In 2015, a time that now feels like a digital Stone Age for restaurants, CAVA CEO Brett Schulman recognized a potential hazard. Mobile devices and digital ordering systems were turning food procurement into an Amazon-esque experience. The ability to build and customize meals for pickup had the potential to further bifurcate the sector. While the divide between convenience and experience was nothing novel to full- and quick-service operators, the idea this dichotomy could exist within the latter was something new.
Even in fast food and fast casual, technology was cracking wide a world where guests held the controls more than ever. Nearly every guest in every market now had a drive-thru in the palm of their hands. “Omnichannel” might not have been in the common restaurant vernacular, but it was a concept plenty of operators were building toward without realizing it.
And it was the customer taking them there.
For Schulman, a cofounder of the Mediterranean chain, whose roots owe to full service, the 2015 idea a diner might walk in and compete with CAVA’s digital business was a prophetic concern. “There’s nothing more frustrating than being in our assembly line format and waiting for your order to be built and having a team member build a digital order in front of you and you have to wait. That’s not what we wanted,” Schulman says.
CAVA, like Chipotle and others, began installing dedicated makelines for digital production. While this fix was a straightforward one—expand capacity for a growing channel—it bespoke a vision of quick service that COVID-19 poured lighter fluid on. As regulations and safety precautions shuttered lobbies nationwide, restaurants began plotting the future of the dining room. When the front door reopened, would customers return? And if they did, what would they want? How would it mesh with digital behaviors accelerated by the pandemic?
According to the National Restaurant Association, nearly three years removed from COVID’s onset, 16 percent fewer people are dining on-premises than before. Yet the Association claims the gap has been entirely covered by off-premises business. Delivery is 5 percent higher than 2019 and carryout 3 percent lower. Drive-thru, however, sits 13 percent above pre-COVID marks and today accounts for 39 percent of all restaurant traffic, per an article in The Washington Post.
There’s little debate the pandemic trailed a disrupted and changed sector in its wake. But there is room to ask whether it was the asteroid some predicted. Data from Revenue Management Solutions showed, among revenue channels, drive-thru turned in the worst year-over-year performance at 10.2 percent in November, lower than the year-ago period. In fact, month-over-month drive-thru trends have held stable since May 2022. Meanwhile, dine-in climbed 29.6 percent in the month after growing 37.1 percent in October. Takeout was 20.6 percent higher and delivery 11.5 percent, although that, too, has declined versus previous months.
This illuminates what could prove a lasting view of post-COVID foodservice: Higher drive-thru usage than 2019, but with an arrow that’s leveled out; sustained preference and interest in off-premises streams; yet with clear evidence one of 2020’s doomsday predictions turned out to be a prisoner-of-the-moment reaction.
“We always felt the demise of the dining room was greatly exaggerated,” Schulman says. “It wasn’t an either or; it was an ‘and.’”
The future is choice
All of CAVA’s channels have grown “significantly” over 2019, Schulman says. As a percentage, digital is off its peak, but the dollars have grown—a common reality these days. The mix of digital slid as in-restaurant business rebounded. At CAVA, roughly 63 percent of its sales currently are dine-in.
“I think what we all learned through the pandemic was we are social beings. We’re humans,” Schulman says. “We love connection. We long for that connection.”
Socialization has been the heartbeat of hospitality for as long as it’s existed. What’s changed now are the terms. Making food available where and when a guest wants has become the table stakes of convenience. And that doesn’t exclude the dining room.
CAVA opened 83 locations in 2022 (including conversions of Zoës Kitchen venues) in seven new states and 10 fresh markets. It also debuted seven digital drive-thru pick up lanes to bring its total to 17.
Those drive-thrus began hitting the field in 2019 as a way for suburban customers to gain greater access to the brand. Schulman, as a father of three, understood the limitations of guests who didn’t—or couldn’t (car seats)—get out of their vehicles to pick up food. The locations boast dedicated second digital makelines for the pickup window as well as in-restaurant serving lines for dine-in customers. “Guests love the optionality of both those channels,” Schulman says, “depending on what their need is on a given occasion, time of day, lunch or dinner.”
