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Daily news and analysis about the food tech revolution

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Requiem for the Dining Room

Welcome to our weekly restaurant tech newsletter. Sign up today to get updates on the rapidly changing nature of the food tech industry.

At one point most figured it would take about five to 10 years for off-premises to become the industry-wide norm in the restaurant biz and for QSRs to change their store formats accordingly. Instead, those changes around restaurant store formats have unfolded in a matter of months and are soon to be everyday realities.

Ever since Burger King unveiled a new store design with space-saver kitchens suspended over drive-thru lanes and conveyor belts handing food to customers, we’ve seen a non-stop stream of announcements from fast-casual and QSR restaurant with similar plans. Two more chains joined the list this week — El Pollo Loco and La Madeleine. But rather than simply list the new features slated for those brands’ revamped store formats, it’s now worth our while to comb through all the major announcements in this realm and find the common denominators driving these new store formats. There may be a lot of unknowns in the restaurant industry right now (aka everything), but the following developments give us a pretty good hint at some certainties for the future.

With the biz going virtual at a blinding clip, it’s only natural that future store designs will have a smaller physical footprint. From the aforementioned Burger King to El Pollo Loco, more brands are significantly reducing the size of their dining rooms or getting rid of them altogether. The fast rise of ghost kitchens, which cater to takeout and delivery orders only, is partly responsible for this trend. The pandemic and ongoing lockdowns across the country are an even bigger driver, and one that’s accelerated the timeline of these smaller store formats.

But of all the concepts fast becoming the norm for QSRs, it’s the multiple-drive-thru-lane scenario — that is, stores are being designed with double and triple lanes (or more) to accommodate the uptick in customers. KFC, McDonald’s, Chipotle, El Pollo Loco, and Shake Shack are some of the top names on the list of restaurant chains literally expanding their drive-thrus. La Madeline is actually adding drive-thru for the first time, and Dunkin’ was doing the whole multi-lane concept long before the pandemic. There’s a good reason for the widespread emphasis on this particular format: with the pandemic keeping us out of dining rooms and in our cars, the length of time one spends waiting in the drive-thru is getting longer.

Anecdotally speaking, I’ve visited three drive-thru lanes in the last week where the wait time was longer than 20 minutes. (Joke’s on me for staying in line that long.) More lanes, some of them dedicated to mobile order customers, will go some way to alleviate this problem. More commonly used developments, like extra parking spaces for curbside pickup and geofencing technologies, could also reduce some of the drive-thru congestion.

Meanwhile, predictive selling technologies aren’t widespread at the moment, but they will be. McDonald’s was first to put this concept — which involves using AI, machine learning, and other tech to analyze customer preferences and upsell relevant items — on the industry’s radar when it acquired Dynamic Yield. Over the last few months, Restaurant Brands International, which owns BK, Tim Horton’s, and Popeye’s, announced plans to use something similar in its drive-thrus, and KFC has hinted at using AI as well.

While predictive selling tech doesn’t directly alter store formats, it expedites channels like pickup and the drive-thru, which are integral parts of the QSR of the (near) future. It’s also a good example of how technology will influence the physical restaurant going forward. Tech that makes off-premises channels faster and more efficient will help drive more sales through those channels. That in turn will make those off-premises channels more valuable than their dining room counterparts, both now, during lockdowns, and long into the next decade. That makes these new developments in store formats less of a trend than a really big step into the restaurant industry’s next version of normalcy.

Upcoming Event: The Ghost Kitchen Deep Dive

Is now the right time to adopt a ghost kitchen strategy? The epic fallout of the restaurant industry suggest yes, but before you take the plunge, there are many things to consider. How much will it cost? What kind of set up do you need? How do you scale a virtual restaurant business?

Join The Spoon on Dec. 9 to discuss these things and more at our latest virtual event, The Ghost Kitchen Deep Dive. Throughout the day, we’ll be joined by Reef, Kitchen United, Ordermark, Fat Brands, Wow Bao, and many other companies enabling big changes in the ghost kitchen space.

General admission is free. Register for a Gold Ticket and get special networking opportunities, a month of free access to Spoon Plus content, and exclusive live tours of some real-life ghost kitchen operations. 

Restaurant Tech ‘Round the Web

California imposed new stay-at-home orders for certain regions in the state late this week. Looks like it’s back to takeout- and delivery-only meals for Golden State restaurants for the foreseeable future.

Uber completed its $2.65 billion acquisition of Postmates this week, and the two companies have started to integrate their U.S. operations.

