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Shake Shack, Panera, and Chipotle open drive-thrus to keep up with fast-food rivals like McDonald's and Taco Bell

Business Insider logo Business Insider 8/1/2020 ktaylor@businessinsider.com (Kate Taylor)
a person standing in front of a window: Drive-thru made up 90% of McDonald's business in the last quarter. Catherine Ivill/Getty Images © Catherine Ivill/Getty Images Drive-thru made up 90% of McDonald's business in the last quarter. Catherine Ivill/Getty Images
  • Drive-thrus are a crucial part of fast-food chains' strategies in the coronavirus era. 
  • Drive-thru orders made up 90% of McDonald's business in the US in the most recent quarter, helping the chain rebuild sales. 
  • Shake Shack, Chipotle, and Panera are among the chains that are now investing in drive-thrus as the pandemic stretches on. 
  • "I'm a big believer that drive-thrus are going to continue to be very important," Panera CEO Niren Chaudhary told Business Insider. "Therefore, as we look ahead, we will build more drive-thrus than we have in the past." 
  • Visit Business Insider's homepage for more stories.

In the coronavirus pandemic, drive-thru is king. 

Restaurants' sales plummeted in mid-March as dining rooms across the US were forced to shut down. While sales have recovered in the months since, one of the biggest determining factors in how far sales dropped and how quickly they improved was if a restaurant had a drive-thru. 

Full-service restaurants saw visits drop 47% in April, May, and June, according to data from The NPD Group. Meanwhile, quick-service restaurants (QSRs) only saw traffic decline 17% in the same quarter, due to their preexisting drive-thru and carry-out businesses. 

McDonald's, for example, saw US same-store sales plunge by 19.2% in April. By June, sales were only down 2.3% compared to the same period the year before. The recovery was due in large part to drive-thru, which made up almost 90% of the chain's sales in the quarter, executives said this week. 

Chains with fewer drive-thrus than rivals are now playing catch up, especially as the pandemic threatens to stretch into 2021. 

a sign on the side of a road: Shake Shack drive-thru rendering. Shake Shack © Shake Shack Shake Shack drive-thru rendering. Shake Shack

Chipotle recently said it plans to add more digital "Chipotlane" drive-thrus, remodeling restaurants and opening new locations. On Thursday, Shake Shack announced plans to open its first-ever drive-thru in 2021, with the chain planning for half of the restaurants opening next year to feature drive-up or walk-up windows. 

"People want to stay in their cars. That's not going to last forever," Shake Shack CEO Randy Garutti said in a call with investors. "But obviously, this country has proven that the drive-through in its old form works. We want to do in this new form. We want to do it better than ever." 

At Panera, which currently has drive-thrus at roughly half its locations, drive-thrus are a "definitive part" of the chain's plan going forward according to CEO Niren Chaudhary. 

"I'm a big believer that drive-thrus are going to continue to be very important," Chaudhary told Business Insider this week. "Therefore, as we look ahead, we will build more drive-thrus than we have in the past. We will also be looking at relocating ... to actually add drive-thrus to what we have today." 

Some chains have decided drive-thrus trump dining rooms in 2020

a man standing in front of a computer: Taco Bell © Taco Bell Taco Bell

The success of the drive-thru, as well as curbside pick-up and delivery, has convinced some chains and franchisees that it isn't even worth reopening dining rooms. David Gibbs, the CEO of Taco Bell, KFC, and Pizza Hut parent company Yum Brands, said on a call with investors this week that drive-thru sales have been so significant that reopening dining rooms was "not critical to our success." 

"No one in the QSR space is really anxious to open dining rooms," industry analyst John Gordon told Business Insider. 

By keeping dining rooms closed and relying more heavily on drive-thru traffic, restaurants can cut back on how many employees need to be staffed and avoid paying for expensive new safety measures. Enforcing mask policies can be a difficult and sometimes dangerous job for workers, raising concerns that many employers might want to avoid. Some restaurants have already been forced to close dining rooms after re-opening due to rising cases of COVID-19, which can confuse customers and hurt business in the longer term, according to Gordon. 

"Eventually, you need to have a dining room open, but at least for now, if you can operate a take-out model … that is a superior profit model," Gordon said. 

The power of the drive-thru continues even when restaurants finally do reopen dining rooms. McDonald's chief financial officer Kevin Ozan said on a recent call with investors that locations with drive-thrus build sales faster than those without when once again open for business. 

"The number of drive-thrus impacts the market pace of recovery. ... Markets with a higher percentage of drive-thrus are showing quicker recovery," Ozan said. 

Read the original article on Business Insider

Gallery: Drive-Thru Day: Looking at the history of the drive-thru (StarsInsider)

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