McDonald's, Dunkin', Wendy's End Dine-In Service to Slow COVID-19

McDonald’s late Monday joined the list of major restaurant companies shuttering dine-in operations to slow the spread of COVID-19. Fast food’s top earner closed seating areas, including the use of self-service beverage bars and kiosks, across all company-run restaurants at the end of business Monday. As has been the case for McDonald’s counter-service peers making similar moves, like Starbucks, Shake Shack, Noodles & Company, Chick-fil-A, and Inspire Brands, drive thru, walk-in take out, and delivery remain active.

McDonald’s is a heavily franchised system, with more than 13,150 of its 13,846 domestic locations run by franchisees. The chain said independent franchisees “continue to focus on the needs of their local communities and make safe and caring decisions.”

It added operators “are strongly encouraged” to adopt similar operating procedures to keep the needs of guests and communities in mind. McDonald’s said Monday’s guidance was supported “by franchisee leadership and is excepted to be adopted by the majority of franchisees.”

As for employees, McDonald’s anticipates “most” crew members with scheduled shifts to be redeployed to support drive thru, carry-out, and delivery business, it said.

“It is remarkable how franchisees, suppliers, agencies and company employees have come together in recent days,” Joe Erlinger, president of McDonald’s USA, said in a statement. “During these uncertain times that impact all of us in personal ways, our ability to support each other, our people and our communities will ensure we emerge from this crisis stronger than before.”

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McDonald’s said its decision was guided by “expert local and national health authority guidance.” Additionally, it’s complying with local and state restaurant restrictions, where applicable.

Shortly before McDonald’s announcement, President Donald Trump shared updated guidelines to combat the nationwide spread of coronavirus. The federal government did not outright suggest shutting down restaurants, but did ask for groups to gather at 10 or fewer people, and to avoid dining out at restaurants and bars. Trump’s exact words: “Avoid discretionary travel. And avoid eating and drinking in bars, restaurants and public food courts.”

It was a stark change from the CDC’s earlier call to cancel or postpone gatherings with 50 or more people.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infection Diseases, added that in states “with evidence of community transmission, bars, restaurants, food courts, gyms and other indoor and outdoor venues where groups of people congregate should be closed.”

Here’s a look at some states and cities that have ordered restaurants to close dine-in service so far.

In addition to closing dining areas, McDonald’s shut down all PlayPlaces nationwide.

“Franchisee leadership completely supports the decision to adhere to social distancing guidelines and ensure that large groups of customers are not gathered together inside our restaurants,” said Mark Salebra, the chair of McDonald’s National Franchise Leadership Alliance. “We are committed to our role in supporting the communities in which we do business and protecting the public’s health by shifting our operations to drive thru, walk-in take-out and McDelivery.”

The company said it believes the change is temporary and would continue to evaluate operations as the situation evolves.

McDonald’s, which eclipsed $100 billion in systemwide sales last year for the first time, sees upward of 70 percent of its business via drive thru. In the past year, it’s invested in speed of service and personalization upgrades, rolling Dynamic Yield technology across nearly all outdoor digital menuboards in the U.S. and Australia, or roughly 10,000 domestic locations at the end of Q4.

The suggestive selling capability helped McDonald’s lift its average check 7 percent (per BTIG estimates), comprised of 4.2 percent menu mix and 2.8 percent pricing. The chain has grappled with negative customer counts over the past couple of years.

McDonald’s delivery also generates orders roughly twice the size of dine-in, the company previously said, and now covers more than two-thirds of McDonald’s total system (25,000 locations). In three years, McDonald’s delivery has gone from producing $1 billion in sales to more than $4 billion.

Additionally, many Experience of the Future redesigns added curbside pickup. The chain said after Q4 more than half of its $1.3 billion U.S. spending in 2020 would be allocated to 1,800 EOTF updates. McDonald’s completed about 2,000 of these projects in 2019 and is on track for just about all restaurants to be modernized by the end of 2020.

The chain’s fourth-quarter global same-store sales rose 5.9 percent, while U.S. comps climbed 5.1 percent—the brand’s best domestic figure in 13 years.

Dunkin'

Like McDonald's, Dunkin's redesigned model should help it navigate the COVID-19 crisis given its focus on digital ordering.

Dunkin’ closes down dining rooms, too

Dunkin’ shared a letter from CEO David Hoffmann Monday saying U.S. restaurants will have reduced hours and be limited to drive thru and/or carry-out-only service until further notice. All seating and tables were removed form dining and patio areas, and Dunkin’ increased standards on the frequency of hand washing and cleaning procedures, including disinfecting high-use surfaces and high-traffic areas, it said.

“Our franchisees are taking care of their crew and managers, and are committed to providing a clean and healthy work environment for all employees,” Hoffmann wrote. To keep everyone safe, we are stressing the importance of social distancing in our restaurants. The reduced operating hours will also allow our restaurant employees to focus on their families as well.”

Dunkin’ has more than 5,300 drive-thru locations.

Like McDonald’s, the chain underwent a footprint facelift over the past year, although not quite to the same scale. Dunkin’ said after its Q4 review it would shell out roughly $60 million as part of a push for “NextGen” evolution, which includes “state-of-the-art, high-volume” brewing equipment for domestic locations, with matching investments from franchisees.

It ended 2019 with 525 NextGen stores, a redesign including an eight-headed tap system, modern décor, front-counter bakery, efficient coffee line, and enhanced pick-up area. The company expects to end 2020 with 1,400. Dunkin’s Q4 comp sales increased 6.9 percent, year-over-year, the 10th positive quarter in a row.

The java brand entered 2020 with 13,137 restaurants (9,630 in the U.S.).

Wendy's

Wendy's breakfast business is coming through the drive thru.

Wendy’s joins in

“COVID-19 is impacting communities in different ways, but the guidance from public health experts has been clear that social distancing is an important and necessary step to take to help minimize spread of the virus. To assist with this goal, we want to be proactive, recognizing much is quickly evolving at the country, state/provincial and local levels,” Wendy’s CEO Todd Penegor wrote Monday in a letter.

Effective immediately, the company implemented a restricted service policy across all corporate restaurants in areas that have declared a national emergency due to COVID-19. Wendy’s company-run locations will remain open for takeout, pickup, drive thru, and delivery unless otherwise prohibited by local authorities, the company said.

All orders placed in the dining room at the counter will be bagged for takeout.

Wendy’s adopted these practices in corporate restaurants and strongly urges franchise operators to do the same, Penegor said. Many are already doing so, he added. At the end of 2018, only 353 of Wendy’s 6,711 domestic stores were company run.

“We also recognize that governments in some locations are requiring more strict measures, and as a system, we will of course adhere to those restrictions as well. We will continue to evaluate the landscape, understanding it’s changing rapidly, and will adapt as needed,” Penegor said.

One thing worth noting, Wendy’s highly anticipated breakfast launch is a drive-thru initiative.