COVID-19

Drive-thrus are keeping the restaurant business rolling

Sabri Ben-Achour Nov 2, 2020
Heard on: Marketplace
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Drive-thru restaurants are faring better than full-service eateries. Bruce Bennett/Getty Images
COVID-19

Drive-thrus are keeping the restaurant business rolling

Sabri Ben-Achour Nov 2, 2020
Drive-thru restaurants are faring better than full-service eateries. Bruce Bennett/Getty Images
HTML EMBED:
COPY

Friendly’s restaurant chain filed for Chapter 11 protection Sunday, joining a list of other chains declaring bankruptcy. Pizza Hut, Chuck E. Cheese, Le Pain Quotidien have all filed for bankruptcy since the pandemic started.  

But some chains are booming during COVID-19. Chipotle, for example, said it plans to hire 10,000 more workers. So who’s winning and who’s not as we eat our way through the pandemic?

Down the street from John Gordon’s house is a Burger King that recently shut down. 

“Burger King is one of the global brands that’s gotten overstored in the United States and even in the rest of the world,” said Gordon, a restaurant expert at Pacific Management Consulting Group.

He said a lot of chains knew even before the pandemic they had too many locations. Now they’re downsizing. But many chains are also adapting. At that same corner where the Burger King was, there was a Starbucks.

“They closed, and they just moved into the Burger King,” Gordon said. “Now they have a brand-new store with a drive-thru that’s going to double their sales easily.” 

In a pandemic, the less contact with customers the better, and the chains that can pull that off are doing all right. 

Pizza chains that deliver have mostly done well. Chipotle is expected to grow its drive-thru stores from 100 to 1,000 in the next five years, according to Andrew Charles, a restaurant analyst with Cowen and Co.  

“Safety is now paramount, and obviously convenience is No. 2,” he said.

But there are some chains that are based on contact with customers and dining in, like Denny’s and IHOP, which aren’t doing so great. 

“The full-service restaurants will decline at a much faster rate on the chain side,” said Darren Tristano, CEO of Foodservice Results. He said they’re going to keep losing market share to more grab-and-go type places. “And that trend will likely continue for years to come.”

Basically if there’s a restaurant chain whose food you love to eat but you don’t really care where you eat it, it’s probably doing well. The places where you like to hang out are probably in some trouble.

COVID-19 Economy FAQs

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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