Large restaurant chains have mostly recovered from the effects of COVID-19, while the rest of the industry still struggles, Bank of America study says
A study of Bank of America credit card spending since March emphasizes the widened gap between recovery for large restaurant chains and small businesses
Joanna Fantozzi | Jul 10, 2020
National restaurant chains have largely recovered from the detrimental effects of plummeting consumer spending during the COVID-19 pandemic, according to a study of credit card spending from March to July 4 from Bank of America. The research compares the expenditures trajectory between large restaurant chains and the rest of the restaurant industry (which includes small chains and independent restaurants).
At the beginning of March just before pandemic-related lockdowns had started to be implemented, consumer spending at large restaurant chains and the rest of the industry were neck and neck at just about 5-6% in year-over-year spending. But by mid-April, although the entire restaurant industry was seeing negative year-over-year consumer trends, the spending gap between large and small restaurant chains had widened to nearly 35%.
That gap between consumer spending at large restaurant chains vs. the rest of the industry has been a consistent trend since the end of March. By July 4 weekend, the trajectory of large restaurant chain spending was positive for the first time, which Bank of America largely attributes to the fact that the holiday was on a weekend.
But even though small restaurant chains and independent business sales have steadily improved since the industry hit rock bottom at the end of March, on 4th of July weekend, consumer spending was still not quite at -20% when compared with last year, and the gap between large and small restaurant spending was hovering at more than 25%.
“While big chain includes limited service and full service concepts, we note that smaller chains and independent restaurants are more often casual dining (full-service) and quick-casual concepts,” Bank of America analysts said in the report. “Casual dining and quick-casual have been hit harder by a shift to social distancing, which explains some of the gap between big chains and other restaurants in the data. It also supports our expectation of greater store rationalization in those two segments vs. limited service.”
This data analysis is supported by Datassential, which reported that while consumers are starting to feel “cautious” rather than “hopeless” about returning to restaurants, they’re most likely to feel safe with restaurants with drive-thrus, outdoor seating, and quick-service and fast-casual restaurants, and many of these features are associated with chains rather than independent restaurants.
Bank of America did not respond in time to request for further comment.
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