By Heather Haddon
The drive-through, a nearly 90-year-old American invention, may
be fast-food restaurants' best shot at surviving the coronavirus
Even those companies that have the drive-through option say they
will still likely endure hundreds of millions of dollars in sales
losses in the coming months after officials across the country have
banned dine-in eating to try to curb the spread of the new
Yet drive-through is one of the few ways to reach customers in
nearly every U.S. state, along with carryout and delivery. Big
chains such as McDonald's Corp., Restaurant Brands International
Inc.'s Burger King and Yum Brands Inc.'s KFC that already make up
to 70% of sales at the drive-through are better positioned to
weather the crisis.
Customers can order food in a drive-through without coming into
close contact with a server or entering a dining room, minimizing
exposure to the virus.
Matt Harris, a 33-year-old assistant professor from Kansas City,
Mo., said drive-through seems like one of the safest options to get
food right now. He has noticed the lines of cars pulling up to
drive-through chains in his area has lightened, but they are far
busier than the local Olive Garden and Red Lobster.
"The lack of traffic feels almost post-apocalyptic," Mr. Harris
Some companies with drive-throughs are retooling their
operations as they shift nearly all of their business there.
Drive-throughs now account for around 90% of U.S. sales at
Wendy's Co., compared with about two-thirds before the pandemic.
The Dublin, Ohio-based chain is redirecting the cash it had planned
to use for a new national breakfast offering to franchisees and
promotions for drive-through and delivery instead.
Some franchisees of restaurant chains with drive-throughs are
slapping up signs, and companies are sending out tweets to let
skittish customers know they are open for business and safe to
patronize. They are trying to maintain drive-through service times
while having crews practice social distancing. Yum Brands' Taco
Bell is featuring its drive-through workers in promotional
The basics of the drive-through are largely unchanged from their
early 20th-century origins in the U.S. But some of the bigger
chains, including McDonald's and Burger King, have each spent tens
of millions of dollars in recent years to equip their
drive-throughs with digital menu boards because many consumers
still prefer ordering from their cars to dining in or the newer
phenomenon of delivery.
McDonald's, in a television ad that made its debut last week,
said: "We'll be taking your order in the drive-through.... Just
like we have for the last 65 years, we can still be here to take
Fast-food-delivery sales are growing but are still small
compared with the amount customers spend on carryout and
drive-through, which are more familiar to many diners and don't
come with added fees. Consumers spent $83 billion in drive-throughs
in the year through February, compared to less than $20 billion for
restaurant delivery, according to industry-firm the NPD Group.
McDonald's, which introduced its first drive-through in Arizona
in 1975, was already making around 70% of its sales in the U.S. to
customers ordering from their cars before the coronavirus crisis
erupted. In the past year it has tried to cut drive-through times
via investments such as speed-of-service timers and by paring down
its menu. Now, the company is temporarily removing items from its
menus and suspending all-day breakfast to further simplify
Even at the drive-through, business is weaker as consumers stay
home. Franchisees for McDonald's, Burger King, Popeyes Louisiana
Kitchen units of Restaurant Brands International Inc., KFC and Taco
Bell said their customer traffic was 10% to 30% lower in the past
week. Many owners said they were closing stores early and reducing
staff hours because of sales declines.
McDonald's increased its cash balance to $4.5 billion after
borrowing another $1 billion earlier this week, and Yum Brands,
also the parent company of Pizza Hut, drew down $525 million from
its credit line. Yum said it expects the virus to depress its
same-store sales by the mid- toGo high-single digits in its current
quarter, and more so in the next period.
"No one is going to make money at this time," said David Barr,
owner of 30 KFC and Taco Bell locations across three southeastern
Restaurants without drive-throughs, particularly casual-dining
chains, face the most serious threat to their existence.
Some dine-in chains, such as Texas Roadhouse Inc., are setting
up improvised drive-throughs to try to keep up some business.
Others, including Olive Garden-owner Darden Restaurants Inc. and
Applebee's parent-company Dine Brands Global Inc., are drawing down
on credit lines, while casual-dining chains Cheesecake Factory Inc.
and J. Alexander's Holdings Inc. have furloughed thousands of
workers because of plunging dine-in traffic since the virus
Ed Doherty, owner of 150 restaurants that include Applebee's and
Panera locations, said sales plummeted at his New Jersey and New
York restaurants by around 85% after the dine-in bans rolled out.
Little of his sales before the coronavirus came from takeout.
"There was absolutely no sales," said Mr. Doherty, who said he
has laid off 5,000 of his 8,000 employees and likely will shed
Write to Heather Haddon at email@example.com
(END) Dow Jones Newswires
March 29, 2020 06:14 ET (10:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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