Restaurant operators' top 2022 investments will include mobile ordering and more drive-thru locations.
That’s according to a study conducted by TD Bank, which found that the pandemic has permanently altered the consumer-restaurant relationship, with operators investing in technology and real estate to align with changing consumer preferences. Early in the pandemic, 72% of operators invested in delivery and mobile/online ordering to boost revenue during mandated stay-at-home orders, according to TD's 2021 Restaurant Franchise Pulse survey, and it appears the popularity of these offerings is here to stay.
According to the survey, restaurant operators' early investment in delivery and mobile ordering has paid off, with 71% relying on delivery for 11% or more of sales and 33% relying on delivery for more than 20% of sales. Sixty-five percent of respondents rely on mobile ordering for 11% or more of sales, and 25% rely on mobile ordering for more than 20% of sales.
To keep up with changing consumer preferences, operators noted that their top areas of investment in 2022 include mobile ordering (54%); delivery services (47%); technology such as new POS digital signage or other in-store tech (45%); and alternative payment methods (37%).
In addition to technological investments, operators are also altering their physical restaurant locations to cater to delivery. While only 15% plan to reduce the number or size of their franchise locations, operators are making other adjustments to their real estate. These include
- 55% plan to add more space for pick-up;
- 45% plan to provide additional drive-thru locations; and
- 43% plan to add an outdoor on-site dining space.
“Mobile ordering and delivery have become a part of everyday life and are no longer nice to have, but expected, and operators need to continue to enhance these offerings to keep up with competitors,” said Mark Wasilefsky, head of restaurant franchise finance group, TD Bank. "What we are seeing is that the pandemic has permanently altered consumer expectations and behaviors to the point that operators are comfortable enough to make long-term capital investments.”
Despite the challenges the restaurant industry has faced since the start of the pandemic, operators have learned to pivot and as a result, 81% of respondents feel optimistic about the future. More than half even feel very optimistic and 47% believe their revenue will increase significantly. This optimism and operators' planned investment lead to strong credit needs. In fact, 61% of respondents plan to apply for a loan or line of credit within the next year.
This study was conducted among a representative group of 251 restaurant franchise owners and operators across the United States from November 10-22, 2021. The survey was hosted by global research company Engine Insights.
TD Bank is one of the 10 largest banks in the U.S., providing more than 9.7 million customers with a full range of retail, small business and commercial banking products.