garden.  That concept's guest traffic skews older and may have a harder time recovering, but that is likely true for all of the Casual Dining segment. 

Delivery is one of the worst consumer propositions to hit the restaurant industry and is likely not going to save the day for sit-down restaurants.  According to Black Box, “As restaurants shift to off-premise sales, third-party delivery may prove challenging given the meager adoption rates by consumers, especially those in older demographics. Only 4% of all consumers 18-24 years old placed a third-party delivery order the week ending March 6; the percentage was less than 1% for those 55 and older.”

Consumer Staples names (food manufacturing) are benefiting from the shifting food spend in the grocery aisle. “Consumers decreased their share of food spend at restaurants by 2.8% nationally and by 5.7% in Seattle during the first week in March.”

More to come.