Food Restaurants created a monster by emphasizing to-go and online orders during the pandemic, and now they can't control it

15:52  04 december  2021
15:52  04 december  2021 Source:   businessinsider.com

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Many restaurants turned to carry out and delivery during the coronavirus pandemic. Carolyn Kaster/AP Photo © Provided by Business Insider Many restaurants turned to carry out and delivery during the coronavirus pandemic. Carolyn Kaster/AP Photo
  • Restaurant chains are starting to grapple with the growing demand for to-go orders.
  • Workers have been saying things were untenable since early in the pandemic.
  • Americans are consuming much more food than before the pandemic, data shows.

Restaurant chains have enjoyed huge boosts in delivery and to-go orders over the last year and a half, but now they're facing a demand that they can't handle.

Off-premise orders were key to keeping these restaurants afloat in 2020 when the COVID-19 pandemic closed many dining rooms, and online orders subsequently exploded. Mobile orders drove Starbucks' recovery and grew to an "all-time high" in 2021, making up over 25% of all orders, and at Chipotle they now make up nearly half of all orders. Even restaurants that traditionally concentrated more on dine-in business have emphasized online orders, and Cheesecake Factory doubled them in 2021 to $3 million in sales per restaurant.

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Consumers are spending way more on delivery, and restaurants in general, than they have in the past. They've shown a growing preference for ordering digitally, Kalinowski Equity Research founder Mark Kalinowski told Insider. At least 10% of US restaurants, around 100,000 businesses or more by most estimates, closed since the onset of the pandemic, so a smaller number of restaurants are responding to this growing demand as the restaurant industry has one of its best years in recent memory.

Part of the higher demand is that people are simply consuming more, Kalinowski told Insider. Combined food service and grocery sales, which are a close proxy for overall food purchases, are up more than double digits over 2019 levels, Kalinowski told Insider based on US census data. For example, in October 2021 US consumers spent 14.3% more on restaurant and grocery purchases than in October 2019.

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The desire for to-go and delivery orders continues to grow, but now chains are realizing that they've created more demand than they can fulfill with current staffing and ingredient levels. IHOP and Applebees have begun to shut down delivery orders during the busy evening and weekend morning periods, CEO John Peyton said.

Olive Garden and Longhorn Steakhouse, both owned by Darden Restaurants, are throttling online orders because of "excess demand," CEO Gene Lee said in a recent earnings call. Cheesecake Factory managers now have the ability to temporarily close digital orders if needed.

While management is just starting to grapple with the tolls of excessive delivery demand, workers have been well aware. Restaurants are chronically understaffed, without enough workers to meet even average demand, without the additional orders this year. Some business owners say they're unable to find staff and in some cases even cite a lack of desire to work, while workers say they can demand better pay and benefits in the tight labor market. This mismatch has led to restaurants decreasing hours and closing dining rooms, and a third of restaurant workers say they want to leave the industry.

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These problems are coming to a head across the country. In mid-November, a group of five employees at an Austin Chipotle quit their jobs, led by their general manager. They reached their breaking point as digital orders kept coming in, and the manager closed the dining room in an attempt to keep up with the online orders.

Across the industry, workers told Insider that they agree these orders have gotten out of hand.

"Digital ordering was the worst thing that ever happened to fast food," a Taco Bell worker of 20 years who recently quit told Insider. These online orders can be "so ridiculously customized," he said, that they're highly difficult to make, coming in much faster than they can be made.

Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.

Read the original article on Business Insider

Understaffed restaurants are pushing customers to order at digital kiosks. As well as alleviating the labor shortage, the kiosks bring in bigger revenues. .
The CEO of digital kiosk company GRUBBRR said its phone were currently "ringing off the hook" as demand booms during the labor shortage.Sam Zietz, CEO of digital-kiosk maker GRUBBRR, told Insider that demand for its products had boomed during the labor shortage.

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