Restaurant tech platform Allset this week launched a new feature, Dietary Preferences, to its takeout and contactless dining app. Customers can add their dietary needs and preferences as well as any food allergies to their search to further refine results on the app.

KFC Is the Latest QSR to Ditch the Dining Room in Favor if Digital Drive-Thru

KFC unveiled two new designs today for future stores that emphasize off-premises order formats and minimal dining room space, according to Nation’s Restaurant News. The Louisville, Kentucky-based chain is the latest major QSR to revamp its store format in response to the pandemic’s impact on the restaurant industry.

One design is for an “express” store format with no indoor dining space. Clocking in at about 1,300 square feet, the design is intended for use in crowded urban locations where space is both limited and expensive. This is a tactic also used by chains like Starbucks and, most recently, Chipotle. 

KFC’s other design is all about the drive-thru, which the company said grew 60 percent year-over-year in Q3 of 2020. The format includes multiple drive-thru lanes, including those dedicated to mobile orders, a small outdoor seating area, and designated parking spots and entrances for customers and delivery drivers picking up digital orders.

These new prototypes have actually been in development since last year. Chief Development Officer Brian Cahoe told NRN today that the company hit the “pause” button on these projects when the pandemic hit in order to learn and apply new requirements the pandemic would bring to the restaurant experience.

More obvious safety measures are one thing. The new KFC stores will include automatic doors and more space between tables. And of course, with the emphasis on digital ordering, a more contactless pickup or drive-thru experience is also on the menu. The company said some stores would also have a digital cubby system in future.

The QSR has in the last couple months become ground zero for testing out new restaurant tech. Besides digitizing the drive-thru, which everyone from McDonald’s to Tim Horton’s is doing, brands are introducing features like geofencing, conveyer belt meal delivery systems, and AI-powered menu boards to the restaurant experience. Many are also ditching the dining room in favor of drive-thru-only locations and ghost kitchen facilities. 

KFC will open three new restaurants based on these prototypes in 2021. 

McDonald’s Is the Latest QSR to Embrace the Drive-Thru-Centric Restaurant Format

At its McDonald’s 2020 Virtual Investor Update today, McDonald’s unveiled a long-term growth strategy that includes a new loyalty program, more AI and machine learning in the drive-thru lane, and revamped formats for future locations. 

At the Update, which directly followed the company’s Q3 2020 earnings call, CEO Chris Chris Kempczinski and several other presenters outlined the pieces of this new strategy, dubbed “Accelerating the Arches.” 

Technology will play a huge role in future growth, particularly where the drive-thru is concerned. In 2019, the company acquired Dynamic Yield, whose tech can show menu options based on external data, such as the weather or traffic patterns in the area, and is currently installed at about 12,000 McDonald’s locations. At the time of the acquisition, McDonald’s suggested this system would eventually be able to make recommendations based on more personalized preferences and order history for each individual customer. Deploying that capability to the drive-thru lane is now part of the Accelerating the Arches plan (though there’s no definite timeframe).

Also in 2019, McDonald’s acquired voice-tech company Apprente. Some McDonald’s franchisees already have an Apprente-powered voice assistant taking orders, rather than a human being. Experts say Apprente could be ready to scale across the McDonald’s system as early as next year.

Other updates to McDonald’s drive-thrus will include express lanes for digital orders and a conveyor belt that delivers your food without the need for human-to-human interaction. 

Wait times at the drive-thru have progressively increased over the last several years, and the latest data shows that total wait time in 2020 was about 30 seconds longer than 2019 across the QSR sector. Add that to the pandemic-related need for more contactless ordering and more efficient ways of fulfilling off-premises orders (i.e., those outside of the dining room), and it’s no wonder reinventing the drive thru is at the top of the priority list for many QSRs. Burger King also envisions a conveyer belt in the drive-thru, and in terms of more AI-enabled tech and dedicated drive-thru lanes for digital orders, everyone from Dunkin’ to KFC is exploring options.

Like some of those other chains, McDonald’s is also rethinking the physical layout of future stores. Even before the pandemic started its latest streak of record-breaking case numbers, QSRs were doubling-down on off-premises formats and calling into question the future of the dining room. Many, including Burger King and Wendy’s, have announced drive-thru-only restaurants for the future. McDonald’s said at today’s investor Update that it is considering a store format that is just a kitchen serving drive-thru and pickup orders.

Finally, the company will launch a new loyalty app called MyMcDonald’s by the end of next year. McDonald’s today also announced McPlant, its own line of plant-based meats, which will be testing in markets in 2021. 

