American Customer - The ACSI€¦ · TGI Fridays stays put at 78, while Applebee’s is flat at 77....

Industry Results for:

Full-Service Restaurants

Limited-Service Restaurants

ACSI®

T h e A m e r i c a n C u s t o m e r

Satisfaction Index (ACSI®) is a

nat iona l economic indicator

of customer evaluations of the

quality of products and services

available to household consumers

in the United States.

The A C S I u s e s data f rom

interviews with roughly 500,000

customers annually as inputs

to an econometr ic model for

analyzing customer satisfaction

with more than 400 companies in

46 industries and 10 economic

sectors, including various services

of federal and local government

agencies.

ACSI resu l ts a r e r e l e a s e d

throughout the year, with all

measures reported on a scale of

0 to 100. ACSI data have proven

to be strongly related to several

essential indicators of micro and

macroeconomic performance. For

example, firms with higher levels of

customer satisfaction tend to have

higher earnings and stock returns

re la t i ve to competitors. Stock

portfolios based on companies

that show strong performance in

ACSI deliver excess returns in up

markets as well as down markets.

At the macro level, customer

satisfaction has been shown to

be predictive of both consumer

spending and GDP growth.

American Customer Satisfaction Index

AMERICAN CUSTOMER SATISFACTION INDEX RESTAURANT REPORT 2019-2020

June 30, 2020

ACSI® ACSI Restaurant Report 2019-2020

Diminishing Customer Satisfaction With Restaurants May Hamper Recovery Efforts

A sea change has arrived for the restaurant industry in the form of a global pandemic, ushering in an era of social distancing and mandatory lockdowns that have upended business as usual. The arrival of the COVID-19 crisis hit full-service restaurants the hardest, as many operators scrambled to transition to takeout and delivery only. Some shuttered their doors entirely. Lacking the deep pockets of some major chains, independent restaurants are the least likely to survive.

Meanwhile, the limited-service segment is better positioned to weather the storm, with an estimated 70% of its business already happening via drive-thru lanes. In addition, the cheaper price tag that most fast food outlets offer may be appealing to consumers tightening their budgets amid the pandemic.

In results from the American Customer Satisfaction Index (ACSI®), full-service restaurants are losing the most favor with U.S. consumers—falling 2.5% to an ACSI score of 79. Customer satisfaction with the limited-service segment wanes to a lesser degree, down 1.3% to 78. Together, these declines put downward pressure on the Accommodation and Food Services sector overall, which retreats 1.3% to 77.9. This report’s results are based on surveys conducted over a 12-month period from April 2019 to March 2020—the month when the first U.S. stay-at-home policies began. Later this year, the ACSI will follow up with special reporting on the impacts of COVID-19 on customer satisfaction for restaurants.

According to the National Restaurant Association, the industry overall lost $120 billion from March to May 2020, and by the year’s end this total may double. But even before the pandemic hit, customer satisfaction with both full-service and limited-service restaurants was heading in the wrong direction. Chains with declining customer satisfaction, or those with a track record of lower ACSI scores, may find it more difficult to recover and thrive under such challenging circumstances. ACSI data consistently show that the more satisfied customers are, the more willing they are to increase their restaurant spending in the future.

The pandemic hit the fast-forward button on some trends already happening across the restaurant industry. Even before COVID-19, delivery was fast becoming the name of the game with consumers increasingly looking for off-premises dining options. By mid-2019, almost four in five full-service restaurant operators reported using an online ordering platform. Much of this demand came from millennials, with the anticipation that Gen Z would continue the trend. By 2019, millennials were 50% more likely to have food delivered than two years earlier.

Gone are the days when pizza purveyors had a lock on food delivery. The rise of third-party delivery services like Grubhub, DoorDash, Postmates, and Uber Eats removed limitations, opening up more consumer choices. By mid-2019, U.S. restaurant delivery sales had grown over 50% year-over-year. At the same time, investments in virtual (“ghost”) kitchens were on an upward

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trajectory. Competition outside the industry also grew as supermarkets added more prepared foods to become grocerants—even partnering with third-party delivery services.

