The rise of remote work has dramatically impacted our economy in the last few years since the COVID-19 pandemic, and the restaurant industry is no exception. In fact, the work-from-home (WFH) movement has reshaped consumer spending patterns, which can offer insight for restaurants to navigate the market landscape for 2024 and beyond.
Windham Brannon’s Maggie Wise was able to attend the Restaurant Finance & Development Conference in November 2023, where Stanford University Professor Nicholas Bloom presented on the impact of future and remote work to the restaurant industry. We’ve provided a summary of his thoughts as well as some action steps for restaurants to prepare to meet the needs of WFH consumers.
How WFH has impacted the economy for restaurants?
- Work from home isn’t going anywhere: While the pandemic sparked the initial WFH boom, the trend shows no signs of fading. Employees value the flexibility and productivity it offers, with studies indicating its appeal on par with an 8 percent pay raise – an increase five times since 2019. This significantly drives where and when consumers spend their money, especially in restaurants.
- Dining shifts to evenings and suburbs: With fewer weekday commutes, people dine out later, but they also have fewer business lunch outings during the week – this is particularly true for Friday lunch crowds, since Friday is the most popular weekday for remote work. Evening city center spending has also skyrocketed, fueled by post-work outings as remote workers trade in business lunches for dinners outside the home. Meanwhile, the “donut effect” sees people migrating to suburbs, impacting city center businesses and rail station foot traffic.
- Leisure economy is increasing: Leisure activities like golfing and shopping see a weekday surge as freed-up schedules give rise to spontaneous errands and recreation. Restaurants in suburban areas and those catering to evening crowds stand to benefit.
- Rail transit is decreasing: Rail transit is down by 30 percent, meaning restaurant locations close to rail transit areas could be greatly affected. This will also impact real estate decisions for restaurants looking to benefit from how closely their locations are to public transit areas.
- Retail spend is lowest in northern and western cities: The retail spend drop has been more significant in northern city centers like New York City, Washington, D.C., and Boston and western cities like San Francisco and Seattle. However, southern cities like Dallas, Houston, and Atlanta have seen more of a return to normal retail spending habits.
What actionable steps can restaurants take?
By understanding trends from the WFH movement, restaurants can take proactive steps to adjust how they do business and meet the needs of their consumers. Now is great time to analyze your sales data by location, time and day to identify trends that are unique to your own restaurant locations and develop marketing campaigns to capitalize on any new and emerging consumer rhythms. You may even decide to change your operational hours and marketing spend decisions in order to target consumers at specific times and locations.
Other actionable steps for restaurants include the following:
- Rethink staffing schedules: Align staff presence with peak evening and weekend demand, and optimize labor costs to match lower weekday traffic.
- Embrace takeout and delivery: Cater to the convenience-seeking WFH crowd by strengthening takeout and delivery options.
- Target evening crowds: Offer enticing dinner specials and promotions to capitalize on the post-work surge, which now tends to happen earlier in the evenings. This may mean you also rethink and change how you offer happy hour or early bird specials.
- Rethink real estate expansion: Explore opening new locations in areas experiencing population growth and increased spending due to the “donut effect,” particularly small cities and suburban areas. Also, consider investing in locations and experiences that cater to the leisure economy (i.e., golf, shopping, salons, etc.).
Windham Brannon Can Help
Windham Brannon’s Restaurant Practice understands that shifting trends in the marketplace mean changes for how restaurants do business. Our professionals are prepared to provide tailored solutions and services to meet your specific needs on all fronts. For more analysis or questions on how your sales data could show new consumer trends, please reach out to your Windham Brannon advisor today, or contact Maggie Wise.
