The Drive-Thru Reaches New Heights. NewsWire

NEWSWIRE: 3/19/21

• Drive-thru ordering has boomed during the pandemic. And it’s not just for fast food restaurants anymore, with chains from Chipotle to Sweetgreen to Starbucks all joining in. (CNBC)
• NH: After the pandemic shuttered indoor dining, most restaurants had to pivot to takeout and curbside pickup to survive. But fast food restaurants had a third option that helped them rebound faster: drive-thru lanes.
• By December 2020, drive-thru orders accounted for 44% of off-premise orders across the entire restaurant industry. Thanks to increases in drive-thru orders, sales at McDonald's (MCD), along with Yum! Brands (YUM) staples Taco Bell and KFC, soared.
• Other restaurants have scrambled to keep up. Some chains, like Panera Bread and Starbucks (SBUX), had already embraced drive-thru lanes at some sites before the pandemic hit. But now it’s gone from an experiment to a must-have. In the last three months of 2020, same-store sales at Starbucks declined 5% while its drive-thru locations saw increases. The upscale coffee giant, which has long prided itself on being what former CEO Howard Schultz called a "third space" gathering place, is now planning to launch drive-thru only locations without seating. Meanwhile, newcomers like Shake Shack, Chipotle (CMG), Applebee’s, and Sweetgreen are launching their first drive-thrus.
• A few months ago, I noted that McDonald’s had heavily invested in AI upgrades for its drive-thrus. (See “McDonald's Turns to AI.”) Restaurant Brands International (QSR)--the parent company of Burger King, Popeyes, and Tim Hortons--is doing the same thing. Burger King is going even further and piloting new restaurant designs with multiple AI-powered drive-thru lanes, smaller dining rooms, and even burger pickup lockers.
• The rush to develop drive-thrus is also fueling a boom in another area: commercial real estate. Drive-through properties command a 10-20% price or rent premium. But because they can affect traffic flow and cause congestion, new sites often must request approval for zoning changes and take a long time to get off the ground. The inventory of existing drive-thru sites is low, and prices are expected to soar. As more customers pull up to the drive-thru lanes, real estate speculators are scrambling to buy eligible properties--or to lobby local governments to change the zoning on properties they already own.