It's fair to say that Americans have a healthy obsession with coffee, and so consumers commonly flock to Dunkin' (NASDAQ: DNKN) to get their caffeine fix. But the chain's latest Boston location won't accommodate guests who want to sit around and chat over a cup of joe. That's because Dunkin recently launched a digital-only restaurant, and if it proves successful, we could see more pop up in the near term.
Jumping on the bandwagon
Dunkin' isn't the first chain to open a digital-only location. Chipotle; Taco Bell, part of Yum! Brands (NYSE: YUM); and Starbucks have all introduced similar concepts in response to the pandemic.
Last year, when COVID-19 cases were surging, many restaurant-goers had a strong preference for ordering food and leaving on their merry way rather than lurking and consuming it in a busy dining room with other unmasked patrons. Now, restaurants are leaning into that trend by opening locations that don't even offer seating for customers.
The new Dunkin' restaurant requires customers to place their digital orders in advance using the company's app or an in-store kiosk. Orders are then put together and handed off in a contactless area designated for pickup. The whole setup should make the process more efficient for everyone involved, which is especially helpful given the number of commuters who tend to pick up coffee on their way to work and don't want to be delayed.
Dunkin' is excited about its new concept and feels that a digital-only setup will afford customers an experience that's not only safer, but swifter. Many people who frequent Dunkin' want to get in and get out with a hot beverage in hand. And so catering to those customers makes a lot of sense, especially at a time when limiting interaction with others may top people's priority lists.
What real estate investors need to know
Because digital-only locations tend to be more compact than full-service fast-casual restaurants, they're generally a more cost-effective option as far as rent goes. That may not be the best news for commercial landlords who want to see larger spaces leased out.
However, if digital-only restaurants take off, we could see a lot more of them in the coming years. And that would be a good thing for real estate investors.
Digital-only locations are growing especially popular in cities where real estate tends to come at a premium. A given chain might shy away from paying up for a larger space due to the cost involved but could run the numbers and decide that a smaller restaurant will render itself profitable. Or, to put it another way, commercial landlords in hotspots like New York City and San Francisco could really end up benefiting from the digital-only trend, because chains may opt to open smaller locations rather than open no new locations at all.
In the meantime, coffee lovers in Boston definitely have something to celebrate. After all, the only thing better than a fresh cup of morning coffee is a fresh cup of morning coffee without an excessively long wait.