A melding of two worlds is taking shape across quick service. Restaurants are rewiring their digital ecosystems and building infrastructure to manage order flow. CAVA directs its own digital order platforms that it built internally. There are capabilities now to throttle so restaurants can serve how many orders they’ve received in a given timeframe, “so that they’re not just drinking from a firehouse,” Schulman says. Simply, the ability to put a time of pickup on an order confirmation for guests and actually deliver against that promise.
And where this is connecting coming out of COVID is from a format perspective; how brands are orienting their kitchen production to meet physical and digital demand catered to whatever the trade area requires. “That can come to life in many ways,” Schulman says.
Imagine New York City CAVAs without in-dining seats, but with multiple digital makelines alongside an in-restaurant serving one. Or a suburban venue with 80 seats, two makelines, and a pickup shelf. Even more, a digital drive-thru pickup lane with a dining room. CAVA has taken things a step further, testing a “digital kitchen” and a “hybrid kitchen.” The latter, slated to open in Vienna, Virginia, serves dine-in guests (there’s a big office market there) and also touts expanded catering production and digital order capabilities. CAVA’s digital kitchen is strictly for digital order pickup as well as catering—a channel the brand has been building behind the scenes recently.
“This format diversification and optionality gives us increased flexibility from a real estate standpoint to flex up and flex down depending on the needs of the trade area,” Schulman says.
The Next Gen of Design
Over the summer, Wendy’s CFO Gunther Plosch relayed a story to investors. He had just walked through the brand’s “Global Next Gen” prototype. “Finally,” he said, “we are embracing digital in our design.”
Wendy’s began building traditional units under this banner last fall. Arguably, the blockbuster feature was a delivery pickup window built on the outside of the unit. It’s a feature that doesn’t replace the drive-thru (that’s still live) but rather creates a dedicated handoff point, complemented with paired parking, for order-ahead customers to grab food to go. Namely, the window will keep delivery couriers out of the dining room and shift traffic from the drive-thru line. In addition, Wendy’s devised dedicated mobile order pickup spots, with mobile pickup shelving inside.
In-store, Wendy’s built a galley style kitchen that runs from the front to the back of the restaurant and increases oversight for employees regardless of what channel they’re working on; better efficiency at the point of sale and the ability for workers to slide between positions. Or, as Plosch put it, “way less steps to get all of your tasks done.”
In essence, Wendy’s goal mirrored CAVA’s in many ways: Reduce friction for consumers and crews, and develop an experience where digital and in-store don’t detract from each other. It’s not so much about creating harmony between the two as it’s providing tools for each to operate seamlessly.
Wendy’s president, international and chief development officer, Abigail Pringle, says the Global Next Gen restaurant is conceptualized to handle 400 times the digital capacity of the chain’s current volume. “Technology powers everything from the point of sale, grills, to the new back-office platform designed to streamline general manager tasks,” she says. On the grill note, she’s referencing Wendy’s DSG 2.0 grills that speed cook times from 155 to 80 seconds and provide even cooking.
The exterior walk-up window, Pringle adds, will address Wendy’s off-premises and digital growth. In Q2, digital comprised just over 9 percent of overall domestic sales, up 2.5 percent, quarter-over-quarter. This as total loyalty members and monthly active users grew 5 percent versus Q1, exiting the period at record highs.
However, it’s also a signal to Wendy’s dine-in customer. Removing delivery traffic from the drive-thru will speed up in-store service, too, Pringle says, “benefitting customers with shorter wait times in line.” The same is true of redirecting delivery order traffic away from the front counter. “This ensures the crew are focused on taking and fulfilling dine-in customer orders quickly, efficiently, and accurately,” Pringle says. “Less traffic at the POS also makes it easier for our digital customers to quickly locate their orders on the new integrated front counter grab-and-go shelving.”
What it all does, dressed down, is make it easier for employees to focus on creating positive guest experiences, and to humanize what’s become a transactional event in countless quick-service circles.
