In this Placer Bytes, we analyze retailers and restaurants – Winn Dixie, 7-Eleven, Olive Garden, and Panera Bread – whose performance could indicate how their wider sectors are performing.
Winn-Dixie’s Continued Success
Grocery chains were among the clear winners of 2021, and there were some specific chains that seemed uniquely poised for a strong year in 2022. Given the success of the grocery sector over the past two years and the numerous examples of grocery chains’ success, some grocers in that mix that seemed uniquely and positively affected by the pandemic’s impact may not have been called out. Winn-Dixie was one of those chains.
However, the grocer’s performance in early 2022 indicates that the boost driven by the pandemic could be far longer term. Winn-Dixie kicked off 2022 with strength both in comparison to 2019, but also to the relative strength seen in 2021. This is a powerful and important example as the chain had been struggling pre-pandemic.
The turnaround indicates that the grocery sector’s boost could actually be a sign of things to come. Essentially, if chains that were privileged by the pandemic’s effects are capable of turning that short-term opportunity into loyalty, and some trends – like cooking – prove to have a longer shelf life, the grocery boon could stick around far longer than initially expected.
7-Eleven – Signs of Wider Resilience?
Inflation could impact discretionary spending and the number of items purchased, but it was less likely to impact the overall dollars spent. On the other hand, rising gas prices threatened to drive a return to mission-driven shopping as visitors would be incentivized to minimize the time they spent traveling. This makes 7-Eleven visits all the more fascinating as the chain should be negatively impacted by the reduction in trips – and indeed, the week of March 7th did see a decline compared to the equivalent week in 2019 with visits down for the first time in 2022.
However, that decline was short-lived with visits returning to growth the week of March 14th, with visits up 2.7% compared to the equivalent week in 2019. Is this an all-clear that everything is fine for brick and mortar retail? No. Is it another indication that consumer behavior takes on an initial shock, but then quickly reverts to the trend that had been seen prior? Potentially.
Critically, visits in early 2022 have seen lower growth numbers than late 2021, which is not necessarily surprising considering the powerful combination of Omicron, inflation, supply chain issues, and now rising gas prices. But the continued resilience in the face of new challenges should give at least some hope that this too could be a fleeting impediment to brick and mortar retail and travel.
A final sign of optimism comes from the restaurant space. Darden announced expansions, and one reason may be what was seen at Olive Garden. The restaurant company made clear that the December recovery brought in a significant windfall for restaurants with pent-up demand driving excitement. This was before visits declined into January with COVID cases hitting record levels. A similar trend was seen with Panera, which saw a significant visit decline due to Omicron in January.
Yet, both players are recovering into March, with visit rates seeming to consistently improve compared to the equivalent weeks in 2019. This is important, as it indicates three critical factors. First, the COVID-driven declines seem to only reinvigorate demand for those who are capable of sticking around to enjoy the rebound. Second, the dining sector has proven once again that it is able to drive a recovery following a setback. Third, there is a major benefit to being a large chain with a strong financial infrastructure in that it enables chains to survive these waves. This is important not just because it means they stick around until recovery, but because it allows them to take advantage of opportunities created by competitors who were unable to make it through.
To learn more about the data behind this article and what Placer has to offer, visit https://www.placer.ai/.
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