Almost two years into the COVID-19 pandemic, it is clear that restaurant brands with strong digital capabilities and drive-through operations have been the best performers in the limited-service space. Drive-through sales have long been a critical component of the performance of limited-service restaurants in the US, but the return on investment in drive-through operations throughout the pandemic was markedly higher than in previous years.
The consumer foodservice industry was subject to a variety of economic pressures in 2021, including record inflation, global supply chain disruptions and increasing labour costs in the US. All three factors contributed to increases in menu prices across the board in limited-service restaurants.
Despite the many challenges faced by consumer foodservice throughout the COVID-19 pandemic, franchise expansion was a key focus for brands in limited-service restaurants in 2021. Bolstered by a strong performance in 2021, many brands have been expanding franchise opportunities and investors/operators have been jumping on board.
While virtual brands and ghost kitchens saw massive growth in the past two years, the digital-only format is still early in its development. Virtual brands were popular in the full-service channel throughout the pandemic as a way for brands primarily focused on dine-in sales to recover some of their lost revenue.
Throughout the COVID-19 pandemic, limited-service brands largely focused on menu simplification, slimming down their offerings to focus on core products and items that work well for delivery and off-premises sales. This trend held true throughout 2021, as brands were hesitant to add new menu items during a tumultuous time for consumer foodservice.
Automation has been a long-standing topic of discussion in the foodservice industry. By some measures, foodservice automation has not lived up to the bold predictions of operators and analysts in the industry, at least in terms of back-of-house (BoH) operations.
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Limited-Service Restaurants (LSR) combine fast food and 100% home delivery/takeaway outlets. These outlets offer limited menus with items that can be prepared quickly. Customers typically order, pay, and pick up their order from a counter, though some outlets can have limited table service. This also includes 100% Home Delivery/Takeaway which provide no facilities for consumption on the premises. LSR tend to specialize in one or two main entrees such as hamburgers, pizza, or chicken, but they usually also provide drinks, salads, ice cream, dessert, etc. Food preparation is generally simple and involves one or two steps, allowing for kitchen staffs generally consisting of younger, unskilled workers rather than professional chefs. Other key characteristics include: • A standardised and restricted menu • Tight individual portion control on all ingredients and on the finished product • Individual packaging of each item • Counter service • For Chained Limited Service Restaurants, chained and franchised operations which operate under a uniform fascia and corporate identity • Any outlet offering full-service restaurant seating with servers would be excluded, even if delivery service is available.See All of Our Definitions
This report originates from Passport, our Fast Food research and analysis database.
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