Despite most restaurant metrics falling in the first quarter of 2022, investor demand for net-lease and quick-service restaurants has been generally strong post-pandemic.
Mike McKean, founder of Retailsphere, told GlobeSt.com that the first quarter of 2022 is the first glimpse of how the restaurant industry might fare in a post-pandemic world.
“With businesses moving to a more remote model, many office spaces are now vacant, which once helped bolster breakfast and lunch visits. And while in-person dining is on the rise, it’s likely to impact the QSR segment as consumers aren’t looking for new on-the-go options right now.
There’s also been a shift in driving habits where many people are driving less in general, a trend “that has become especially true when you add in rising gas prices,” McKean said. “When you combine all of these factors, restaurant dining overall is likely to take a hit.”
Fast food and fast casual restaurants remain popular
Tell that to some of the QSRs. There is ample evidence that brands are moving forward despite the NPD Group’s findings that online and physical visits to QSRs fell 2% in Q1, compared to a 6% increase in traffic in the same quarter l last year.
Lanie Beck, director of corporate research, marketing and communications, Stan Johnson Company, told GlobeSt.com that fast food and fast casual concepts have remained popular with consumers and a number of tenants are actively developing in the space.
Sonic is one of the fastest growing tenants, Beck said, citing that he plans to open 1,000 new locations over the next 10 years.
Other established brands including Chipotle, Jack In The Box, Starbucks and Taco Bell have announced plans to open new locations by the hundreds, while emerging concepts such as Slim Chickens “have an incredibly robust growth strategy” which could launch another 450 restaurants in the next decade, she says.
“This volume of development and expansion bodes well for short- and long-term net rental investors as the market continues to struggle with an imbalance of supply and demand,” Beck said.
Steve Edwards, owner of The Edwards Company, told GlobeSt.com that while visits may have declined in QSRs in the first quarter, it is still the most dynamic growth area in the hospitality industry. catering and retail. “The appetite at Dutch Bro’s, Raising Cane’s, In & Out Burger and Starbucks continues to be insatiable.”
Headwinds Challenge Operators in Q1 2022
One of the reasons for the decline in QSR visits is that comparing the two quarters is difficult given the recent unprecedented consumer situation. In the first quarter of 2021, the third round of stimulus payments, the easing of pandemic restrictions and the availability of COVID vaccines boosted online and physical visits to US restaurants by 3% compared to the same period of the year previous, according to The NPD Group.
In the first quarter of 2022, the sector also faced higher food and energy costs for restaurant consumers and restaurants. NPD Group also notes that consumer spending in restaurants, which reflects higher costs relative to an increase in visits, increased 4% in the quarter compared to the same quarter a year earlier, when spending increased by 7%.
Additionally, full-service restaurant traffic increased 2% from a year ago as visits decreased 7% and restaurant visits to restaurants increased 38% in the first quarter , compared to a drop of 45% a year ago.
“With the first quarter behind us, I am optimistic that seasonal demand and improving on-site trends can help put the restaurant industry’s recovery back on track,” said David Portalatin, adviser to the NPD food industry and author of Eating Patterns in America. in prepared remarks.