Placer.ai: casual dining sector can fully recover before the end of summer
- Foot traffic analytics firm Placer.ai estimates the casual dining sector will fully recover within weeks.
- Chains like Longhorn Steakhouse and Texas Roadhouse are outperforming other restaurants.
- Cheaper options like IHOP are lagging for now.
There was hardly an industry that didn’t feel the heat from the COVID-19 pandemic. Among the most hard-hit industries was the casual dining restaurant sector as a company’s business model relied on filling in-door dining tables multiple times a night.
As the public health guidelines restricted people to their homes, casual dining chains were forced to scramble and recover lost sales through any means possible. But now that COVID-19 restrictions are for the most part eased and in some cases across the US completely eliminated, what restaurant chains are outperforming.
Full recovery within weeks
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Foot traffic at casual dining restaurants was down just 3.8% in June compared to the levels seen before the pandemic in 2019, according to foot traffic analytics firm Placer.ai. This marks a continuation in momentum compared to a 10.4% foot traffic decline in April and a 7.8% decline in May. Placer.ai estimates the casual dining industry is on track for a full recovery by the end of the summer.
Placer.ai attributes this fast-paced recovery in casual dining to ramped up vaccine rollouts and lawmakers confidence in easing the pandemic-related restrictions. Another hurdle to recovery in the first quarter of 2021 was the harsh weather that made it impractical for diners to eat outdoors in areas where it was permitted to do so.
Outperformers and laggers
According to Placer.ai’s analysis, consumers are showing a preference for higher-end restaurants over fast-casual chains. The report calls out Darden Restaurants, Inc. (NYSE: DRI) as “doing particularly well,” especially Longhorn Steakhouse that saw an 18.9% improvement in traffic in June compared to 2019. Trailing not too far behind is rival steakhouse Texas Roadhouse Inc (NASDAQ: TXRH) that recorded a 16.8% Yo2Y traffic gain in June.
On the other hand, Dine Brands Global Inc’s (NYSE: DIN) IHOP brand performed worse in June compared to May But this could be a function of consumers simply opting for pricier dining options for the time being. Lower-end chains like IHOP could catch up as “the novelty of dining out fades and customers return to their pre-pandemic haunts,” according to Placer.ai.