Is fast food going too slow in reopening for dine-in business?

Discussion
Photo: RetailWire
Jun 30, 2021

City by city and state by state, U.S. retailers are reopening as reported COVID-19 infections continue to drop. Fast food chains, however, have been moving more slowly.

While local restaurants have been opening up, chains including Popeye’s, McDonald’s, Starbucks and those owned by Yum! Brands have remained more focused on digital sales and limited in the full reopening of stores in key markets, according to Yahoo! Finance. Brands cite operating in accordance with CDC guidelines and local regulations, but are farther from across-the-board reopening than smaller restaurant operators.

Part of the hesitation may be found in the franchise model some of these brands operate under. McDonald’s franchisees in late May were insisting on staying closed despite the easing of local restrictions, according to a Bloomberg report. Some stated that they were doing well enough through drive-thrus and mobile ordering and had neither enough staff to reopen nor interested diners to justify reopening. The chain hopes to have all restaurants fully open by late August.

Though COVID-19 cases continue to fall in the U.S., so has the rate of vaccinations, according to a CIDRAP report.

Low vaccination rates in some parts of the U.S. have raised concerns about a possible resurgence of the pandemic that would require the reintroduction of mitigation measures — even reaching the point of renewed store closures and lockdowns.

This trend is compounded by the emergence of the novel coronavirus’s Delta variant, a more contagious mutation of the virus that originated in India. The virus has recently and quickly become the dominant strain in the U.K., where a surge in infections has yet to stabilize despite the current high rate of vaccinations there (67 percent vaccinated, 49 percent fully vaccinated, according to The New York Times COVID-19 vaccinations tracker). Two weeks ago, U.K. prime minister Boris Johnson paused the nation’s reopening plans due to the COVID-19 surge. 

The anticipated July 5 full reopening of U.K. restaurants has been rescheduled to July 19 at the earliest, according to an Eater report.

Experts expect to see the Delta variant become the dominant strain of the virus circulating in the U.S. as well, according to CBS News.

DISCUSSION QUESTIONS: Are fast food chains hurting themselves by not reopening more quickly or has the pandemic established a new operating model wherein consumers prefer drive-through and curbside pickup rather than dining in? Are restaurants and retailers prepared for the Delta variant and its possible effect on their businesses?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Short of walk-in only urban locations, I doubt we will ever see a full reopening of in-store dining areas in QSR."
"Why reopen the inside seating when you can operate a lot more efficiently and lower cost if you only have a drive-thru model?"
"Fast food chains are taking advantage of improved economics of takeout. If the takeout volume remains high, the chains can meet those needs with reduced staff."

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24 Comments on "Is fast food going too slow in reopening for dine-in business?"


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David Weinand
BrainTrust

I think QSRs have realized they can be just as profitable with drive-thru/curbside pickup only, contributing to the delay in opening. I’ve heard stories of chains like Chik-fil-A that are so efficient with their drive-thru business that reopening the dining room will actually hurt margins. McDonald’s had 70 percent of their revenue from drive-thru BEFORE the pandemic so they are well equipped to handle the volume.

DeAnn Campbell
BrainTrust

I’ve heard the same thing in interviews with Carl’s Jr. executives.

Lee Peterson
BrainTrust

Clearly the dine-in space of fast food is not as important as drive-thru/delivery pick up. Many QSRs were doing as much as 80 percent of their business pre-pandemic, which only increased. So for them, what’s the hurry? Less labor, maintenance and overall cost with close to the same amount of business, so why rush? This is also a clear signal that, as our own research has shown, QSR restaurants are very well suited for successful “dark” store (no dining space) operations. The pandemic provided proof of concept of the “dark” format to operators.

Richard Hernandez
BrainTrust

Some of this is not solely because of local ordinances but because they can’t get enough employees to support the opening of dining rooms. They have been having a hard time supporting the increase of curbside and drive-thru. I think businesses will decide individually (I saw it last week traveling across the country) whether they want to require or suggest masks to combat the Delta variant.

Gary Sankary
BrainTrust

QSRs have thrived during the pandemic. The big lesson is that they can grow sales, meet their customers’ needs and build new experiences for their customers that do not involve the overhead of dining rooms. Why would the be in a hurry to reopen? They’re enjoying a successful new revenue model at the moment.

DeAnn Campbell
BrainTrust

Fast food restaurants are in a real bind right now. During COVID-19 they discovered the benefits of being able to optimize their kitchen around drive-thru only. With the reopening of sit down dining they now must divide their staff’s attention once again, but at a time when they are still recovering from a pandemic year and struggling to hire enough staff. I think Starbucks is on the right track with mobile order-only formats and QSRs would be wise to start thinking about how to restructure their stores to offer drive-thru only in some locations and full-serve in others, personalized to the needs of each community.