“Dine-in service looks different than it did just a few years ago, and customer preferences have changed,” Pringle says. “To meet our customers where and how they want to enjoy Wendy’s, we offer a variety of ordering options including through kiosks and the Wendy’s App. For those customers who order ahead, mobile pickup spots and grab-and-go shelves make it quick and easy to retrieve orders. These options allow customers to interact with us using the platform of their choice.”
At this turn in the COVID bounceback, Pringle says drive-thru remains strong. The pandemic heightened a shift the brand was already seeing, and which has been widely true across quick-service’s largest players—a migration from dine-in to drive-thru. She anticipates preferences for mobile ordering and delivery to continue growing. But even so, it’s not a point that’s going to pull focus from dining rooms altogether. Wendy’s sees the landscape as an opportunity to bring more Wendy’s to more people in more ways, Pringle says, and use those channels to inspire future visits. “With each technology advancement, new partnership, and market entry, we’re continuously optimizing the way we serve our customers,” she says.
The segment definition
Shake Shack launched what it terms “Shack Track” at the start of the pandemic. CFO Katie Fogertey says the brand saw how many of the fast pivots from the early days of COVID had become permanent functions, including implementing multi-channel delivery, enhancing digital pre-ordering, and expanding Shake Shack’s fulfillment capabilities. Shack Track wasn’t a one-face solution—it’s an acknowledgment of the choice guests now have.
Shack Track includes pickup shelves, curbside pickup, pickup windows, and drive-thru units, of which 11 operated as of January, with 10–15 more on deck for 2023. “The need to enhance and alter the physical restaurant to meet the needs of digital was so important to Shake Shack that today, all new restaurants we open have some aspect of Shack Track,” Fogertey says.
This is an especially revealing development at a fast casual like Shake Shack, which was founded by Michelin-starred restaurateur Danny Meyer. Once the chain evolved from hot dog cart to brick-and-mortar, it crashed preconceived notions of what quick-service experience could look like for a changing generation of consumers. More inviting and modern elements. Agile real estate. Food that took a bit longer to come out but sold its product on ethos and quality.
None of those playbooks have wilted; Shake Track is just the manifestation of what Fogertey calls, “convenience without compromise.”
“Shack Track aims to tackle many challenges that have arisen from building a rapidly growing digital business while maintaining our commitment to the traditional dine-in business,” she says. “We wanted to be able to provide our restaurants and team members the tools to best handle the increase in digital sales. We worked hard over the past two-and-a-half years to identify opportunities to improve the overall omnichannel guest journey as well as the work of our team members.”
Like others, Shake Shack watched off-premises surge across 2020 and into 2021. But its gains today are coming from customers walking into stores, Fogertey says. “Which is great for our business.”
And thanks to investments made outside the four walls, the Shake Shack customer today has more points of access than ever. Guests can download the app and skip the line. Ordering ahead for pickup has proven a sizable time saver, Fogertey says. It streamlines what’s often a busy and crowded order line as well. “This also provides us with a unique opportunity to communicate with our guests on a much more personal level that we didn’t have prior to our digital business,” she says.
Last year alone, Shake Shack appreciated more than a million app downloads. Come Q3, 4.5 million guests had made a first-time purchase in the chain’s owned digital channels. “But, our digital journeys go beyond the app,” Fogertey says. “We also anticipate seeing more guests interacting with our kiosks. A good portion of guests prefer them over traditional cashiers when given the choice, as they’re fun to explore and visually helpful when it comes to customizing a menu item. Our app and kiosk are also helpful tools for our team members, as they allow our team members to focus more on guest service and hospitality.”
Let’s circle the kiosk note. Shake Shack announced in Q3 it planned to put kiosks in every location by the end of 2023. At that point, about half of stores had them. Kiosks represent Shake Shack’s most profitable channel and produce its highest in-store checks. Restaurants with kiosks also boast better labor utilization rates than those without.
Fogertey says kiosks give Shake Shack a lever to lean on to streamline labor and address the front-of-house opportunity. Internal data shows a “good portion” of guests prefer them over traditional cashiers given the option. In many units, Shake Shack has five or six kiosks alongside one or two cash registers.
