In this Placer Bytes, we dive into two ends of the affordability spectrum by looking at McDonald’s recent foot traffic data and analyzing the recovery of leading luxury retailers.
McDonald’s 2021 Recovery
For McDonald’s, like for the rest of the dining sector, this year started off difficult in terms of in-location visits. But the fast-food leader saw its traffic increase significantly in July 2021, and visits have stayed in line with 2019 levels ever since. Most recently, October visits were up 3.8% and November visits were down only 1.9% compared to 2019 – indicating that McDonald’s has essentially recovered.
But while monthly foot traffic is now back to pre-COVID heights, comparing visit patterns in July-November 2021 with foot patterns from the same period in 2019 reveals the impact the pandemic is still having on the QSR leader.
Foot Traffic Patterns not Quite Back to Normal
Overall monthly foot traffic may be back to pre-pandemic levels, but the pandemic’s impact can still be seen across a range of location analytics metrics. The median visit length for McDonald’s customers is still down by more than 10%, from a median stay of 29 minutes in 2019 to a median stay of 26 minutes in 2021. The decrease in median visit length may reflect continuing concern over COVID risks and the desire to minimize time indoors with strangers, but it could also reflect the fact that both the brand and its customers have gotten more comfortable with hybrid forms of ordering over the pandemic, which is leading to shorter wait times.
The share of weekday visits has also decreased since 2019, which may be due to the stickiness of the “work from home” and hybrid work models due to which fewer people are out and about mid-week looking for convenient dining options.
McDonald's Breakfast and Lunch Visits Still Down
The decrease in out-and-about office workers seems to also have had a negative impact on lunchtime visits across many fast food and fast casual restaurants, including McDonald’s. Breakfast visits may be down for similar reasons – fewer people heading out to the office in the morning means that fewer people are stopping by McDonald’s to grab a quick and convenient breakfast during their commute. But the decrease in breakfast visits may also be due to the rise of new breakfast players – in last month’s QSR recap, we discussed Wendy’s recent success in the breakfast space and showed how the Ohio-based fast food brand has managed to snag some breakfast visit shares from the QSR giant.
For McDonald’s, the fall in breakfast and lunch visits does not seem to be significantly affecting overall foot traffic. The brand may have seen more visits before 3 PM in 2019, but it is seeing more afternoon and evening visits now – and the overall post 3 PM boost is significant enough that the brand is still reaching monthly 2019 visit levels: Between July and November 2019, 49.8% of daily visits to McDonald’s took place before 3 PM, compared to 46.4% of visits that took place between 3 PM and 11 PM. During those same months in 2021, McDonald’s received 50.1% of its visits after 3 PM, and only 45.4% of its visits before 3 PM.
The shift to later-in-the-day visits revealed by the data has also been acknowledged by McDonald’s leadership. If this trend continues, it may begin to impact McDonald’s strategy on matters ranging from menu decisions to branch opening hours.
Luxury Apparel’s Strength
Note: This section features data from our Luxury Retailers Index, which tracks over 120 luxury retailers across the country, including brands such as Gucci, Coach, Louis Vuitton, Prada, and Tiffany & Co.
In the past, we’ve highlighted the off-price sector’s key role in the overall apparel recovery. But another apparel category, at the other end of the spectrum, seems also to be doing particularly well in recent months – luxury retailers.
Luxury retailers have been close to a full visit recovery since April 2021, when the Yo2Y visit gap shrunk down to just 1.7%. But after reaching Yo2Y visit growth in July, foot traffic fell again as the fourth COVID wave brought another blow to in-store shopping. Recently, however, the luxury category appears to have made an impressive comeback, with October visits up 6.9% and November visits up 1.4% compared to 2019. The positive Yo2Y visit growth in November is all the more impressive given the slight Yo2Y decrease in foot traffic over Black Friday Weekend – which means that the foot traffic bump during the rest of the month was significant enough that it outweighed any Black Friday visit losses.
It seems, then, that the extended holiday shopping season has been especially successful for luxury retailers. The real question is whether the success will last. Limitations on international travel, growing disposable income among luxury retail’s target market and even stimulus programs have all given luxury an added boost. In addition, the shoppers that are visiting luxury retailers have been showing a clear intent to buy leading to reports of larger basket sizes. Should the sector prove capable of maintaining these interactions into 2022, it could quickly position itself among the best performing sectors in all of retail.
Will luxury retailers continue to grow? Will breakfast and lunch visits return to McDonald’s?
Visit Placer.ai to find out.