COVID-19 shutdown mandates have dealt a knockout punch to the restaurant industry. Some states are beginning to allow inside table service but limiting seating capacity to 25-50%, which will not be sustainable for restaurant operators. But QSRs (Quick Service Restaurants) are managing to capitalize on their strengths of digital ordering and drive-through, as evidenced by McDonald’s and Chipotle. Further, pizza shops like Domino’s and Papa John’s use delivery as a way to push orders out the door. Mercator’s recent blog Severe Merchant Distress from U.S. Shutdown — but Not Without Hope to Recover, discusses how the 3Ds: digital, delivery, and drive-up, offer a way for restaurants to make it through the pandemic.
The following Wall St. Journal article reports more on this topic which is excerpted below:
Not even the full force of a global pandemic can keep U.S. fast-food sales down for long. After mandatory closures and social-distancing orders ground the restaurant industry to a halt in March, sales at quick-service chains have begun to improve noticeably.
Chipotle Mexican Grill, which saw its share price reach a record high on Monday, said last month that comparable restaurant sales fell 35% from a year ago in the final week of March but that the decline improved to the “high teens” as April progressed. Chipotle Finance Chief John Hartung told analysts last month that online sales tended to recur since the customer had already saved order and payment information in a mobile app. Those sales more than doubled in April as on-site order rates plunged.
Serving customers is a challenge with dining rooms closed. Fast-food concepts can adjust far more easily than sit-down restaurants, though. Having an existing drive-through infrastructure certainly helps too: McDonald’s said last month that about 90% of recent U.S. sales have been via the drive-through. In normal times, it accounts for about two-thirds of sales.
Overview provided by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group.
