New • COVID-19 Report

The Brands that Thrived (and Dived) in the Pandemic

Thursday, April 29, 2021 • 9:00 AM EST

Key Takeaways:

1. Spending habits have evolved since the initial shock of the pandemic, and evidence of recovery is growing. Most major categories saw spending increases in 2021 from the pre-COVID baseline as vaccination continues.
2. Personal Care, which was down to 40% of its Jan 2020 spend at the peak of the pandemic, has lifted 30% year to date above pre-pandemic levels.
3. While Gyms & Fitness struggled as an industry, Peloton soared to a nearly 400% spending surge throughout 2020 and continues to outpace the category in 2021.
4. Quick service restaurants (QSRs) fared better than casual dining restaurants during the peak of the pandemic. One exception is Starbucks, which took a sizable dip in 2020 but has now recovered to 25% above pre-pandemic levels.
5. Unvaccinated people who don’t plan to receive the vaccine report spending the most on Restaurants, Entertainment, and Personal Care relative to other vaccination statuses, but the least on Gyms & Fitness. Vaccinated or soon-to-be vaccinated consumers are more cautious, indicating lower levels of spend for in-person experiences.
6. People are most excited to return to higher-end experiences they can’t get at home: fine dining, massages, and in-person concerts top the post-pandemic bucket list.

Spending crashed in March 2020 when the world went into lockdowns. But this nosedive was not reflective of the market’s demands, instead reflective of a world in crisis. So when supply chains figured out their systems and people got comfortable working remotely, spending patterns began to change.
 
Cardify analyzed spending data from Gyms & Fitness, Restaurants, Personal Care, and Entertainment to better understand how the categories performed in aggregate and which brands outperformed expectations. Cardify also surveyed 1,639 members, asking them about their spending plans when the economy fully reopens. Perhaps not surprisingly, they plan to spend more money on premium experiences such as in-person concerts, group fitness classes, fine dining, and massages. 

In the early days of the pandemic, spending plummeted, as the first chart reflects. As social-distanced socializing began last summer, spending patterns evolved. Now, halfway through spring 2021, we’re seeing sharp upticks in spending for Restaurants and Personal Care - while other key consumer categories like Entertainment and Fitness are lagging.

The year over year trends for the observed categories indicate an optimistic story. Even for categories that have not fully recovered from pandemic-related declines, sharp increases suggest it won’t be long now as vaccination continues around the world. Observing the period since the beginning of 2021, the restaurant category is up 20% and personal care has grown 40% compared to the year prior (2020). Both segments even outperform the same period in 2019.

Neglecting Our Workouts

Diving into Gyms & Fitness, all major chains took a hit relative to their performance in early 2020, and none have fully recovered. The brand doing the best to re-engage consumers today is Planet Fitness, which is seeing around 75% of its pre-pandemic spending levels. On the other side of the coin is upmarket brand Equinox, which continues to hover around 30% of its pre-pandemic levels.

The real winner of the Gym & Fitness world is Peloton. The at-home spin bike (and now treadmill) company marketed aggressively during the pandemic as people were in lockdown. While the Gym & Fitness category stayed below pre-pandemic spending levels for all of 2020, Peloton saw a 300% surge in spending on their products. Peloton continues to grow well into 2021, with its sales growing 17% YTD vs. a year ago, compared to the wider category at 15%.

A Big Drop In Entertainment Gatherings

Even though some US states and cities resisted full lockdowns, it’s no surprise that arcades, amusement parks, concert venues, and movie theatres saw a huge drop in spending. Amusement parks were able to recover a bit during summer 2020 with outdoor capacity restrictions, but that was about it for the sector. The silver lining is a sharp increase in arcade and amusement park goers as cities open up. Further, concerts, events, and movie theatres are starting to see a slight uptick as of Q1 2021.

Quick service restaurants, on the other hand, thrived in the pandemic. With more people at home and casual dining restaurants forced to pivot (many unsuccessfully) to delivery and e-commerce, quick service restaurants filled the gap. Save for an initial drop in March and April 2020, quick service restaurants saw spending levels rise above pre-pandemic levels throughout 2020 and into 2021.