Meanwhile, tech innovation remains a key to success for both fast food and full-service chains, especially considering the younger demographic of digital natives that many restaurants want to capture. The pandemic made clear what was already moving through the industry. Engaging with customers digitally, especially through reliable mobile apps, is becoming a necessity.


Customer satisfaction with the full-service restaurant industry sinks 2.5% to 79 compared to a year ago. Among 12 major full-service chains, seven post customer satisfaction declines and only one chain shows slight improvement. Across the history of ACSI measurement, this is only the second time that the industry’s satisfaction has dropped below 80. This relatively low level of satisfaction indicates that sit-down chains overall were struggling well before the pandemic to please customers. According to diners, both product and service quality has significantly eroded year over year, with some weakening in value as well.

What is even more concerning is that the full-service restaurant industry is less satisfying when it comes to the now-critical components of takeout and delivery. Customers are the happiest when dining in (ACSI score of 78) as compared with either carryout (75) or delivery (77). Moreover, in the ACSI survey 92% of respondents reported dining in at a sit-down venue, while only 6% opted for carryout and 2% for delivery. While many operators were pivoting toward off-premises dining before the pandemic, not all were prepared to shift operations entirely over to takeout and delivery.

The top of the full-service restaurant industry belongs to Darden’s LongHorn Steakhouse, stable for a third straight year at an ACSI score of 81. As of November 2019, LongHorn was a strong performer for Darden, with same-store sales up 6.7%. According to customers, LongHorn shines when it comes to restaurant layout and cleanliness, scoring best in class.

Meanwhile, last year’s industry leader Texas Roadhouse tumbles 4% to 80, losing its crown to steak rival LongHorn. The two steakhouses, along with the group of smaller restaurants (-1% to 80), are the only chains to score above the industry average. Customer perceptions of value have eroded significantly for Texas Roadhouse—more so than for any other major full-service chain. In the second quarter of 2019, menu prices at the steakhouse went up 1.5%, following an increase of 1.7% in the prior fall.

Like Texas Roadhouse, hybrid restaurant-store Cracker Barrel loses ground this year, down 4% to 79 after holding a second-place berth in 2019. Both of these former top-rated performers now sit at record ACSI lows. Known as a dining destination experience, highway-focused Cracker Barrel may find it challenging to succeed in a market that stresses digital interfaces, takeout, and delivery. According to ACSI data, the quality of the chain’s mobile app has deteriorated significantly, now lagging nearly every other chain. Recently, in April 2020, the company announced a partnership with DoorDash to deliver its comfort food to customers. At the same time, Cracker Barrel hopes to get guests in the door by adding beer and wine to its menu.


AMERICAN CUSTOMER SATISFACTION INDEX:FULL SERVICE RESTAURANTS


LongHorn Steakhouse (Darden)

All Others

Texas Roadhouse

Cracker Barrel

Olive Garden (Darden)

Red Lobster

Outback Steakhouse

TGI Fridays

Applebee’s

Denny’s

Red Robin

Ruby Tuesday

Chili’s

2019

81

81

81

83

82

79

78

79

78

77

77

79

78

78

2020

79

81

80

80

79

79

79

78

78

77

76

76

76

75

% CHANGE

-2.5%

0%

-1%

-4%

-4%

0%

1%

-1%

0%

0%

-1%

-4%

-3%

-4%

© 2020 American Customer Satisfaction Index. All Rights Reserved.

0-100 Scale

The remaining full-service restaurants all come in below the industry average. Outback Steakhouse slips 1% to 78, trailing the other steak chains. TGI Fridays stays put at 78, while Applebee’s is flat at 77. When COVID-19 hit, unlike Applebee’s, Fridays did not have a curbside pickup program in place. To combat having too few incoming restaurant phone lines, the company converted its headquarters into a call center. Nevertheless, Fridays is projecting that up to 20% of its locations may close permanently.

At the low end of the industry, Denny’s (-1%) meets Red Robin (-4%) and Ruby Tuesday (-3%) at 76. All three chains had stable satisfaction last year but decrease in 2020. The current satisfaction loss is steepest for Red Robin, which closed 10 underperforming locations in 2019 as it continued to encounter foot traffic declines. Likewise, Ruby Tuesday shut down 26 locations in 2019 after shuttering 51 in 2018. According to customers, Ruby Tuesday’s mobile app rates worst in class for reliability. The company is likely to lose even more stores during 2020 as multiple temporary closures could become permanent.



