As COVID-19 Triggers Resurgence In At-Home Cooking, Are Dine-In Restaurants In Trouble?


One of the more obvious trends playing out in the early days of the COVID-19 pandemic was consumers eating more at home than usual. And this made perfect sense, as restaurants were mostly limited to take-out, delivery or drive-thru — or closed altogether.

Months later, many restaurants across the world have reopened with some limitations.

The key question remains: will consumers return to dine-in restaurant chains as they did before, and what impact will this have on their stocks?

Fact: People Are Cooking More At Home

If you wanted to sit down and enjoy a steak back in April, your options were limited: make it yourself or hope that a takeaway meal was still hot and fresh by the time it was brought home.

Many people opted for the first option, and if it is sustainable, the trend doesn't bode well for a chain like Texas Roadhouse Inc TXRH

"I can say that outdoor cooking channels on YouTube are getting more activity, and I am fielding a lot more questions than usual about techniques and recommendations regarding grills and other pieces of equipment," Gregory Mrvich, host of "Ballistic BBQ" on YouTube, told Benzinga in late April.

The Data Doesn't Support A Return To Restaurants

Data from the U.S. The Department of Agriculture showed that consumers spent around 51% of their food and drink budget away-from-home in 2019, Terrie Wendricks, vice president of consumer and shopper insights at C+R Research, told Benzinga in an email. The firm's estimates show a dramatic shift, as 70% of consumers are spending their food and drink dollars in the grocery category. This may explain why chains more associated with dine-in eating like Ruth's Hospitality Group, Inc. RUTH experienced sharper losses compared to other restaurant peers when COVID-19 concerns resurfaced in late September.

‘Good Health And Whole Foods'

Restaurant Supplier: Cooking At Home ‘Here To Stay'

Analyst Prefers ‘Affordable' Restaurant Names

A handful of food companies recently confirmed that the early trends of people cooking at home remained unchanged throughout the summer months.

For example, spice company McCormick & Company, Incorporated MKC said in its third quarter earnings report that it benefited from "the sustained consumer preference for cooking more at home."

Related Link: Only In Miami: The Magic City Ranked Best Foodie Spot In America

Consumers aren't just spending their money on prepared and frozen meals, Wendricks said.

In fact, studies point to 27% of consumers planning more meals in advance and 20% are trying new dishes more.

An estimated 44% of people prioritize using perishable foods before they spoil and 36% of people have adopted healthier eating habits.

In what could be considered a bearish indicator for a complete restaurant recovery, separate data from Acosta found that 33% of people have found a new passion for cooking since the start of the pandemic, Wendricks said. 

The Acosta study also found that 41% of people will wait for one to five months to revisit a restaurant once their state or local lockdowns are lifted and another 20% said it will be a wait of six or more months.

Ultimately, the fate of the restaurant sector may even be out of its hands. 

"A lot of this is going to depend on the impact COVID has on the economy and what local/state/federal governments do to aid consumers," Wendricks said. "The less disposable income households have, the less they are willing to spend a premium."

A COVID-19 vaccine will certainly help ease concerns people have about going out to restaurants but many have come to realize the importance of eating healthy, Dr. Richard Smith, an investing expert and CEO of The Foundation for the Study of Cycles, told Benzinga in an e-mail.

The "best defense" against another virus is "good health and whole foods," as people have come to realize a global pandemic could occur again in our lifetime, he said. 

Businesses that can provide healthier whole foods with convenience will "succeed the most," Smith said.

Of course, big corporate chains with deep pockets like Domino's Pizza, Inc. DPZ will "continue to thrive," he said. 


Investors shouldn't be jumping to any one set of conclusions.

"There will be cycles of hope and despair as we progress in this new normal," Smith said. "The human spirit will eventually prevail, but there will be volatility along the way."

Ariane Daguin is a name that few outside the culinary universe have heard. Daguin is the founder and CEO of D'Artagnan, a Union, New Jersey-based purveyor of meat and poultry to high-end restaurants.

Needless to say, the vast majority of her business was ground to a halt when restaurants couldn't welcome guests.

Armed with a large inventory of food products, Daguin quickly pivoted to sell more food to consumers at home. The pivot was very successful.

The company saw its retail business grow by 75% once restaurants started to shut down and its e-commerce business grew by 300%, company president Andy Wertheim told Benzinga.

"While it will be a long road to full recovery for foodservice, we have been able to navigate a path of slow but steady rebuild there as well by addressing the evolving needs of our restaurant clients," he said.

As the population becomes more confident in the prospects of a vaccine, cure or general safety practices in public places, one thing is clear: people discovering or re-discovering "the pleasures of cooking and hosting meals is here to stay," Daguin told Benzinga.

"For the last six months, we have seen a huge growth in cooking at home, getting more and more adventurous with sophisticated recipes and ingredients, and, lately, jumping into dinner parties, inviting close friends or family to share dishes [for which] recipes have been mastered during the thick of COVID," she said.

Investors who want exposure to the restaurant industry may want to listen to Piper Sandler's Nicole Miller Regan.

In a late September upgrade of Dunkin Brands Group Inc DNKN, the analyst turned bullish on the coffee chain because of its "affordable" and repeat business model.

At a time when consumers are very much eating more at home, a range of hot caffeinated beverages is more difficult to recreate — even among those who upgraded their at-home coffee accessories and machines.

It may even be easier to cook a steak to a perfect medium-rare than it is to make a macchiato or cappuccino. Dunkin can offer either drink and many others — along with a snack — for a few dollars.

Related Link: Coca-Cola Pleads For Consumers To Aid Restaurants

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