While all of these efforts are features and initiatives many brands are exploring, McDonald’s sheer size (nearly 40,000 restaurants worldwide) and inevitable influence over others could greatly accelerate the rollout of these technologies into the mainstream.

Burger King, Popeye’s to Modernize Their Drive-Thrus With More Tech

Restaurant Brands International (RBI) announced today its plans to “modernize” the drive-thru at more than 10,000 Burger King and Tim Horton’s locations in North America by 2022. Additionally, a drive-thru modernization for Popeye’s, also owned by RBI, will kick off later this year. 

RBI first hinted at this development back in February. Most of the updates and changes are around the digital menu boards on display in drive-thru lanes. These menu boards will be equipped in the future with “predictive selling technology” built in-house that can learn consumer purchasing habits and make recommendations based on those as well as factors like current weather and traffic.

These new menu boards will also incorporate loyalty programs and contactless order/payment features, with the latter being developed in partnership with Verifone. The first prototype of this order/payment integration is currently testing at a Tim Horton’s location in Canada. An additional 15 locations are set to test it by January 2021. 

RBI notes that it already has a number of these newly revamped menu boards installed at its restaurant brand locations: 800 at Tim Horton’s locations in the U.S. in Canada and more than 1,500 at Burger King in the U.S. As noted above, Popeye’s will start to incorporate them into its drive-thru layout later this year.

Making menu boards more dynamic is just one way QSRs are modernizing their drive-thrus to make them faster, more efficient, and more contactless. That modernization, while broad in terms of real-world application, is necessary now that the pandemic has forced the restaurant biz to go off-premises. Drive-thru times are about 30 seconds slower right now than they were in 2019, a lag QSR Magazine says equates to lost revenue, typically around $64,182,668 annually per 2,000 stores. That’s a lag restaurant chains will have to fix in order to remain competitive, since the future of the dining room still hangs in the balance (because pandemic) and drive-thru sales can account for up to 70 percent of a chain’s overall sales.

Efforts from other restaurant companies of late include full-on pivots to drive-thru format from the likes of Shake Shack and Chipotle as the companies add more lanes and increase mobile order-ahead functionality for this format. KFC is exploring license plate-recognition technology, and of course there is McDonald’s Dynamic Yield technology that’s currently installed at thousands of the chain’s locations.

RBI actually has much more than menu boards up its sleeve when it comes to modernizing the drive-thru. The company recently showed off a Burger King prototype that features a conveyor belt system for delivering food to cars and a kitchen built over the drive-thru lanes. Undoubtedly, some of the ideas embedded in that prototype will make their way to other RBI brands and locations in the future.

Contactless: ‘Easier Said Than Done’

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Achieving a contactless restaurant experience when it comes to the drive-thru lane is easier said than done, according to QSR Magazine’s 2020 Drive-Thru Study, released today in partnership with SeeLevelHX.

Every year, QSR Magazine’s study looks at various aspects of drive-thru performance, from speed of service to order accuracy to the effectiveness of digital menu boards. This year’s study includes all of those things as well as some elements that wouldn’t have made it in there if not for the COVID-19 pandemic.

The so-called contactless restaurant experience is one of them. If you follow the restaurant biz or are a regular reader of The Spoon, you’ll know that restaurant tech companies large and small have lately been championing software that enables contactless ordering and payments. Instead of a customer and staffer passing a credit card back and forth, guests order and pay from their own mobile phones. 

That goes some distance in keeping unwanted germs at bay, but as we’ve said before, there’s no such thing as a truly contactless restaurant experience right now. And as QSR’s data suggests, there’s no such thing as a truly contactless drive-thru, either. 

The survey found that 80.1 percent of all drive-thru orders were handed to the customer directly by the employee. In 16.4 percent of the cases surveyed, the order was placed on a tray. Rounding out the math, 1.3 percent of orders were placed on a window, and 2.2 percent were labeled “other.” Use your imagination. 

QSR’s survey found that 78.1 percent of employees wear gloves at the drive-thru window, while 91.3 percent wear masks. But the survey’s basic conclusion to all of this is that contactless “proves easier said than done” when it comes to the drive-thru lane.

Unlike a physical restaurant space that can be altered to make room for pickup shelves or lockers, there’s not much in the way of architectural adjustments a drive-thru window can absorb that would make much sense. And actually, one could argue that too many alterations done in the name of contactless service would just confuse things, slow down service, and impair order accuracy. 

