CHERRY HILL, N.J., Oct. 21, 2020 /PRNewswire/ -- Off-premise sales
has become a key focus for restaurant franchisees in light of
COVID-19, according to the 2020 Restaurant Franchise Pulse survey,
conducted by TD Bank, America's Most Convenient Bank®.
Capacity restrictions designed to implement social distancing and
customer concern about physically visiting restaurant locations led
to the prioritization of enhanced delivery and mobile ordering
capabilities to boost revenue, with 72% implementing this
change.
While 86% of respondents reported having delivery and online
ordering prior to the pandemic, which is a 14% increase in delivery
since 2019, these offerings now account for a larger percentage of
sales, climbing from 20% in 2019 to 39% in 2020. While this spike
could be seen solely as a product of the pandemic, restaurant
owners see the value of these services long-term. According to last
year's survey, only 12% of franchisees planned to invest in
delivery and 25% in mobile ordering in 2020, which has since jumped
to 63% planning to invest in delivery and 69% in mobile ordering in
2021 – a 51% increase in delivery and a 44% increase in mobile
ordering.
"Franchises have invested a tremendous amount of time, money and
creativity in delivery and mobile ordering, but not all restaurants
have adapted to off-premise sales to the same degree as the QSR
space," said Mark Wasilefsky, Head
of Restaurant Franchise Finance Group, TD Bank. "Providing
off-premise sales, which is critical to cash flow, requires having
a menu that is amendable to delivery and takeout, which may be more
difficult for restaurants that are not QSRs. Fast casual and fine
dining establishments need to modify their menus to tasty food that
travels well. We expect the shift to off-premise sales to be long
lasting, and due to broad consumer acceptance of its added
convenience, we believe it will likely become a permanent aspect of
many franchises' business models."
Franchisees Become Nimbler
To overcome pandemic-related restrictions, franchisees quickly
pivoted, making multiple changes to their operations as federal,
state and city guidelines evolved. Respondents noted shifting in
the following ways to cater to customer preferences and government
guidelines:
- Implemented enhanced delivery services/online and mobile
ordering (72%)
- Limited hours of operation (50%)
- Pivoted to non-traditional payment methods (42%)
- Created a more limited menu (38%)
- Added drive thru capabilities (38%)
"The consumer demand is clear as restaurants reopen nationwide –
people still want to go out, be social and are tired of cooking at
home. However, franchisees' survival will depend on their
creativity. We've seen restaurants pivot during the warmer months
and now they must confront the next challenge – how to attract and
retain business during colder months," Wasilefsky added.
COVID-19 Brings Payment Options Front and Center
COVID-19 has altered consumer sentiment and behavior. As a
result, many now expect a quick and seamless payment experience
with limited physical interaction. To cater to evolving
preferences, 42% of franchisees pivoted to non-traditional payment
methods that eliminate shared devices, cards and the use of cash
due to its propensity for germ accumulation. According to the
survey, franchisees now use traditional retail or cloud-based point
of sale (POS) systems (36%), online payments (28%) and
person-to-person payment apps (22%) as their primary payment
method.
"COVID-19 transformed payment offerings such as contactless,
mobile and online payments from 'nice to haves' to 'must haves',"
said Doug Mearkle, Head of U.S.
Merchant Services Sales, TD Bank. "Although we have previously been
behind other countries in the adoption of contactless payments and
other merchant offerings, this may be the catalyst the U.S. needed
to bring heightened awareness of the benefits of these
products."
Changes to Franchise Real Estate are Uncertain
While larger QSR chains are beginning to announce their plans to
create smaller stores with more pick-up and drive-thru space, this
trend may be slow to trickle down to franchise owners. Respondents
are split on making changes to their physical space, with 49%
planning to reduce or having already reduced the number or size of
their franchise locations as a result of COVID-19 and 51% not
planning or having made any real estate changes. This may be
because, according to our 2019 survey, 31% of respondents planned
to invest in store reimaging or remodeling in 2020 so there may be
a delay in additional significant investment in franchise real
estate.
Survey Methodology
This study was conducted among a representative group of 250
restaurant franchise owners and operators across the United States from Sept. 3-16, 2020. The survey was hosted by global
research company ENGINE INSIGHTS.
About TD Bank, America's Most Convenient
Bank®
TD Bank, America's Most Convenient Bank, is one of the 10
largest banks in the U.S., providing more than 9.5 million
customers with a full range of retail, small business and
commercial banking products and services at more than 1,220
convenient locations throughout the Northeast, Mid-Atlantic, Metro
D.C., the Carolinas and Florida.
In addition, TD Bank and its subsidiaries offer customized private
banking and wealth management services through TD
Wealth®, and vehicle financing and dealer commercial
services through TD Auto Finance. TD Bank is headquartered in
Cherry Hill, N.J. To learn more,
visit www.td.com/us. Find TD Bank on Facebook
at www.facebook.com/TDBank and on Twitter at
www.twitter.com/TDBank_US and www.twitter.com/TDNews_US.
TD Bank, America's Most Convenient Bank, is a member of TD Bank
Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services
company in North America. The
Toronto-Dominion Bank trades on the New
York and Toronto stock
exchanges under the ticker symbol "TD". To learn more, visit
www.td.com/us.
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SOURCE TD Bank