How The Rise of Takeout Orders Drove an Unprecedented Surge in US Restaurant Productivity

Revolutionizing Productivity: Lessons from the US Restaurant Industry

A remarkable transformation has occurred in the US restaurant industry's productivity landscape, documented in groundbreaking new research from economists at the University of Chicago, NYU, and the Federal Reserve Bank of Chicago. Their analysis reveals that after nearly 30 years of flat productivity, restaurants experienced a striking 15% surge in labor productivity during the COVID pandemic—a gain that has persisted even as other economic metrics returned to pre-pandemic patterns.

Key Findings from the Research

The research team, led by Austan Goolsbee, analyzed mobile phone data tracking visits and spending at over 100,000 limited-service restaurants across the country to understand this puzzling productivity jump. Their findings point to a fundamental shift in how customers interact with restaurants, particularly through the rise of takeout and delivery orders.

1. Scale and Market Power Not the Answer

Initial hypotheses that the productivity gains came from economies of scale or increased market power proved incorrect. The data showed that average restaurant employment actually dipped during the pandemic's onset and didn't return to pre-pandemic levels until early 2022, well after the productivity surge appeared in early 2021. Similarly, analysis of pricing data ruled out market power as the primary driver.

2. The Critical Role of Visit Duration

The research identified a strong correlation between productivity gains and reductions in the amount of time customers spend in restaurants. Before the pandemic, about half of all visits to limited-service restaurants lasted less than 10 minutes. This share jumped substantially as the pandemic began and continued rising, reaching over 60% by the study's end. Most notably, this shift came primarily at the expense of visits lasting 21-60 minutes rather than from moderate-length visits of 11-20 minutes.

3. Chain-Specific Impacts

The relationship between shorter visits and increased productivity held true across individual restaurant chains, though with varying magnitudes. Among major chains, McDonald's restaurants showed some of the strongest effects, with locations experiencing the largest increases in short-stay customers seeing the greatest productivity growth. The implied productivity gain for McDonald's was approximately 22.5%, about twice the overall sample average.

Supporting Evidence from Multiple Sources

The researchers' findings align with broader industry data. The Global Wireless Solutions' Magnify dataset shows that food delivery app usage surged simultaneously with the increase in short restaurant visits and has maintained elevated levels. Both customer-side delivery apps (like DoorDash and Uber Eats) and driver-side applications show sustained high usage patterns.

The productivity gains vary significantly by restaurant type:

• Traditional fast-food chains saw the largest productivity increases
• Coffee shops also experienced substantial gains
• Sandwich and burrito chains showed moderate improvements
• Pizza chains saw modest gains, possibly due to their pre-existing delivery focus

Implications for the Future

This research suggests a permanent shift in restaurant operations and customer behavior rather than a temporary pandemic response. The persistence of these productivity gains even after the relaxation of pandemic restrictions indicates that restaurants have successfully adapted their operations to handle a higher volume of takeout and delivery orders while maintaining their traditional dine-in service.

The magnitude of this productivity transformation is particularly noteworthy given the restaurant industry's historical resistance to productivity growth. While most sectors of the economy saw steady productivity increases over recent decades, restaurant productivity remained essentially flat from 1992 to 2019.

Broader Implications

The study also carries broader implications for understanding how consumer behavior changes can drive productivity improvements. The pandemic essentially forced both restaurants and customers to experiment with new service models, leading to efficiency gains that might not have emerged under normal conditions.

Methodology and Data Quality

The research team's findings are particularly robust because they draw on multiple data sources and measurement approaches. The productivity gains appear whether measured in sales per employee or in the more basic metric of customer visits per employee. The correlation between their sample data and official government statistics (0.88 for sales and 0.63 for employment) provides additional confidence in their conclusions.

These findings represent more than just a statistical curiosity—they demonstrate how significant productivity gains can emerge from shifts in customer behavior and business adaptation. As the restaurant industry continues to evolve, these insights may help guide future innovations in service delivery and operational efficiency.

The research calls for further investigation into whether similar productivity surges might have occurred in other service sectors where customer behavior patterns changed significantly during the pandemic. Understanding these dynamics could provide valuable insights for business strategy and economic policy in the post-pandemic economy.