The latest Omicron wave appears to be subsiding, and soon we will be back to normal (for certain values of normal). In the restaurant industry, the response to COVID has accelerated trends that had started before — lower costs, more convenience for the greatest number of customers — rather than creating much new. That leaves these affordable restaurants better prepared for a future pandemic.
Three Trends in the Fast Food and Fast-Casual Industries
For the past 20 years or so, fast-food restaurants have been starting to deemphasize indoor dining. Endless salad bars, the food that could comfortably be eaten only on-site, were on their way out due to high food waste and staffing needs. The indoor playgrounds, once a big draw for families, started to disappear as fast-food restaurants shifted their marketing toward adults, combined with the capital cost, space needs, maintenance and liability. The advent of fast casual chains like Chipotle and Panera meant more attractive places than McDonald’s to sit down and have a leisurely lunch with friends and family yet still without the expense, time commitment and hassle of a table-service restaurant.
Before the pandemic about 70 percent of fast food sales was done through the drive-through. When you figure some of the remainder is take-out, it’s apparent how relatively unimportant the dining room was — this despite taking up an enormous amount of space and the need for both cleaning and parking. Then COVID happened and with it the need for even more intensive cleaning. Or worse yet, the possibility of an infected customer infecting the staff and shutting down the entire establishment. And then staffing shortages happened.
Considering that some of the dining room sales have been shifted to take-out or the drive-through rather than lost, fast food restaurants were slow to reopen their dining rooms even when allowed to do so. Everything old is new again: The first McDonald’s was take-out only.
Fast-casual chains are increasingly embracing drive-throughs. In the past, there were perceived issues with having one:
- Pretentiousness that they weren’t that kind of restaurant.
- Wanting to locate in classy mixed-use developments, lifestyle centers or more upscale strip malls as opposed to free-standing sites surrounded by a sea of parking.
- The assumption that customers wouldn’t want to wait in long lines due to the length of time required for their food to be cooked
- The fear customers might balk due to prices higher than expected from drive-throughs.
Despite this, Culver’s has long made it work by picking freestanding pad sites rather than strip malls and having you park out of line after ordering and paying, and then delivering the food out to your car. Now others are joining the trend and figuring out how to make it work.
A third trend is separating app orders from conventional orders. The workflow and staffing needs are different when you know what you need to have made and when and it’s already paid for, as opposed to a customer who walks in with money in hand and places an order.
Here’s a look at what some fast-food and fast-casual restaurants with a presence in Minnesota are doing.
The New Prototypes
Burger King has two new prototypes: one maintains a small, deemphasized dining room and the other one eliminates it entirely with multiple drive-through lanes and integrated curbside service. If you don’t have a car and need to go in, there are “burger lockers” where app orders can be picked up without potentially dangerous contact with staff.
Caribou has recently built a few “Caribou Cabins” for drive-through or take-out only service. Here’s one in Burnsville.
Starbucks has noticed a shift in revenue from dine-in urban locations to take-out and drive-through suburban locations. The former downtown office workers who are working from their homes in the suburbs still want their lattes. Starbucks closed 600 locations, primarily urban or shopping mall locations, and are replacing them with 500 primarily suburban locations on sites that can support a drive-through. Drive-through and app orders now are 70 percent of their business, as opposed to 55 percent before the pandemic.
Taco Bell in recent years dabbled in the idea of relatively upscale “destination” dine-in restaurants in urban locations, the “Taco Bell Cantina,” which serves alcohol, and “Urban in-line” locations in existing row buildings. The pandemic hit the pause button on much expansion of these concepts, and instead the company developed two new drive-through and take-out prototypes.
- The first is “Go Mobile,” designed for smaller urban sites and with the ability to retrofit to existing sites. It maintains a small dining room, but adds pickup lockers and kiosk ordering, and a dual drive-through with a separate lane for app orders. They will be 80 percent of the size of traditional Taco Bell sites.
- The second, the nationwide debut of the new “Defy” prototype, is going up off Zane Avenue in Brooklyn Park. With only a small lobby for take-out, it will be focused mainly on drive-through service. Four lanes will include one for conventional ordering and three for app orders. To save space the kitchen will be built on top, and dumbwaiters will lower food to motorists, maximizing space on small sites and eliminating even the low risk, brief outdoor contact of a traditional drive-through.
Dunkin’ unveiled a new traditional prototype in 2018 and is very interested in finding ways to use technology to ease the app order experience. Recently the company is experimenting with “Dunkin’ Go,” which are drive-through and takeout or drive- through-only stores. One of those opened recently in Mankato. With more drive-throughs both in absolute numbers and as a percentage than Starbucks, Dunkin’ did relatively well in the pandemic and actually surpassed Starbucks’ sales.
