There seems to be a prevailing idea that the suburbs are about to find their groove again as home buyers and renters seek more space. I'm not qualified to dive into expected migration patterns, but let's say, for the sake of argument, that this is at least partially true.
What would this mean for restaurants?
Urban areas have traditionally been where the actions at. Cities are host to a wider variety of concepts, from the trend-setting independents with well-defined niches to the highest grossing restaurants in the country. Likewise, foodservice usage tends to be higher among those living in cities than suburbs or rural areas.
What this had traditionally meant for restaurants is that a successful urban concept is not a sure thing in the suburbs, and vice versa. They've simply been different markets, with cities offering the concentrated demand necessary for some truly unique concepts to survive. One notable chain to consider in this discussion is White Tower Hamburgers, which was located throughout the Rust Belt. As these cities lost residents, the concept struggled with declining urban customer bases and failed to establish itself among suburban consumers.
So, in thinking about a potential wave of restaurant users from the cities to the suburbs, our question ultimately becomes this: will they bring their city-like foodservice behaviors with them, or will they adopt suburban ways?
There are a lot of factors that make it hard to determine which is more likely.
First, part of the higher usage in cities is demographics. Cities are by default younger, but its easy to imagine that younger consumers will keep visiting restaurants fairly frequently, regardless of where they live.
Further, restaurant visitation in general relates to not wanting to or not being able to cook. Not all consumers will learn to cook as they move. Though given the notoriously small size of city kitchens, it's possible that some might experiment when they can actually move around in their new kitchens.
But what's likely the larger factor is lifestyle, especially now that there's this idea that consumers want more spacious homes because they're spending more time there. If consumers are working from home, shopping online, binging Netflix and ordering delivery from restaurants and supermarkets, a small apartment doesn't make sense.
But how much of our day-to-day life will continue to occur at home? While it's hard to knock any of the trends we're seeing with online shopping, remote work or food delivery, Americans will still want to leave the house. Stay-at-home orders haven't necessarily been embraced, and its clear that people miss being 'out'. And this speaks back to the allure of cities - the proximity to culture and activities to experience. Restaurants are a big part of that.
All that said, it is incredibly risky to paint our idea of the future based on what's happening today. Will people leave cities forever? No - we just heard Jerry Seinfeld's take on that. At least he'll be in New York. Will office buildings sit vacant as employees work from home? Not all of them, that's for sure. After all, not every job can be done remotely, and some businesses have already returned their employees to the office. Will the restaurant trends that define this pandemic stick around? Some will, but not all.
For example, lets look at the Great Recession. Domino's was getting hammered in the late 2000s, and Subway had a historically successful product launch, the $5 footlong, in 2008, that inspired other brands to launch deals at that price point. But just a few years later, Domino's was among the strongest performing restaurants, and the $5 footlong was a source of conflict between Subway franchisees and the corporate office.
Things change fast in this industry, and this has certainly been the case during the pandemic. And it will continue to be the case after the pandemic.