Does this offer a model of another quick-service dining room of tomorrow? The easy answer is, it depends. To Fogertey’s point, you have to see how customers react. She’s watched many guests walk in and go right to the kiosk. They tell the brand they enjoy the ability to sit with the menu and page through. Shake Shack saw this translate through orders as kiosk users tacked on premium offerings. Guests viewed LTOs and navigated order flow with upsell throughout. “We’re having a burger, we’re going to have our shake and our fry and our lemonade,” Fogertey noted earlier. “And they can visually see all of that.”
“Our digital team developed a kiosk experience that helps guests navigate our menu and premium add-ons more easily for some than the traditional menu board,” she says. “… Kiosks also help our team members be more efficient and, over the long term, our investments will allow us to expand our digital and omnichannel ecosystem.”
More than anything, it’s become a conversation that considers all parts to the equation. Digital can unlock ways for brands to provide experience through improved levels of access, convenience, and connection. “Hospitality is at the center of everything we do at Shake Shack,” Fogertey says. “That used to be limited to just in-Shack. Now, with digital tools and more channels, we are focused on delivering hospitality across the omnichannel.”
One size doesn’t fit all
Something that also can’t be disputed about COVID’s harshest stretch, when dining rooms went dark, is that quick-serves discovered labor optimization through digital means.
Zach Flanzman, president and COO of 17-unit Brown Bag Seafood, says, despite the chaos, the fast casual was never as efficient as it was during that rocky period. You could manage an entire operation with three people in the kitchen.
“So coming out of COVID, it’s a hard shift to go back to accepting a higher labor figure when we had gotten used to running things really efficiently,” he says. And that’s not to mention the continual climb in labor costs these days, from what it takes to recruit to hourly pay and broader benefits.
It’s why, Flanzman says, it makes sense for a lot of brands to divest a bit from the in-store experience and let customers have a second-fiddle experience in favor of digital traffic.
“I think, largely, it’s what has created a situation where we now see many brands find their way into a middle ground where they accept the fact the guest experience in-store is not what it used to be,” he says. Some brands, he portends, are even being deliberate about diminishing dine-in so guests will head to digital channels.
With that in mind, Brown Bag went the other direction. The company has a culture card called “10 out of 10” that’s clear from day one of orientation and throughout training, from dishwasher to manager. It’s an uncomplicated notion that guest experience comes first. Flanzman says Brown Bag consciously, at times, sacrifices financially to make this happen. “Could we take a couple of bodies out of our stores if we were willing to sacrifice that? Absolutely,” he says. “But in general, we still believe the in-store experience is extremely important to maintaining loyal guests and, for that matter, our business flow.”
It starts with a realization that Brown Bag’s dining room is its best customer acquisition tool. If Flanzman wanted to impress a guest, he’d bring them inside and let them experience the circular offering. What the store smells and looks like, how the food presents coming out. The effect is far different than getting a bag dropped off on your doorstep, or even taking food from the counter and racing back outside.
“I trust our team. I trust our operations. I trust the dining rooms. I trust the atmosphere,” he says. “Everything, to actually lend to that experience and enrich it versus just having a quick pickup order.”
On a weekly and monthly basis, Brown Bag measures those “10 of 10” traits and informs teams how they’re doing. Unlike Shake Shack, Flanzman doesn’t see kiosks vibing with what customers expect of Brown Bag. He wants people to be able to grab a laptop and sit down, and know they’ll engage with employees from start to finish of their visit. There’s no assembly line at Brown Bag, so the idea of customers seeing digital orders prioritized isn’t as much a visual concern as it’s an operational one. Brown Bag has settings on its KDS and different ticket time goals for off-premises orders. Employees are trained on prioritization, which generally means third-party delivery or digital orders are placed under in-store. The latter are the only ticket times Brown Bag measures, tracks, and evaluates operations on.