McDonald’s is in a different position than the rest. It introduced a new prototype in 2005 and unlike its competitors, forced all existing stores to be demolished and rebuilt to conform. So the oldest McDonald’s is now only about 20 years old. Another new prototype likely would be met with a backlash from franchisees that have just dropped a substantial amount of their own money into rebuilding.
Instead, McDonald’s is doing some minor remodeling to the dining room, spacing out tables and putting COVID-related privacy screens around some of the tables and between the dining room and the kitchen. Outside, the company is experimenting with a conveyer belt for delivering food to the outside drive- through lane, which would be reserved for app orders.
Here’s a site plan for a Raising Cane’s under construction in Burnsville. Despite having a decent sized dining room, it also has made room for 24 cars to queue at the double drive-through. Cane’s is already thinking ahead to the next pandemic closure or staffing shortage; the cars in red show how they can increase vehicular capability even further for “Dining Room Closed Operations” by use of traffic cones.
In Maple Grove, Shake Shack has opened its first-ever drive-through. This location was originally going to be a standard location, but the pandemic inspired new plans to add a drive-through. Sixteen cars can be accommodated in standard configuration, with space for 35 with the dining room closed and the parking lot coned off.
Chipotle has announced that 70 percent of its new locations will include a “Chipotlane,” an app-only pickup window. In Burnsville’s Heart of the City, Chipotle officials are seeking permission to build on a freestanding site in the Cub Foods parking lot so they can have their drive-through, rather than locate in one of the nearby strip malls or mixed-use buildings like they would have in years past.
Wendy’s has its “Smart 2.0” concept. After testing contactless digital ordering, Wendy’s decided its customer base wasn’t ready for it (yet). But the company incorporated new ideas like a “Drive-Through-Only Plus” prototype, which, despite its name, has a small lobby for take-out orders. For locations that have a dining room, the separation between the customer ordering line and the tables has been increased; being near a line full of people apparently made diners uncomfortable.
Finally, Panera‘s new prototype has a 20 percent smaller dining room, devoting some of that space to a drive-through. Like most of the others, this fast-casual chain increasingly is picking freestanding sites where a drive-through is possible. And Panera’s seems eager to relocate from existing locations. Recently the Apple Valley store relocated from a strip mall end cap across the parking to a freestanding site with a drive-through. The Panera at Rosedale has gotten permission to do the same thing: move from a strip of shops attached to the mall to a freestanding site out across the parking lot on the other side of the ring road.
What About the Minneapolis Drive-Through Ban?
The urban drive-through ban is in direct conflict with pandemic- and economic-driven trends in the industry. Did city leaders expect the ban to push the next Panera to lease space in one of those cute ground-floor commercial spaces they’re forcing developers to build? Or expect people would be willing to step out of their cars to get their Starbucks? I don’t think that’s going to be a reality. Instead this may push even more people to delivery service orders, so it’s their delivery driver who has to get out of the car.
I anticipate some or all of the following:
- Existing drive-through locations are going to become all the more valuable. Losing the fixed number of allowed locations is now going to be a big disincentive for redeveloping a fast-food property for anything else. Arby’s at Lake and Snelling wasn’t interested in rebuilding after being destroyed by criminals in the riots, but Raising Cane’s was eager to swoop in, to the point of deviating from its prototype and rebuilding on the existing foundation so the store could have a drive-through. A new state law says that non-conforming properties are allowed to be rebuilt substantially similar (interpreted by Minneapolis to be reusing the existing foundation) if the existing structure is destroyed by “fire or other peril” and rebuilding is commenced within a year.
- Another possibility is small-format pickup-only stores that still have “drive-through” functionality in that you order ahead on the app. You or your food delivery driver pull into the lot and park in a numbered space (with most people probably leaving the engine idling to provide heat or air conditioning). The only difference from your point of view is an employee now has to bring your food across the parking lot to you or your delivery car window in the rain, snow and cold instead of handing it to you through a window from the warm store.
- A third possible take is an increase of “app only” stores in existing small, cheap buildings. Even before the pandemic, Chick-fil-A was testing these with stores in Nashville and Louisville. The Nashville store will take your order (card or phone payment only, no cash) if you find the place and walk in, but the Louisville location is strictly app and catering only. These trade the vastly reduced sales of not having a drive-through with the vastly reduced costs of reduced or eliminated cashier and order-taking staff and being able to locate in cheap, tiny, out-of-the-way locations rather than large sites on prime real estate.