By Nina Trentmann and Mark Maurer
Fast-food restaurants are responding to changing consumer tastes
during the coronavirus pandemic in ways that have boosted profits
at some chains to where they were before the health crisis or even
higher.
Some restaurants are focusing on expanding their takeout and
drive-through businesses, while others are betting on delivery
services amid a recent surge in new infections and changing
regulations in the U.S. And many expect these efforts to pay off
longer term as the pandemic shows no signs of fading and some
consumer habits could change permanently.
Many fast-food chains brought down staffing levels and cleaning
costs by closing their dining rooms, and aren't in a rush to reopen
them. "For quick-service restaurants, they don't want to reopen
their dining rooms because this drags down profitability and
increases costs," said Andrew Charles, an analyst at investment
bank Cowen Inc.
Restaurant Brands International Inc., the owner of the Burger
King, Tim Hortons and Popeyes Louisiana Kitchen brands, doubled
down on an existing effort to boost its digital offering and
delivery services.
"Covid acted as an accelerator for some of the trends that we
already identified in our strategy," said Matthew Dunnigan, chief
financial officer of RBI.
The Canadian-U.S. fast-food chain relied on its digital sales
channels when the pandemic hit, Mr. Dunnigan said. RBI extended
curbside pickup, drive-through and delivery services, he said.
The company now has nearly 10,000 outlets offering delivery in
the U.S. and Canada, compared with a few hundred in the beginning
of 2018. RBI added more than 2,000 stores to its delivery network
in the first months of the pandemic and ramped up investments in
its mobile apps, Mr. Dunnigan said. He declined to provide a figure
for those initiatives, but said RBI's investment in its digital
sales channels in recent years has been substantial.
Church's Chicken, an Atlanta-based fast-food operator
specializing in fried chicken, doubled down on drive-throughs,
which had been a focus since 2017, finance chief Louis "Dusty"
Profumo said. "We have been working on this for years, and it paid
off. It really benefited our business," he said, pointing to a 15%
to 20% increase in drive-through sales since March, with those
sales now accounting for nearly all of Church's business.
Church's is looking to reduce the size of some of its
restaurants, Mr. Profumo said. "Customers want their meals
wherever, whenever," he said. "It is efficient to run all of your
business through drive-through." Most dining rooms are closed for
now, according to Mr. Profumo.
Church's Chicken is rolling out new delivery and payment systems
to restaurants operated by franchisees, which account for the
majority of outlets, Mr. Profumo said.
Panda Express in June added its own delivery service, said David
Landsberg, finance chief of parent company Panda Restaurant Group
Inc. "We've made a bigger commitment to delivery since the pandemic
started," Mr. Landsberg said.
Panda has invested $40 million since the beginning of the
pandemic in improving health and safety measures and its delivery
platform. The company is looking to hire 30,000 new employees this
year, despite recently pausing the reopening of lobbies for
customers to carry out their orders.
Panda's dining rooms remain closed, even though management would
like to reopen them. "It's about when the social-distancing
guidelines go away, and at this point, that's unlikely to happen
until sometime during 2021," Mr. Landsberg said.
About a third of RBI's dining rooms in the U.S. and Canada have
reopened, Mr. Dunnigan said, adding that the company plans to do so
for all of them. RBI books higher average revenue per order in its
drive-through and delivery business compared with dine-in.
Chipotle Mexican Grill Inc. earlier this month said it is
opening more stores with drive-through lanes for digital orders.
More than 60% of new stores will include these lanes, which are
strictly for picking up orders placed in advance online.
Even restaurants that mainly offered dine-in before the pandemic
are adjusting their business.
Waffle House Inc., a closely held restaurant chain based in
Norcross, Ga., is expecting more takeout customers as the pandemic
continues, said Chairman Joe Rogers. "We will have a bit more to-go
business, and less competitors," Mr. Rogers said, pointing to the
financial struggles of some of his rivals.
Write to Nina Trentmann at Nina.Trentmann@wsj.com and Mark
Maurer at mark.maurer@wsj.com
(END) Dow Jones Newswires
July 29, 2020 10:33 ET (14:33 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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