• by Sarah Mahoney , Staff Writer @mahoney_sarah, April 21, 2020

There’s still no joy in QSR Land. But there are signs that America can only go so long without a respectable burger or taco. Black Box Financial Intelligence reports that sales in the latest week (ended April 5) fell 62.3%, marking a small improvement of 4.7 percentage points. 

We asked Victor Fernandez, vice president of insights and knowledge at the Dallas-based research company, to weigh in on the way people are reacting to the restaurant landscape right now. 

QSR Land: You’ve been tracking the sales decline all along. What’s changing from the mid-March downturn?

Victor Fernandez: Once shutdowns began hitting the national stage mid-March, the drop was quick and sharp. Losses are still there, and restaurants are still hurting. But we're starting to see some improvements and small recovery.

And hopefully, as those relief checks reach consumers, we might see some additional push upwards. But the worst-hit continue to be full-service restaurants, [where] we see declines of 90%. Overall, we're starting to settle in at decreases in the range of 60%, and in limited-service brands -- which already had drive-throughs in place -- they are down in the negative 20% range. Pizza has seen the smallest drop.

QSR Land: Of course, people are afraid of getting sick. But is money holding people back too?

Fernandez: Yes, and that also explains why limited-service and pizza brands are doing better. They are sold at lower price points. You can’t overlook the fact that for a lot of people, money's tight. Many have lost jobs. A lot of people are expecting some downturn in their income, and so their budgets are pinched. Limited-service brands become a more attractive option.

QSR Land: Are you ready to make long-term predictions about how consumers will change their dining behavior as restrictions ease?

Fernandez: It’s hard to say. Restaurant spending has been strong. Last year, people had been spending about half of their food budgets out-of-home. Our most recent data shows that consumers allocated 78% of their food spend towards grocery stores last week, up from 66% in January. And full-service restaurants received only 3.3% of consumer food spend, down from 10% in January.

Quick interactions -- like getting food at a drive-through -- will initially feel safer. But I think we are all playing that game in our head and with friends and family: Where are we going to go first when restaurants open again? But I do think we’ll see waves of new activity, regionally. And it will be gradual, at first.

QSR Land: What will consumers be thinking about as they mull going out to eat?

Fernandez: We’re seeing lots of chatter on social media that leads us to think safety will be key. People are looking for vigilance about cleanliness, about how restaurants treat their staff. That's going to continue. As we ease back to normal life, there will be a cautionary period as people explore.

QSR Land: QSR brands have done some fast thinking, whether it’s Chick-fil-A adding handwashing stations, Denny’s selling meal kits, or hundreds selling some groceries. 

Fernandez: Yes, they have. Our latest survey says that 29% of participating restaurant companies have created meal kits, packaging ingredients to make meals at home. And 12% say they are grocery essentials, like milk or eggs, as part of their menus. It’s encouraging to see how fast they’re adapting and shifting. They had the excess inventory anyway, and consumers need those items.