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Pandemic Sparks A Building Boom For Restaurant Drive-thrus

Aug 07, 2020

The last drive-thru boom was in the 1970s. The next one could be in the 2020s. 

StarbucksChipotle Mexican Grill and Shake Shack are among the chains planning to focus on drive-thru construction in the coming months, thanks to lessons learned during the coronavirus pandemic.

Industry executives say that consumers are looking for contactless access to their favorite restaurants. Drive-thrus proved to be a lifeline for fast-food chains such as McDonald’s and Wendy’s, which reported more moderate same-store sales declines as lockdowns went into effect and revenue that bounced back more quickly.

“Through the pandemic, there’s been a double-digit increase in revenue among those drive-thrus, and so it’s created a buyer frenzy among restaurant chains for that real estate,” said Aaron Allen, founder and chief executive of restaurant consultancy Aaron Allen & Associates.

Shake Shack is planning to create its own twist on the drive-thru next year, with lanes for ordering on-site and for digital order pickup. At some restaurants, the company wants to build either a lane just for digital order pickup or a walk-up window, both of which have been internally dubbed “Shack Tracks.” 

“Look, in the moment of safety, people want to stay in their cars,” Shake Shack CEO Randy Garutti told analysts on the July 30 conference call. “That’s not going to last forever. But obviously, this country has proven that the drive-thru in its old form works. We want to do in this new form.”

The milkshake and burger chain isn’t the only company venturing into drive-thrus for the first time because of the crisis. Wawa, the convenience store chain known for its hoagies, said last week that it would open its first freestanding drive-thru only location in December.

Other restaurant companies that already had drive-thru lanes plan to increase their number.

Chipotle opened its first “Chipotlanes” in 2018 as part of its push into digital ordering. The drive-thru lanes are only for digital order pickup, a strategy that cuts down on the chain’s indoor lines and speeds up service. It is planning for 60% of new restaurants this year to have a Chipotlane, up from its 50% forecast in February. By 2021, 70% of its new locations will have a drive-thru lane.

Chipotle CEO Brian Niccol said on the company’s July 22 earnings call that its 13 restaurants with a Chipotlane that have been open for more than a year are seeing 10% higher same-store sales than the locations without a drive-thru lane.

Likewise, Panera Bread CEO Niren Chaudhary said in an interview that the percentage of sales generated by its drive-thrus has doubled during the crisis. About half of the sandwich chain’s restaurants have drive-thru lanes. Chaudhary said Panera will build more cafes with drive-thrus “without question.”

The pandemic also accelerated Starbucks’ plans to revamp its U.S. footprint with a focus on convenient access, particularly for digital orders. That means adding more drive-thrus over the next 12 to 18 months and having fewer locations inside malls. In the coffee chain’s most recent quarter, nearly 90% of its sales volume came from drive-thru lanes or mobile order and pay, according to CEO Kevin Johnson. 

The pandemic and ensuing economic crisis and widespread unemployment could make it easier for these chains to score their drive-thru lanes. Retailers and restaurants are going out of business, leaving desirable real estate up for grabs for those with the funds.

“The good news is, in this environment, our landlords are more willing to work with us to do a remodel, and if they are not willing to work with us on a remodel, there is a site across the street that we will take a look at as well,” Chipotle CFO Jack Hartung said on the company’s most recent earnings call.

In recent years, drive-thrus have become unpopular with municipalities, and some have restricted or even banned their construction. A year ago, Minneapolis barred new drive-thru lanes, citing their impact on the environment, traffic and noise. 

Correction: Chipotle’s earnings call was July 22. An earlier version misstated the date.