More restaurants are now starting to open up to limited indoor dining, but partial capacity isn't exactly the business model restaurant owners are striving for. And while cooped-up foodies are snapping up reservations as soon as they're available, there are still many reluctant diners who are choosing to stay home and order food delivery as they wait to get vaccinated.
The drive-thru is a happy medium for restaurants and patrons -- and not just for Happy Meals, either. Once the hallmark of fast-food restaurants, other popular restaurants, including pricier casual restaurant chains, are moving ahead with drive-thru options to safely serve patrons. Chipotle's (NYSE: CMG) "Chipotlane" has been open to customers for the past two years with great success. And now Shake Shack (NYSE: SHAK) and Sweetgreen have plans to open drive-thru locations later this year. Will others try to get in the same lane?
Drive-thrus thrived during lockdown
The NPD Group, a market research company, reports that drive-thru restaurant visits increased by 26% -- 42% of total restaurant visits -- in the second quarter of 2020, right as lockdown closed indoor dining. When restaurants started to open up a bit last summer, drive-thru visits still saw a 13% uptick, the highest increase among on-premises, carry-out, and delivery dining formats during the same month.
Now, a drive-thru lane is certainly not an option for every restaurant. Roll-down window service does not mesh well with fine dining, for example. But even if the format does pair well with the cuisine or style of restaurant, there must be enough space on the property to accommodate the drive-thru lane. Freestanding restaurants might be able to give up some parking spots to accommodate a drive-thru, but restaurants in strip malls, for example, are likely out of luck.
Food offered with speed, convenience, and comfort
David Portalatin, NPD food industry advisor, said in a press release, "Drive-thru operations are delivering a high ROI during the pandemic, offering convenience, speed, and the comfort of social distance to consumers using them." Restaurants that can add or expand drive-thrus will do so and will be instrumental in helping the restaurant industry recover, Portalatin added.
It's easier to incorporate drive-thrus with new-restaurant construction, but existing restaurants that have the outdoor space are also aiming to add a drive-thru lane. Some restaurants have even brought back the old-school carhop model, where cars park in designated areas and waitstaff serve the food to passengers.
Restaurant investors would be wise to scope out locations with plenty of outdoor space. Establishments with outdoor seating where patrons can socially distance themselves fared better than those without it during the pandemic, but a drive-thru can safely serve even more people. Additionally, a bigger parking lot that offers dedicated parking spots for delivery service drivers makes it easier to fulfill at-home orders and keep a steady stream of customers.
The bottom line
The pandemic was a disaster for the restaurant industry. But restaurants with a drive-thru option were able to survive and even thrive during shutdown and will continue to do so. If it fits the restaurant model, investors should consider a drive-thru format to make it easy to serve patrons who want to enjoy dining out in a safe, convenient way, even after the vaccine is fully rolled out.