Industry News

Why quickserves had an edge in the year of off-premises dining

In a year that has changed much about the way we dine, quickserve chains played to their advantages by putting an even greater emphasis on their off-premises efforts. 

While eateries and chains that depend largely on dine-in traffic had to shift to new business models that included family meals, grocery sales and tweaked menus and recipes that lend themselves more easily to off-premises dining, quickserve chains were already accustomed to feeding demand for takeout and delivery.

They had the advantage of established drive-thrus and burgeoning delivery options that were positioned to grow as dining rooms across the country started shutting down in March. The growing popularity of drive-thru and delivery were trends that prepared quickserves better than other segments of the industry to adjust to the changing times, Revenue Management Solutions' Vice President of Consulting Chris Norton said.

Many quickserves started the year doing around 65% or more of their sales at the drive-thru, according to RMS data, so when the pandemic hit and that trend grew, the change wasn’t as sudden and dramatic as it was at segments that depended more on dine-in business.

“They were ready for it, even though they didn’t know it was coming,” said Norton, whose company has been performing monthly surveys to gauge consumer attitudes and performs of the quickserve and table service restaurant segments.

Delivery was up 60% year-over-year in November and drive-thru traffic overall was up 16%, trends that reflect the relative maturity of the two off-premises sales channels. Many restaurants and chains have been grappling with in-house versus third-party delivery, a debate that was magnified amid the pandemic as eateries weighed the costs and benefits of paying commission fees. Meanwhile, drive-thru traffic had been showing solid growth in the years leading up to the pandemic.

One of the biggest trends this year has been the growth in demand for contactless delivery, with about half of millennials surveyed in August reporting they ordered contactless food delivery five times a week or more. The rate was lower among Gen Z consumers, but it rose from 12% to 22% between May and August.

The surveys also showed frequent users were more willing to pay a premium for delivery but also that they shop around to find the best delivery deals.

Quickserve traffic remained down 11% in November from the same month last  year, while sales were up 1%, reflecting another key trend of 2020 – consumers are making fewer visits while spending more per order, raising average check sizes, Norton said.

The trends are driving quickserves to find new ways to make the most of their drive-thrus, and some have unveiled plans to go bigger with smaller formats that trade dining space for more drive-thru lanes and contactless pickup areas for mobile orders.

In June, Starbucks announced plans to rev up expansion of formats dedicated to drive-thru business and mobile order pickup, including opening more Starbucks Pickup cafes where customers use the chain’s mobile app to order ahead and pickup their purchases to go. Like other quickserve chains, Starbucks already boasted a robust to-go business that generated about 80% of transactions before 2020, the company reported.

Also this year, chains including Burger King and Taco Bell unveiled new store prototypes that shrunk or eliminated dine-in space to make room for drive-thru and order pickups. These formats designed for the pandemic era might never become the norm, but they illustrate a focus on the hottest quickservice trends of 2020.

“I look at the prototype designs like when you go to a car show,” Norton said. “Ford, Chevy, they have their regular cars and then their really cool prototype cars. But you never see them, they don’t produce them.”

That’s not to say that some chains won’t build out any of their prototype formats, he said. Starbucks already is and others probably will, but it’s more likely for many that technology, innovation, tweaks to existing formats and digital loyalty programs will drive the continued growth of sales at the drive-thru by creating new ways to personalize the experience.

Geofencing technology that pushes out promotions to loyalty members when they’re near a restaurant location, drive-thru technology that recognizes customers by their license plates and suggests menu items based on previous orders and recommends add-ons based on popular orders are all innovations likely to drive higher average sales, he said.

Survey data backs that up, said RMS’ analytics director Francois Acerra.

“We find that among heavy users of drive-thrus, two-thirds already know what they’re going to order, but they’re also more likely to change based on the menu board,” Acerra said.

Chains that have the ability to upsell customers at the drive-thru are more likely to increase the average check size, and speed and accuracy continue to play a key role in cultivating loyalty and return visits.

Some brands are embracing the shift to tech-enabled drive-thrus, including Restaurant Brands International which last month announced plans to upgrade the drive-thrus at 10,000 Burger King, Tim Hortons and Popeyes units.

New features will include predictive selling capabilities that allow restaurants to tailor promotional offers based on a host of data including customer preferences and even the weather, the company said in a press release. New drive-thru menu boards will also allow for the integration of loyalty program information and contactless payment.

While drive-thru and delivery are expected to continue growing during and after the pandemic, restaurants are also focused on improving the dine-in experience. Table-service eateries have a new opportunity there to set themselves apart and win loyal customers by demonstrating safety practices and scrupulous cleanliness, factors that have come to the forefront this year, Norton said.

“The whole cleanliness factor becomes a selling factor,” he said. “It becomes a great marketing tool.”

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