When coronavirus (COVID-19) was declared a global pandemic in March of this year, every business had to adjust their budgets.
At Divvy, we build expense management software that pairs with corporate cards, so we were curious what insight our data would reveal into changes in business spend. We knew that the restaurant industry was among the hardest hit, so we decided to start there.
How have staff meal budgets decreased?
We wanted to see what percentage of company budgets were going towards meals—either eating out or ordering in. We started by filtering for credit card transactions with merchant category codes linked to restaurants (5812 and 5814).
Then, we divided that amount (the number of restaurant transactions) by the total number of transactions for the year. We did this for all of 2019 and through September of 2020.
In 2019, business meal purchases made up an average of 13.5% of company card spend (based on Divvy transaction counts). In April of 2020, that percentage plummeted to 7.5% and has averaged 8.2% since.
2019 vs 2020 Restaurant spend by small business (as a percentage of total spend)
As seen in Divvy spend data
How have individual restaurant transactions changed?
Not only has the number of business meal purchases significantly decreased, but the average purchase price has decreased as well. In 2019, the average cost per transaction was $57.29. In 2020, the average cost per transaction is $45.65.
2019 vs 2020 Average cost of a business transaction at restaurant
As seen in Divvy spend data
Both of these data sets reveal that adjusted staff meals budgets have not returned to their 2019 limits.
Of course, our analysis is from the point of view of the companies that are no longer spending money at restaurants. The impact on restaurants is much more widespread.
How are restaurant owners making up for the decrease in business customers?
We decided to reach out to some of our customers who own or support restaurants to see how they have mitigated this difference in spend. Speed was a major factor in success. Those who were able to move quickly to implement software solutions and cut operating costs have weathered the storm well.
Dan Simons shared how Farmers Restaurant Group was able to supplement its revenue sources early on this year by launching a new online retail market through GoTab, with takeout, delivery, and curbside pickup.
Another customer story, shared by Libby Peck of xtraCHEF, illustrated how one restaurant owner—who only has 50% of the revenue that they did in 2019—has been able to net the same profit this year as they did last year by controlling their operating costs.
How can business owners support each other?
While numbers haven’t bounced back yet, business owners are doing their part to support each other in this difficult year.
Angie Bohn from Savory Management explained how their restaurant owners are making a difference: “The main item we’ve stressed is to support one another and our other brands during this time. Here at the platform, we make sure to eat at our brands regularly to help them out.”
Are you a restaurant owner who is successfully navigating the COVID-19 landscape? We’d love to hear from you.