The fast casual’s in-store and off-premises business splits evenly. That’s hardly an easy mix to manage but it comes down to setting the bar where it needs to be set. “It’s a question of, do we care? Or are we OK that the bar has lowered because there are financial benefits of [off-premises] and customers are ordering more online now and most of them don’t care?” Flanzman says. “If they come in-store, are we just willing to accept the fact that they’re not? Are they going to have a fantastic experience? Maybe we can give them an OK experience? That’s not how we think about it.”
The brand DNA
One of the defining elements of Roy Rogers is its Fixin’s Bar, stocked with fresh sliced vegetables and other adds. When COVID’s impact pulsed, the brand closed the buffet-style feature and instead allowed customers to request a “Fixin’s Cup” just as they would condiments or napkins.
Roy Rogers co-president Jim Plamondon says the decision was made like so many those days—“I was thinking, ‘how do you get past the next day?’” he recalls.
Plamondon wasn’t sure if it would come back, evolve, stay as a to-go product, or, really, what might await. But accelerate to 2023 and the Fixin’s Bar is alive and well. What this proved to Roy Rogers and countless chains navigating a post-pandemic picture is customers might have taken on new behaviors or come to expect others, but many of the reasons they went to restaurants in the first place haven’t changed.
[float_image image=”https://qsrwp.fantasktic.com/wp-content/uploads/2022/05/deweysbakerypeanutbuttercookie.jpg” width=”40″ link=”” caption=”Roy Rogers’ Fixin’s Bar was one of the first things customers clamored for when dining rooms reopened. ” alt=”Dewey's Bakery Now Has A Peanut Butter Cookie” align=”left” /]
During the pandemic, Roy Rogers’ drive-thru accounted for 100 percent of sales. It dropped to about 70 percent when dining rooms first reopened and is now settling in the high 50 percent range. So in-store represents roughly 30–35 percent of business. Pre-COVID, drive-thru was about 50 percent. While dining rooms aren’t quite where they were previously (you have to factor delivery and pickup into the equation now) it’s unequivocally a noteworthy percentage of Roy Rogers’ take.
A good example? Look at the Fixin’s Bar again. Initially, Roy Rogers opened one side since that’s all guest traffic supported. Both are open today and customers are coming in just to access it.
Plamondon says it’s as clear now as it’s ever been that Roy Rogers’ brand and experience is different from large-scale peers like McDonald’s and Burger King—chains that boasted 70 percent-plus business through the drive-thru lane prior to the crisis.
“We’re still about hospitality. I think that’s what sets us apart. We have higher quality food. And then I think our associates and our people are nicer and continue that relationship with the guest and not just funnel everything through technology,” he says.
Plamondon admits it’s become more difficult to provide exceptional guest experience amid the labor shortage. Roy Rogers is staffed in the mid- to high-80s at the hourly level. The brand has paid signing bonuses for crew members, which it’s never done before—something Roy Rogers stages over time to ensure employees stick around.
For some managers, the brand is paying $3,000–$5,000. “That’s just the way of the world,” he says.
But like Brown Bag, labor is a cost Roy Rogers is willing to dig into its coffers for to ensure it doesn’t blend in with the fast-food field. “We make it a really important point to be able to hire people with social skills. We call it the ‘Spirit to Serve,” Plamondon says.
In October, Roy Rogers lifted the lid on a new design. The model keeps the brand’s nostalgic look but spins modern with natural wood, neutral colors, and warm lightning.
Inside, there’s updated tech, including new electronic menuboards and LED fixtures. Countertops were expanded and some items removed to allow for more drive-thru. Roy Rogers is also implementing digital menuboards in the lane as well.
The dining room menuboards have made a big splash since it enables restaurants to advertise the menu according to the daypart. When it was static, units had to showcase breakfast, lunch, and dinner all at once. Now, with digital, they can devote entirely to whatever’s featured (breakfast in the morning, etc.) There’s less clutter, more pictures, and an ability to highlight LTOs.