John Orr
BrainTrust

The pandemic highlighted much for us and has driven a shift in buyer behaviors that will persist. Hygiene and tangible service quality in the form of cleanliness will remain. As a result, dark kitchens and drive-thru is the preferred experience for many as the dine-in experience hasn’t been an experience people will prefer going forward. New operating models in QSR will remain and as they capitalize on this shift. Why add expenses for keeping a dining room open if they can grow without it?

Ben Ball
BrainTrust

Why reopen high labor cost dining space when higher margin drive-thru is driving sales increases and profits? Short of walk-in only urban locations, I doubt we will ever see a full reopening of in-store dining areas in QSR.

Dick Seesel
BrainTrust

From the other comments posted so far, it seems that fast food restaurants staying closed for dine-in are basing that decision on economics, not on public safety. The challenge of rehiring staff is another real issue right now.

But is that drive-thru-only model sustainable? My neighborhood Culver’s (home of the Butterburger and frozen custard — try it!) recently reopened to dine-in and its parking lot is jammed. Meanwhile, the nearby McDonald’s with its double drive-thru lane is probably better prepared to keep its dining room closed. Some of the franchisees’ decisions will be driven by incremental sales and local customer expectations, not just by the profit margins.

Ryan Mathews
BrainTrust
One question at a time. Any retail establishment that isn’t operating full-bore hurts itself but – and it is a huge but – there are solid reasons for slowing reopening starting with the labor shortage. The Taco Bell not far from my home has banner signs in the window advertising that they are starting untrained workers at $15 an hour and — you guessed it — they apparently have very few takers because the signs haven’t come down. Many smaller retailers I speak with complain that they can’t get employees back to the job because with the COVID-19-related benefits their workers are financially better off not working. Given the historic turn in QSR jobs this makes reopening at full capacity a Herculean task, especially in competitive labor markets. Now for question two, the answer is no. It would probably be terrifying to create a Venn diagram of QSR demographics and the portion of the population that has chosen not to be vaccinated. Many, many young people in particular are opting out of vaccination for myriad… Read more »
storewanderer
Guest
1 month 6 days ago
COVID was largely a boom for the QSR business. The drive through model was perfect for many of them and they picked up a lot of new customers in various locations (lost a lot of customers in downtown type locations where the office workers were no longer present though). A vaccine resistant COVID-19 strain would potentially cause dine in to have to be closed again but with the current labor shortages in this industry, I think they could easily reassign the displaced dine in staff (which is realistically only a couple extra employees a shift if that) to drive through/take out duties or to other nearby locations that are understaffed. As far as the young people opting out of the emergency use FDA authorized (not yet FDA Approved) COVID-19 Vaccination impacting the decision of fast food QSRs to reopen their dine ins where people go and sit for 10-15 minutes and get out, I think that is a bit of a reach. Certain other business types (bars, etc.) where young people tend to congregate closer… Read more »
Steve Montgomery
BrainTrust

QSR drive-thrus were the dominant choice for customers before the start of the pandemic. Once they were forced to close their dining areas many, if not most, added curbside. This provided customers with two choices that did not require going into the location and standing in line to order and pay for their food.

Customers liked this and so did the QSRs. For restaurants it meant their staff did not have to spend so much time cleaning their dining areas, etc. Customers liked it because they did not have to leave their cars. I do not foresee the QSRs or their customers reverting to in-store dining with a few exceptions.

Rich Duprey
Guest

Because consumers were trained over the past year and a half to expect just drive-thru/walk-up, and because it’s more profitable for chains, dine-in fast food may be a thing of the past. You had Shake Shack, Chipotle, and numerous other chains saying they were going to knock holes in the walls of even existing restaurants to install pickup windows while new locations would have them as a priority. No need to go back to the other more labor intensive method.

A new Blimpie’s sandwich store opened up nearby late last year and though it has a seating area the chairs remain on top of its tables warding off customers who want to sit. Same with Subway. A McDonald’s by me just closed for renovations to shrink its dining room and expand drive-thru to two lanes.

I don’t see fast food going back.

Mel Kleiman
BrainTrust

Why reopen the inside seating when you can operate a lot more efficiently and lower cost if you only have a drive-thru model? Until the customer demands inside seating by not using the drive-thru, the smart operators will offer limited service—more money in the operator’s pocket and less hassle.

Doug Garnett
BrainTrust

The line of cars I see at McDonald’s in our neighborhood is far longer than it ever was pre-pandemic. They don’t seem to be suffering from the take-out only model.

So no. They aren’t moving too slowly.

Richard J. George, Ph.D.
BrainTrust

QSRs fared relatively well during Covid. Fast food chains have had a history of drive in business and their product formulations emulated dining in better than more traditional restaurants. However, make no mistake — the loss of dining in had an adverse impact. Not sure if anyone is ready for the Delta variant. However, fast food chains have been affected by the same labor shortages that have plagued other restaurants as they reopen their dining rooms.