Along with Cracker Barrel, two full-service chains are tied with the industry average: Darden’s Olive Garden (unchanged) and Red Lobster (+1%). While the gain is slight, Red Lobster is the only full-service chain to show improvement year over year. Customers are more impressed with the value offered by Red Lobster, which brought back one of its popular promotions—Endless Shrimp—for a limited time in September 2019.



2020 2019

FULL-SERVICE RESTAURANTSCustomer Experience BenchmarksYear-Over-Year Industry Trends

Accuracy of food order

Food quality (taste, temperature,freshness of ingredients)

Quality of mobile app

Restaurant layout and cleanliness

Beverage quality (taste, temperature)

Courtesy and helpfulness of waitstaff

Variety of food on menu (not including beverages)

Variety of beverages on menu

Reliability of mobile app (minimal down time, crashes, lags)

Speed with which food order was received at table

Website satisfaction

85

85

84

83

84

82

85

50 55 60 65 70 75 80 85 90


ACSI (0-100 Scale)

86

87

85

8486

8789

80

8183

82

8186

87

84


The bottom of the industry belongs to Chili’s this year, plummeting 4% to 75. Beyond having the lowest level of customer satisfaction in the full-service segment, Chili’s also lags behind the majority of fast food chains. Customers find Chili’s service quality to be lacking compared with all other full-service chains.

According to diners, the full-service restaurant experience has gotten worse nearly across the board. While food order accuracy continues to be the top-ranked element with a high score of 87, it has dropped 2% year over year. Likewise, food quality (85) and beverage quality (84) each decline 2% but still outpace limited-service chains (83 for food and 82 for beverage quality).

Results for mobile apps are mixed. Diners are slightly more pleased with the quality of apps (85) but are finding apps to be far less reliable (-6% to 81). With apps gaining more widespread use during lockdown periods and beyond, this does not bode well for the industry.



In-person service also worsens, with staff courtesy dropping 3% to 84 and service speed down 2% to 81. The least regarded aspect of the experience remains websites, which have fallen 2% to 80 and now lag fast food websites (81).


Customer satisfaction with the limited-service (fast food) restaurant industry slips 1.3% to 78, the lowest ACSI score since 2015. Overall, fast food restaurants trail the full-service segment by just a point. Among the 18 brands measured a year ago, 11 experience some lessening in customer satisfaction, but the majority of these changes are 2% or less. With a business model honed over years to allow quick, more frictionless customer experiences through drive-thru lanes and delivery, the fast food segment is positioned to fare better than sit-down restaurants in a COVID-19 impacted market.

The undisputed industry leader is Chick-fil-A despite a 2% decline to an ACSI score of 84. This is the sixth straight year that Chick-fil-A has been number one across both restaurant categories. Although its ACSI score is lower compared with prior years, Chick-fil-A continues to be a pacesetter across much of the customer experience. The chicken specialist has grown to become one of the top U.S. fast food chains by system-wide sales. Per location in 2019, Chick-fil-A sales were over 50% higher than McDonald’s per-unit sales.

In second place, the group of smaller fast food outlets drops 2% to 80, tying with Chipotle Mexican Grill (unchanged). This is the first time that Chipotle has returned to its number-two position in the industry since its food safety crisis abruptly lowered satisfaction in 2016. Panera Bread holds its third-place slot this year but is now joined by five other chains at 79. While Panera stays just above the industry average in 2020, the 2% decline brings the fast-casual chain to its lowest score since its ACSI debut in 2015.

Sandwich specialist Subway is unchanged at 79 after two years of modest customer satisfaction decline. The company closed over 1,000 U.S. locations in 2019, following similar closures in 2018. For Subway, a bright spot is the quality of its mobile app, which is top-rated by customers. Arby’s (Inspire Brands) joins in at 79 as well with a 1% downturn. Over the past five years, Arby’s score has been steady within the range of 79 to 80.

