Envestnet | Yodlee conducted an analysis of consumer spending at the largest 100 restaurants in our panel compared to smaller chains and standalone restaurants. Our data includes spending at both company-operated and franchise-owned restaurants.
Our analysis of restaurant spend indicates that these larger chains have fared better in recent weeks when compared to the rest of the industry. More specifically, data indicates that consumer spending at the larger chains dropped by roughly 9% compared to 2019 in March vs 40% for the small to mid-sized chains. The disparity only grew in April, with the small/medium restaurant category dropping by 50% nationally compared to 2019. Contrast that with the words of several executives of larger restaurants who indicated that spend picked up in the second half of April.
The rest of the industry remains fragmented and crippled from the effects of the COVID-19 crisis. Per the National Restaurant Association, the industry employs over 15.6 million people (or 10% of the U.S. workforce) and 7 out of 10 restaurants are characterized as single unit operations. An April survey of small businesses from the National Bureau of Economic Research estimated that restaurants will have only a 30% chance of survival if the crisis lasts four months.
The small/medium-sized category of restaurants in New York State has been hit harder than the rest of the nation.
Curiously, as smaller restaurants in New York furlough employees or close their doors permanently, some of the related consumer spending seems to be shifting to the larger restaurants and the other smaller restaurants that are staying open. This has resulted in increased ticket sizes (total purchase amounts), especially for the larger restaurant chains.
As the economy begins to reopen in phases, the recovery of these small/medium chain restaurants will indicate if the impact is short- or long-term.