RandyDandy
Guest
1 month 6 days ago
No (or few) others will like what I am about to write. But that does not negate its truthfulness. Aside from all the overt talk of the better economics of going forward—with just drive-thrus, mobile app ordering, less staff (vs unavailable hires), and closed service areas—lies the covert reality of how dealing with many of these businesses, aside from financial terms, became somewhat more pleasant during lockdowns. Or to put it in blunter terms: that being inside for some became far less unpleasant. For as we all know (but many don’t care to openly admit) many of these operations had become havens for a part of society that the majority (of customers and workers) found very difficult to deal with. (Surely my learned colleagues have experienced some form of this desperation in some CBD fast food locale, yes?) But when lockdowns hit, and inside spaces shuttered in favor of takeaway only, that element vanished. And transactions occurred without the culture-class tumult of how it was before. Now, in the “after times,” businesses wonder what can… Read more »
storewanderer
Guest
1 month 6 days ago
I know what you are talking about in certain parts of the country and around many larger cities with the various McDonald’s locations with no loitering signs, 30 minute time limit while eating food only signs, no backpacks or suitcases signs, “this McDonalds is not a shelter” signs (classic from Stockton, CA), etc. So I can see how these businesses were very happy to close dine-in and eliminate everyone from coming in so they no longer had to mess around with enforcing the above policies. But the problem did not go away at large. It just went away from the fast food places. And it transferred to whatever was open (retail stores…). As a customer, I much preferred going inside the locations. I want to see what is going on inside. I have entered a couple different fast food places recently that reopened inside and they were so filthy inside I ended up leaving without purchasing. I went into another one last week that was very clean but as I was standing there waiting to… Read more »
Venky Ramesh
BrainTrust

Clearly, Dark Kitchen is the way to go for QSRs, given their hesitancy to open the restaurants. However, humans standing in a line is far more compact than cars waiting to be serviced, thanks to space constraints (If there is one thing I have learned from the movie “The Founders,” is that the real profit opportunity is QSRs in providing real estate to the franchisees). In order to drive higher velocity, QSRs will increasingly leverage AI and ML to predict orders, specific customer arrival times, etc. in order to drive order value and velocity.

Craig Sundstrom
Guest

Huh? I didn’t see a single number here — nor even an anecdote — supporting the premise (which BTW seems remarkably sweeping, along the lines of “are tall people friendly?” overgeneralization).

So answering in the form of a theoretical question (are there reasons why fast food should/can/might open more slowly than full service restaurants?): Yes, their model has long been built around “take out,” so they’re less hurt by staying with that.

Jlauderbach
Guest

I remember when McDonald’s was only a walk up to an outside window. They had no inside dining area. They proved to be profitable back then and I believe it is the way for them to remain so. The lack of available staffing, the pressure for $15/hr and the advent of AI order taking makes a strong argument to remain drive-thru and curb side pickup.

storewanderer
Guest
1 month 6 days ago
After all of the money chains like McDonald’s and Wendy’s have pushed franchisees to spend to upgrade the dining areas, I find it hard to believe there are not plans to re-open dine in. Various McDonald’s and Wendy’s in my area have been getting interior remodels even during the pandemic period (and those have also reopened indoor dining already). I guess it must differ in some places but Chick-fil-A started to reopen dine in a couple months ago. There was one location (only one) in my area that was still not doing it but finally started again last week; I was told they were forced to do so by corporate. They were hanging on to the drive through only concept since it used less staff. I don’t think dine in at fast food is something that is necessarily a must for the future. But I do wonder if drive through only chains would survive in the face of other fast food chains that still offer the nicer amenities of dine in or even just an… Read more »
Mark Price
BrainTrust
Mark Price
Managing Partner, Smart Data Solutions, ThreeBridge
1 month 6 days ago

Fast food chains are taking advantage of improved economics of takeout. If the takeout volume remains high, the chains can meet those needs with reduced staff. Reduced staff improves profit and also recognizes that hiring right now is very hard, and will continue to be a challenge in the near future.

Brian Numainville
BrainTrust

Labor being what it is right now, not surprised that they would take this slow, especially given that in many cases the dining room isn’t all that necessary. With more attention on sanitation and hygiene, drive thru and takeout will likely continue to uptick going forward given new importance from a consumer perspective.

wpDiscuz
Braintrust
"Short of walk-in only urban locations, I doubt we will ever see a full reopening of in-store dining areas in QSR."
"Why reopen the inside seating when you can operate a lot more efficiently and lower cost if you only have a drive-thru model?"
"Fast food chains are taking advantage of improved economics of takeout. If the takeout volume remains high, the chains can meet those needs with reduced staff."

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