The pizza segment has a new leader in 2020: Domino’s at 79 (unchanged). In contrast, three other major pizza competitors lose ground. For the first time since 2009, Domino’s beats Papa John’s, which retreats 3% to 78. For Papa John’s, this is the lowest ACSI score since 2015. In the fourth quarter of 2019, Domino’s beat analysts’ expectations with U.S. same-store growth of 3.4%. The pizza segment overall has been facing pressure from third-party delivery services. Unlike other chains, Domino’s uses its own digital platform and employees for ordering and delivery. In 2019, digital sales made up 70% of its total U.S. sales, and the company has a database of over 85 million customers.





AMERICAN CUSTOMER SATISFACTION INDEX: LIMITED-SERVICE RESTAURANTS

COMPANY


Chick-fi l-A

All Others

Chipotle Mexican Grill

Arby’s (Inspire Brands)

Domino’s

Dunkin’

KFC (Yum! Brands)

Panera Bread

Subway

Papa John’s

Starbucks

Pizza Hut (Yum! Brands)

Burger King (RBI)

Little Caesars

Wendy’s

Popeyes (RBI)

Sonic Drive-In (Inspire Brands)

Taco Bell (Yum! Brands)

Jack in the Box

McDonald’s

2019

79

86

82

80

80

79

78

78

81

79

80

79

80

76

77

77

NM

76

75

75

69

2020

78

84

80

80

79

79

79

79

79

79

78

78

77

76

76

76

74

74

74

73

70

% CHANGE

-1.3%

-2%

-2%

0%

-1%

0%

1%

1%

-2%

0%

-3%

-1%

-4%

0%

-1%

-1%

NA

-3%

-1%

-3%

1%


0-100 Scale

NM = Not MeasuredNA = Not Available

Pizza Hut (Yum! Brands) drops further than Papa John’s—down 4% to 77. Little Caesars slips just 1% but remains in last place among the pizza chains at 76. In the fourth quarter of 2019, Pizza Hut’s U.S. same-store sales tumbled 4%. Pizza Hut is transitioning toward delivery and carryout only—which is 90% of its business. Over the next two years, Pizza Hut may shed up to 500 restaurants.

Coffee specialists remain within a point of each other but swap places as Dunkin’ moves up 1% to 79, just ahead of Starbucks at 78 (-1%). For Starbucks, price is clearly an issue as it rates at the bottom of the industry for value.

Like Dunkin’, KFC (Yum! Brands) rises 1% to 79, staying far ahead of its sister brand Taco Bell (-1% to 74). While KFC continues to trail Chick-fil-A by a sizeable gap of 5 points, the chain outperforms another chicken rival—ACSI newcomer Popeyes Louisiana Kitchen (Restaurant Brands International). In its first appearance in the Index, Popeyes earns a score of 74 that




places it in the bottom five for customer satisfaction. The chain lit up social media with its August 2019 sold-out chicken sandwich launch, boosting same-store sales that quarter by about 10%. Nevertheless, ACSI data show that Popeyes has a long road ahead to catch up with its chicken rivals for customer satisfaction. In particular, Popeyes falls behind leader Chick-fil-A the most when it comes to service quality.

Among burger chains, Wendy’s drops 1% to tie with a stable Burger King (Restaurant Brands International) at 76. The two chains have been tied or within a point of each other for six straight years. Sonic Drive-In (Inspire Brands) cedes ground this year, down 3% to 74 after debuting in the Index one year ago. Even lower, Jack in the Box declines 3% to 73, and the chain has never seen customer satisfaction higher than 75.

Consistent with its track record of last-place customer satisfaction, McDonald’s anchors the bottom of the fast food category at 70 (+1%). Still, this is one of the few times that the chain has broken out of the 60s. In 2019, the company’s U.S. comparable sales were up by 5% as the chain continued its “experience of the future” remodel. McDonald’s also acquired decision-logic firm Dynamic Yield in 2019 to personalize its drive-thru experience via changing digital menu displays. Nevertheless, improvements to the customer experience remain incremental. ACSI data show that service speed has improved but not enough to rival any other competitor.

