Takeaway: The latest Hedgeye Consumer survey results show a tempered consumer sentiment towards restaurants compared to the last survey in mid-July as COVID concerns continue to trend upwards. There was not a significant worsening in sentiment on personal financials despite the extra $600 a week in unemployment benefits expiring at July’s end. Purchasing behavior on grocery continues to lean towards increased spend.
From late March, we have surveyed to assess shifts in the consumer mindset and sentiment during the COVID-19 outbreak relevant to consumer staples and the restaurant industry. Overall, the survey suggests a cynical economic outlook by consumers and a sustained shift in spending towards food-at-home from food-away-from-home. COVID-19 continues to be a tailwind for grocery stores. While the restaurant industry is nowhere near to returning to pre-pandemic levels of service – 49% of respondents still categorize their dine-in spend on a WoW basis as ‘significantly less’ – our survey indicates a small improvement in consumer sentiment towards on-premise dining.
In all 50 states, restaurants have opened some variation of indoor/outdoor dining. Even NYC, once the national epicenter of the pandemic, offers outdoor dining. The survey shows that things have moved towards ‘less bad’ for restaurants vis-à-vis consumer perception. However, this sentiment shift comes after the U.S.’s worst month in COVID cases. In July, cases more than doubled the total of any month. The U.S. recorded over 1.9 million new infections in July, close to 42% of the more than 4.5 million reported cases nationwide.
Dr. Deborah Birx, the White House coronavirus taskforce coordinator, spoke grimly on the coronavirus this past weekend: "What we are seeing today is different from March and April. It is extraordinarily widespread. It's into the rural as equal urban areas.” This positive perceptual shift by consumers towards restaurants highlights how state policy seems to outweigh personal COVID concerns in dictating consumer behavior with restaurants.
The survey began weekly from March 22nd for ten weeks and is now conducted on a bi-weekly basis. (Geography: U.S., n=500)
THE CONSUMER
- COVID-19 concerns continue to trend upwards again, which is unsurprising given that July recorded the most infections since the pandemic’s onset. In the first week of June, the share of respondents categorizing their concerns on COVID-19 as ‘extremely concerned’ dropped to a survey low of 35% - an 18% drop from its peak (52%) during Week 2 (3/29). Since then, the ‘extremely concerned’ cohort has climbed back up to 45%, a 1% increase from the survey’s last iteration.
- In the June 7th survey, only 57% of respondents expected the effects of the coronavirus pandemic to last longer than 4 months. Close to two months later, more than 77% of respondents make up that cohort.
- Personal financial concerns have maintained similar levels for the past two months, slanted upwards towards the ‘moderate’ and ‘extreme’ buckets at 26% and 27%, respectively. Despite the extra $600 per week in unemployment benefits expiring at July’s end, there was not a significant uptick in anxieties from respondents.
GROCERY
- The share of ‘more’ grocery spend respondents continues to outweigh the share of ‘less’ grocery spend respondents, at 38% versus 14% respectively.
RESTAURANTS
- On Delivery/Take-Out, the results were mostly unchanged from the survey’s last iteration. 37% of respondents categorize their off-premise as ‘less’, while 27% categorize it as ‘more’.
- In Week 19/20, the ‘significantly less’ response for Dine-In spend was at 49%. While 42% of respondents expect to make a purchase at a restaurant this week, 43% responded in the negative on making a restaurant purchase. These responses are a slight comedown from Week 17/18, where the ‘significantly less’ response for Dine-In hit a new low and the responses for a positive expectation to make a restaurant purchase hit a new high. Yes, compared to the pandemic’s onset, there is a slight improvement in consumer sentiment towards restaurants on a broader purchasing level, however, this is still a ‘less bad’ scenario.
