A vehicle is parked in a thoroughfare in a Starbucks Corp. store on Wednesday, June 10, 2020. in El Cerrito, California, USA.
David Paul Morris | Bloomberg | Getty Images
The last drive-through boom was in the 1970s. The next one could be in the 2020s.
Starbucks, Chipotle Mexican Grill and Shake Shack are among the chains that will focus on transit construction in the coming months thanks to the lessons learned from the coronavirus pandemic.
Industry leaders say consumers are looking for contactless access to their favorite restaurants. Drive-Thrus proved to be a lifeline for fast-food chains like McDonald’s and Wendy’s, which saw more moderate sales declines in the same store as locks came into effect and revenue fell faster.
"The pandemic has resulted in double-digit sales growth among these drive-thrus companies, which has resulted in a frenzy of buyers among restaurant chains for these properties," said Aaron Allen, founder and managing director of restaurant consultancy Aaron Allen & Associates.
Shake Shack plans to create its own variant of transit in the next year, with lanes for ordering on site and for digitally picking up orders. In some restaurants, the company would like to build either an alley just for digitally picking up orders or a walk-in window, both of which were internally referred to as "shack tracks".
"Look, at the moment of security, people want to stay in their cars," said Randy Garutti, CEO of Shake Shack, the analysts at the July 30 conference call. "It won't take forever. But obviously this country has proven that driving through in its old form works. We want to do it in this new form."
The milkshake and burger chain is not the only company to venture into the drive thrus for the first time due to the crisis. Wawa, the convenience store chain known for its Hoagies, announced last week that it would open its first free-standing drive-through location in December.
Other restaurant companies that already had drive-through lanes are planning to increase their number.
Chipotle opened its first "Chipotlanes" in 2018 as part of its move to digital ordering. The drive-through lanes are only intended for digital order pick-up, a strategy that restricts the inner lines of the chain and speeds up service. It is planned that 60% of the new restaurants will have a Chipotlane this year, compared to 50% in February. By 2021, 70% of the new locations will have a through lane.
Brian Niccol, CEO of Chipotle, said on the company's July 22nd call for profit that its 13 restaurants with a Chipotlane, which have been open for more than a year, have 10% more revenue in the same store than the non-thoroughfare locations .
Likewise, Niren Chaudhary, CEO of Panera Bread, said in an interview that the percentage of sales generated by his drive-thru doubled during the crisis. Around half of the restaurants in the sandwich chain have thoroughfares. Chaudhary said Panera would "no doubt" build more Drive-Thrus cafes.
The pandemic also accelerated Starbucks' plans to improve its US presence, with a focus on easy access, especially for digital orders. That means adding more drive-thrus over the next 12 to 18 months and fewer locations in shopping centers. In the last quarter of the coffee chain, CEO Kevin Johnson said almost 90% of sales came from thoroughfares or mobile ordering and payment.
The pandemic and the resulting economic crisis, as well as widespread unemployment, could make it easier for these chains to get through their traces. Retailers and restaurants go out of business and leave desirable properties for those with the means to win.
"The good news is that in this environment, our landlords are more willing to work with us to do a remodel. If they are not willing to work with us on a remodel, there is a location across the street that we Take a look at that too, "said Jack Hartung, CFO of Chipotle, in the company's latest earnings statement.
Drive-Thrus has become unpopular with local authorities in recent years, and some have restricted or even banned it. A year ago, Minneapolis blocked new drive-through lanes and pointed out their effects on the environment, traffic and noise.
Correction: Chipotle's call for profit was July 22. In an earlier version, the date was incorrect.