Operators understand the influence cyclical events and holidays will have on their businesses, but unforeseen events can affect brands in less predictable ways. Technomic leveraged more than 200,000 customer transactions through its Transaction Insights platform to shed light on the impressions that recent hurricanes Harvey and Irma left on the industry.
For the week leading up to and during Hurricane Harvey, for example, the top 50 nationally ranked chains operating in Houston lost approximately 10% of sales compared to the same week in 2016. The week after the storm, the same chains lost an estimated 30% of their weekly customer spend. While the loss is significant and won’t reflect positively in quarterly reports, this story does not necessarily have the dire ending many forecasted.
Higher buys on single trips
While fewer consumers were going out to these restaurants, they were picking up more on any single trip. Communities banded together, and local residents purchased extra for neighbors, rescue workers and shelters.
Dunkin’ Donuts outperformed its typical Houston-market sales the week of and after Harvey, while Starbucks experienced some of the largest total transaction and customer spend declines of any brand in the analysis. A key difference, apart from shifting consumer behavior, may be which Dunkin’ and Starbucks locations stayed open during this time. Corporate-owned Starbucks appeared to have shuttered more of its stores, while local Dunkin’ Donuts franchisees were more apt to stay open.
However, all else being equal, two other factors were in play. Consumers’ daily routines, including their habitual coffee chain visits on the way to work or school, were disrupted. Plus, there was increased demand for breakfast, snack and treat options that worked well for those buying for a group.
Lower check averages prevailed
Heightened price sensitivity can be seen when comparing the three largest QSR burger chains. The week following Harvey, McDonald’s year-over-year sales stayed flat and Burger King’s declined slightly more than 1%. However, Wendy’s customer spend declined approximately 30% year over year. Wendy’s average check is $7.20, compared to $6.95 for Burger King and $5.80 for McDonald’s.
Consumers heavily prioritized convenience and getting the most bang for their buck. Because of this, brands with slightly lower price points and more expansive menus won out, even with consumers who may have chosen otherwise under everyday circumstances.
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