4 Fall Covid Trends that continue to Impact the Restaurant Sector

By: Brittany Maroney


An analysis of recent dining trends, based on 24.8 million engagements, shows that omnichannel engagement is more integral than ever for most brands.

As the Covid-19 outbreak continues to impact the industry, restaurants are left to navigate labor shortages, virus surges and shifts in consumer demand, largely on their own. On a daily basis, they must predict how consumer behaviors will shift, how to combat a weakened labor pool, and prepare for constantly changing regional and national mandates. It’s a slippery slope for most operators– one bursting with opportunity but also challenges, as consumer behavior continues to dynamically shift across the nation.

Some of the most recent trends were highlighted in Nations Restaurant News’ Mid-Year Update, where data showed consumer spending in restaurants was again on the rise, despite the most recent variant outbreak. Driving this change were the gains in vaccination rates and healthier household balance sheets. This proved to positively impact restaurants across all segments, increasing sales on average by 19.7%. 

It also showed that pent-up demand for dining out continues to pressure resources, as food and fuel costs are rising due to labor and commodity costs. Many brands have sought to offset these rising costs with price changes. Overall, NRN is reporting that menu prices are up 3.9% on a year-to-year (Y/Y) basis which is the highest increase since 2008. 

With the uncertainties in the industry, Punchh, a leading loyalty, offers, and engagement platform for restaurants, groceries, retailers, and convenience stores, is releasing its most recent industry trend report to provide further industry insights into these challenging times. Utilizing an extensive network of resources, this report was based on 24.8M transactions across  200+ restaurant brands nationwide, in an effort to provide insights on the causal relationship between dining trends, consumer behavior, and geographic mandates. Transactions included loyalty participants, as well as non-loyalty engagements within the period. For the sake of comparison, Punchh has analyzed this data based on year-over-year trends and month-over-month (M/M), to truly understand consumer behaviors and how quickly shifting state mandates are impacting major markets. 

While many of the findings simply confirmed a continued trend toward digital adoption and shifting behaviors, many proved surprising and pointed to a resilient industry flourishing in times of crisis. Here are the results:


Transactions are up but check size remains flat

Similar to the NRN report,  findings showed that while sales remained flat across all categories based on the previous year, total sales for the most recent periods were up around 20%, signaling that customers have resumed in-person dining. Some increases in sales may be attributed to menu pricing changes as operators attempt to offset rising commodity and labor costs. 

This trend back to on-premise engagements is also highlighted by the increase in transactions, elevated significantly over the previous year, and up over 30% month-over-month. The analysis also found that while consumers were engaging in more visits, the average check size was down significantly Y/Y and has fallen by 9% month-over-month. This signals that consumers tended to spend more at the peak of last year’s pandemic, when they were primarily ordering online, and now have shifted back to reducing their consumption when on-premise. 

All indications seem to point to the fact that customers continue to crave in-person dining, and their adoption of online ordering and delivery has not offset the experiential side of on-premise purchases. Rather, these new channels offer an opportunity to increase engagements and visits. When diners choose to dine in-person, it now will have a direct negative impact on average check size, so upsells or promotional offerings may be necessary to compete with digital purchases. 

Online ordering transactions remain strong

With the increased adoption by customers to new channels like takeout, curbside, online ordering, or delivery options in the last year, many brands found the need to quickly adopt digital strategies that support these new ordering options. Many concepts actually found that these verticals helped offset labor challenges and provide alternatives for closed dining rooms. They became not only an integral part of operations but a necessity. 

The Punchh analysis supported the continuation of an omnichannel ordering experience for guests. It showed that online sales continued to grow over the previous year by 14%, highlighting the importance of new channels of engagement by consumers. Yet, most recently, online sales have begun to experience some flattening over the last few months, as diners continue to trend back to in-person dining. 

What can be said is that adoption during the pandemic and trends back to in-person dining have had minimal impact on overall spending online. Customers spend about the same amount whether in the midst of a lockdown or when they are regularly enjoying in-person dining experiences; and overall, checks consistently remain higher than those completed in-restaurant. 

Loyalty sales were up 35% over previous year

With big brands like McDonald’s, Taco Bell, and more jumping on the loyalty train this year, it truly has been a critical topic within the restaurant industry. And there’s no wonder. Loyalty offerings have been proven to strengthen customer relationships, increase engagements and visits and drive longer lifetime devotion to a brand. Loyalty programs also can provide marketers with the ability to segment their customer base and offer truer 1:1 personalization that drives experiential connections. 

Brands that implemented loyalty programs over the last year saw a 35% spend increase from their loyalty followers versus non-followers. That trend has remained consistent over the past few months and is expected to continue into the coming year. The spend lift is only amplified when a loyalty user places an order online, with transactions up over 17% as loyalty programs become more of a “must-have” for brands in the minds of consumers. Loyalty check sizes online also were up compared to standard orders placed by non-loyalty members, almost an additional 6%. 

The results of the Punchh analysis showed that loyalty programs continue to outperform across all channels within a restaurant environment and continue to drive higher spend, more visits, and an increase in online purchases. This remains consistent Y/Y, and its growth will only accelerate as consumers continue to look for rewarding engagements, offers, and promotions from their favorite brands. 

Local restaurant mandates have a varied effect on sales

In light of recent regional mandates in cities like New York, San Francisco and New Orleans, the Punchh analysis took a look at how pandemic closures and vaccination mandates might be impacting sales for restaurants within these markets. While many of these mandates differ, calling for seating limitations, outdoor dining requirements, or proof of vaccination, all cause hardship on restaurants as they continue to try to survive the challenges of the last year. 

The Punchh findings showed that there was not a consistent reaction, across these particular markets, and trends varied widely based on the requirements and consumer reaction of that city. While New York and San Francisco saw little impact on overall sales, New Orleans saw a steep decline of 10% of their total revenue. New York and New Orleans saw transactions decline, while San Francisco remained flat. 

The only consistent metric across all three markets was that online ordering was not impacted and continued to remain constant, along with average check size. Adoption of this channel proved to help maintain sales across all categories and brands. That was true for online loyalty transactions, as well. These numbers proved consistent with national averages, showing that online ordering, when integrated with a loyalty program, could be called a solution for “pandemic-proofing brands.” 

Pandemic Proofing Your Brand

Over the past few years, brands of all sizes have been searching for the magic bullet– the key to growing sales and overcoming tough economic challenges. The last few years have come with their ups and downs, and while some of the worst may be behind us, there are surely more difficulties on the horizon. That’s where the right marketing strategy comes in, one not based on traditional media purchases and seasonal offers, but rather in investing in the proper channels and digital solutions that will help your brand not only survive but thrive. 

Whether foot traffic ever truly returns to pre-pandemic levels is unclear, but what can be said is that it will be difficult for any brand to hold onto pre-pandemic sales in the same way without a truly omnichannel program that supports sales verticals and loyalty engagement. Restaurants that want to thrive into the future need to hone in on their customers’ needs, embrace the idea of an integrated tech stack that comes with being a digital leader, and fully commit to evolving their programs as times and consumer preferences change. If the past eighteen months have taught us anything, it’s that there is no telling what the future holds. 

To learn how the Punchh Platform can deliver loyal customers to your brand, contact a Punchh loyalty expert today.

Stay in the know. Subscribe to our bi-monthly newsletter to receive proven loyalty strategies, offer management techniques, and new trends in your industry. Sign up today!