Thursday, June 27th, 2019 June27th2019

Sell for More News: Fast casual drive-thrus are coming

Published on June 27th, 2019

Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.

 

Fast casual chains like Chipotle and Panera will add drive-thru lanes to better compete with fast food restaurants.  The goal is convenience for the consumer.

McDonald’s popularized the drive-thru in the 1970’s, and fast food chains still generate an estimated 65% of sales from customers who don’t get out of their cars. Chipotle, Panera and Noodles & Co. and other slightly higher-end fast-casual chains originally insisted their key to success was doing things differently from the traditional fast-food leaders. But they’ve changed their tune, and are now betting that Gen Z and Millennial diners are just as willing as past generations to collect their orders from inside the car.

Chipotle, under the leadership of former Taco Bell chief Brian Niccol, is adding dozens of what it calls “Chipotlanes.” Noodles is doing the same as to-go orders surge. Starbucks, founded on the idea that its cafes are a “third place” for customers outside of work and home, says that 80% of its new locations will have car service as it focuses on suburban areas.

Panera, meanwhile, says that 40% of its 2,100 locations have drive-thrus, and this will rise to a majority in the next few years. Dan Wegiel, the company’s chief growth and strategy officer, said the feature “absolutely is a significant boost to our overall sales.”

The rise of fast-casual car lanes puts these chains more squarely in competition with fast food. The use of drive-thrus has risks, however. They could erode fast casual’s relative premium branding over fast food, and finding locations that can accommodate the outdoor service lane is difficult and expensive.

While Noodles says its real-estate costs aren’t increasing yet, 75% of its new stores will have a pick-up window. That’s a reversal from the chain’s previous philosophy on car service, and admittedly puts the chain “closer to the fast food” in the minds of shoppers who may think the quality isn’t so great.

Drive-thrus can be difficult for another reason: It’s tough to replicate the on-the-spot customization that helped fast-casual chains gain prominence, such as Chipotle’s assembly line where employees add ingredients in front of customers. For now, the burrito chain’s drive-thrus are reserved for mobile orders only.  The chain, with about 2,500 U.S. restaurants, has just 11 drive-up windows at the moment but plans to add “several dozen” this year. Over the longer term, the feature will help Chipotle double its U.S. store count.

Fast casual used to be about the dine-in experience…times have evolved.

 


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About Beau Beach, CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 800-721-3287, click to schedule a call or Beau@ProwessIRES.com