For the limited-service restaurant industry overall, the customer experience shows signs of weakening, but not to the extent seen in the full-service segment this year. Accuracy of orders still tops the list at 85, down slightly from a year ago. While staff are somewhat less courteous and helpful (83), they now come close to rivaling full-service wait staff (84). On the other hand, service speed (81) is deemed to be no better than that of full-service restaurants (81).

Customers still find mobile apps from full-service chains to be superior in terms of quality (85 versus 81 for fast food). But as mobile app usage increases, full-service restaurant apps have become much less reliable (down 6% to 81). For fast food apps, reliability has instead improved such that it now matches the full-service segment (81). For both restaurant segments, however, website satisfaction is moving in the wrong direction, with fast food (81) now just ahead of the full-service industry (80).

In the limited-service segment, guests continue to be happier with food quality (83) than food variety (80). Likewise, beverage quality (82) is more acceptable than beverage variety, which at 79 is the worst aspect of the fast food experience.




2020 2019

LIMITED-SERVICE RESTAURANTSCustomer Experience BenchmarksYear-Over-Year Industry Trends

Accuracy of food order

Courtesy and helpfulness of waitstaff

Food quality (taste, temperature,freshness of ingredients)

Restaurant layout and cleanliness

Beverage quality (taste, temperature)

Quality of mobile app

Reliability of mobile app (minimal down time, crashes, lags)

Speed of check-out or delivery

Website satisfaction

Variety of food on menu (not including beverages)

Variety of beverages on menu

83

83

81

82

81

81

83

50 55 60 65 70 75 80 85 90


ACSI (0-100 Scale)

83

81

80

8283

8586

79

8080

80

8182

84

83



About This Report

The ACSI Restaurant Report 2019-2020 on full-service and limited-service (fast food) dining chains is based on interviews with 23,312 customers, chosen at random and contacted via email between April 15, 2019, and March 19, 2020. Customers are asked to evaluate their recent experiences with the largest sit-down and fast food restaurants in terms of market share, plus an aggregate category consisting of “all other”—and thus smaller—restaurants in those industries.

The survey data are used as inputs to ACSI’s cause-and-effect econometric model, which estimates customer satisfaction as the result of the survey-measured inputs of customer expectations, perceptions of quality, and perceptions of value. The ACSI model, in turn, links customer satisfaction with the survey-measured outcomes of customer complaints and customer loyalty. ACSI clients receive confidential industry-competitive and best-in-class data on all modeled variables and customer experience benchmarks.

No advertising or other promotional use can be made of the data and information in this report without the express prior written consent of ACSI LLC.

ACSI and its logo are Registered Marks of the University of Michigan, licensed worldwide exclusively to American Customer Satisfaction Index LLC with the right to sublicense.


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CUSTOMER SATISFACTION BENCHMARKS BY INDUSTRYBreweries

Personal Care & Cleaning Products

Food Manufacturing

Soft Drinks

Televisions & Video Players

Household Appliances

Internet Investment Services

Internet Retail

Banks

Cellular Telephones

Life Insurance

Automobiles & Light Vehicles

Athletic Shoes

Credit Unions

Financial Advisors

Full-Service RestaurantsInternet Travel Services

Property & Casualty Insurance

Computer Software

Limited-Service RestaurantsPersonal Computers

Specialty Retail Stores

Supermarkets

Ambulatory Care

Apparel

Consumer Shipping

Internet News & Opinion

Internet Search Engines & Information

Department & Discount Stores

Health & Personal Care Stores

Video Streaming Service

Hotels

Airlines

Health Insurance

Wireless Telephone Service

Cooperative Energy Utilities

Gasoline Stations

U.S. Postal Service

Investor-Owned Energy Utilities

Internet Social Media

Hospitals

Municipal Energy Utilities

Fixed-Line Telephone Service

Video-on-Demand Service

Internet Service Providers

Subscription Television Service

8483

828282

79

818181

80

807979

80

7979

79

78

7978

787878

7777777777

767676

75

74

7474

7373

727272

7068

6564

72

© 2020 American Customer Satisfaction Index. All Rights Reserved. 0-100 Scale

73



American Customer - The ACSI€¦ · TGI Fridays stays put at 78, while Applebee’s is flat at 77....

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