And in another switch seen throughout the industry of late, the new build is smaller inside. Quick-serves are moving toward this scaled-down footprint for myriad reasons. One is the acceptance digital is taking up a larger portion of the business. So a bigger kitchen makes more sense than a larger dining room. The other is to improve ROI and create buildings that can fit on more compact parcels of land. It’s become increasingly difficult for restaurants to chart larger locations since land is more expensive and rarer to come by.
All said, the dining room at Roy Rogers isn’t going anywhere “because of who we are,” Plamondon notes. “And we’ve always had a nicer environment in our dining rooms. And I really mean that. I’m not just saying that this from a brand speak,” he says. “… When we do remodels, we really make sure that the environment is nicer. You see people who are there to engage with one another. You see more groups of people, families.” One hallmark feature is communal tables, which are in every restaurant.
“We feel like our place is more like a bar,” Plamondon adds. “It’s like ‘Cheers,’ where people come and spend a little bit more time eating and staying there and using the Fixin’s Bar. It’s just different.”
The habitual occasion endures
Count Scott Snyder, the CEO of Bad Ass Coffee of Hawaii, among those operators who feel the death of dine-in was premature. Need proof? Snyder turns to, of all places, Taylor Swift. Her Eras Tour sent Ticketmaster into shambles, even leading to some fans filing a class-action lawsuit against the company. Regardless of the logistics or controversy, it sent a pretty clear message, Snyder says. “People want to gather again, and in big numbers,” he says. “They want to be with other people. And coffee being such a social and communal sort of product and experience, we think it’s important.”
In no arena is this experience versus convenience query surfacing more than coffee. What does the “third place” even look like anymore? Mobile order and pay and delivery drove 72 percent of Starbucks’ total sales volume in North America in Q4, with delivery accounting for more than 4 percent of sales—up 35 percent year over year. Some 90 percent of new store growth going forward will include drive-thrus.
Perhaps it was coming already, but definitely thanks to COVID, Snyder thinks the “third place” will become a less prominent feature in coffee shops across America. Internally, the Bad Ass team debated what this might mean and why it was unfurling. “What we’ve come up with is there are so many people working from home now that when they come to the coffee shop in the middle of the day, it’s a rest,” Snyder says. “That takes us back to the café, right? They want a place. They’ve got to get away from the computer; get out of the living room or their study. So when they come to the café, it’s a rest, an escape. They want to sit down and enjoy the meal.”
Back in August, the morning daypart was mixing 51 percent at Starbucks, with 65 percent of it occurring before noon, above pre-virus results. That quarter (Q3) marked the fifth consecutive period of positive comps growth in the a.m. But even with routines snapping back and morning occasions returning, it’s clear coffee has evolved from just a habitual segment to one that’s providing the break and indulgent treat Snyder referenced. Case in point—the rocket ship that is cold coffee, which accounted for 75 percent of Starbucks’ beverage sales in that same period.
For Bad Ass, Snyder wants to find the balance quick-serves today are looking for. Dining rooms are getting smaller and the brand is opening more drive-thrus. Yet, again, it’s not forgetting about what happens inside.
“Is the [café] going to be in all of our stores? Nope. But we still think that’s an important element. Especially in store locations that serve as the hub of that community,” Snyder says.
And it brings up a broader goal of making sure experiential brands flood every opportunity with their core equities. Whether somebody is rolling through the drive-thru or grabbing to go, they’re greeted with the same “aloha” that’s critical to the Bad Ass mantra.
“From our standpoint, we’ve never thought that the café was dead,” Snyder says. “I think that has a lot to do with what type of brand we have. Are we adapting? Of course we’ve adapted. We designed models for pure convenience and for throughput, and for drive-thru. Or for walk-up windows. But our core business is still about our heritage, Ohana, family.”
Bad Ass has a double-drive model and a modular version it’s working on that would combine the drive-thru as well as dedicated parking spots out front for curbside. Some will flex the ability to have outside or even rooftop café seating. Models, Snyder says, built to meet the needs of guests and also the needs of the location.
Yet that brand purpose will translate throughout and along the same lines repeated by operators in this story. The restaurant customer has not been shy about what they expect barreling into a fresh era of quick service. “It comes down to, do people have a choice?” Snyder said.