Starbucks took the biggest hit as lockdowns stopped business travel and shut down traffic in many areas where the chain had significant density (airports, downtown cores, etc.). On the other hand, full meal-focused quick service restaurants like Chick-fil-A, McDonald’s, and Taco Bell had a banner 2020, seeing a 21% to 36% increase in spending from 2019. All brands - Starbucks included - also experienced a spending jump in Q1 2021, putting all brands above their indexed Q1 2020 pre-pandemic levels. Year-over-year, spend at Starbucks rose 29% from March 2020 to March 2021, and it increased for Taco Bell 22% over the same timeframe.

Casual dining is a different story. Most major brands - Applebee’s, Buffalo Wild Wings, IHOP, and Olive Garden - took a spending hit. Even as the companies pivoted to delivery and takeout exclusively, the companies struggled to stay at or near pre-pandemic levels. The outlier is Texas Roadhouse, which actually did better during the pandemic than it did in Q1 2020. Despite the name, the chain operates exclusively in Ohio, Michigan, Pennsylvania, and New York in the US, plus Ontario in Canada. The chain took advantage of any relaxation of lockdown restrictions to keep its dining rooms open as much as possible, with relevant safety precautions, which seems to have contributed well to consumer spending levels as other casual dining chains kept dining rooms closed.

Vaccinated and Ready for Action

As governments around the world spring into action to support vaccinating their populations, people are excited to reclaim their pre-pandemic lives. To better understand if vaccination changes people’s spending patterns, Cardify surveyed 1,639 users to ask about their vaccination status. We then cross-referenced aggregate spending data to see if vaccination correlated to different spending patterns.


The group that spent the most at restaurants were people who were not vaccinated, who indicated they will not be receiving the vaccine (either due to not wanting it or having a medical condition that makes it unsafe for them). After that is people who did not yet have their vaccine, then fully vaccinated people, and finally people who had received only their first dose.

By contrast, people who haven’t been vaccinated and won’t receive the vaccine spend the least on Gyms & Fitness as of Q1 2021. Category spend in fitness for those who are awaiting vaccination or are already vaccinated recovered relatively more in recent months, but still under-index pre-pandemic levels.

Entertainment and Personal Care spend more closely mimic Restaurant spending: unvaccinated people who won’t receive the vaccine have the highest indexed spend in both categories.

Where Personal Care stands out is that people who are vaccinated (one dose or fully) are also surging in spend, while people who aren’t yet vaccinated are spending less compared to their previous spending patterns.

Understanding how the pandemic affected spending

In a Cardify survey of 1639 members, we polled respondents about how the pandemic has affected their spending. A majority in every category - except Personal Care - spent less due to the pandemic. Personal care saw more than a quarter (26%) of people spending more during the pandemic, and a third (33%) not changing spending levels at all.

Looking ahead, a significant number of people plan to spend more on Entertainment (42%) and Restaurants (43%) in the next 3 months, compared to their pandemic spending levels. But they’re not getting back to workouts quite yet. Despite Gyms & Fitness taking a huge hit during the pandemic, only 16% of people plan to spend more in this category in the next 3 months, and 20% don’t plan to spend anything on Gyms & Fitness next quarter.

Respondents also indicated what kind of things they are excited to return to post-pandemic. In Entertainment, in-person events such as concerns and sporting events were the most popular. In Gyms & Fitness, people cited unique experiences that are impossible to replicate at home such as studio fitness classes, speciality items like rock climbing, and group sports.

Restaurants follow a similar trend to Gyms & Fitness, where the majority of people want service experiences they can’t get at home, with fine dining and casual dining leading the pack. Luxury is the name of the Personal Care game, with massages, spa treatments, and nail services being priorities for consumers post-pandemic.

Ready for Normalcy

By the time things are truly back to normal, it’s likely the pandemic will have lasted two years. That’s a long time to be away from loved ones, unable to live life the way you want to, and unable to access experiences that give you joy. However, as vaccination continues there is a clear light at the end of the tunnel. Based on spending patterns and intentions, it looks like the United States could be headed for a Roaring 20’s after all, complete with little luxuries, travel, and more.