If the restaurant industry wants a truly contactless drive-thru experience, it’s going to have to do some major overhauling when it comes to the design of the drive-thru process. Burger King hinted at this a while back with its new restaurant prototype that includes a conveyor belt system for retrieving food and a good deal of re-architecting of the physical store layout, among other things. That’s the first of what will likely be dozens more examples over the next year of what the drive-thru of the future will look like. As to whether the industry can ever achieve one that’s truly contactless, stay tuned.

Device of the Week: TableYeti’s Virtual Tip Jar

Besides having the best company name I’ve heard of in a while, hospitality payments company TableYeti also makes a virtual tip jar product called the “Tap to Tip BOX.” The device, which is powered by TIPJAR’s software, can be mounted to a wall, placed on a countertop or stationed at any other location in a bar or restaurant that’s highly visible to customers. 

On its website, UK-based TableYeti says the BOX is meant to replace TRONC, which is the tipping pool system used in many bars, cafes, and restaurants around the country. Essentially it’s the digital version of the big jar of cash you’ll find next to many cash registers at eating and drinking establishments. Instead of dropping a few bills into the jar, you tap a credit card.

It’s a compelling product in this day and age when so much of the restaurant biz is going digital. It also comes at a time when the concept of a virtual tip jar is a little more widely known, thanks to various efforts to help restaurant industry workers during the height of lockdown. TableYeti’s product joins multiple other iterations of this idea, not just in the U.K. but all over the world.

TableYeti’s BOX is only available to U.K. businesses at the moment, though a U.S. equivalent is bound to surface at some point in the near future as restaurants get further digitized and cash gets increasingly less popular.

More Restaurant News

Food ordering platform Olo this week launched Serve, a revamped version of its ordering platform restaurants can use to consolidate order flows and manage their digital storefronts. The redesigned platform, which Olo says enables faster ordering and checkout and higher conversion rates, is available to all restaurant customers using the Olo platform.

Fast-casual chain Fazoli’s put something of a twist on the dark kitchen/virtual restaurant concept this week. The chain had been using some of its restaurants as dark kitchens to test a delivery-only chicken wing product. Said product has proven to be so popular Fazoli’s said this week it will now go on the chain’s regular brick-and-mortar menu. Which just goes to show you that the definitions of “ghost kitchen” and “dark kitchen” continue to evolve.

Taco Bell just launched the “Taco Gifter” on its website and mobile app that lets users, uh, gift tacos to one another. Pick an item, pay for it, and T. Bell will generate a unique URL the recipient can use to retrieve the order. Somehow I suspect this will be popular with those who need last-minute gift ideas for the holidays.

Drive-Thru Times Are almost 30 Seconds Slower in 2020

Around this time last year, we asked whether tech could help drive-thru wait times, which have steadily grown longer over the last couple decades. Tech certainly tried to help this year, as evidenced by the endless updates from QSRs on their new drive-thru innovations. But as QSR Magazine’s just released 2020 Drive-Thru Study shows, wait times are actually longer this year than last.

While service time — that is, the time it takes between placing an order and retrieving it — was actually a little faster in 2020 (238.1 seconds compared to 255 seconds in 2019), total wait time in the drive-thru lane is up. Total times across all brands were 29.8 seconds slower than last year. As today’s press release summarizing the report notes, “slower wait times in 2020 increased the overall total times down, equating to a substantial loss in revenue opportunities with a typical brand losing up to $64,182,668 annually per 2,000 stores.”

In many ways, the longer wait time are to be expected. We are, after all, in the midst of a pandemic that has turned the restaurant industry on its head and more or less forced businesses to go off-premises. That in turn translates to more folks in line at the drive-thru, not to mention more operational pieces to juggle as restaurants adopt  new safety protocols and technologies.

Even so, three QSRs surveyed for the study bucked this trend of slower wait times: KFC, Taco Bell, and Hardee’s improved their wait times this year, clocking in under the average time of 356.8 seconds. (Carl’s Jr. and Burger King also squeaked by beneath the average.)

KFC’s leading spot in the drive-thru realm makes sense when you consider its existing efforts around the drive-thru. The chain launched an in-house digital ordering system last year and is said to be testing automation technology and drive-thru-only concept stores. Taco Bell has also been giving its business a tech-forward facelift of late, including new tech and formatting for its drive-thru lanes.

QSR’s report noted that “COVID-19 is here to stay,” though that statement seems less about the actual illness and more about the world it’s created. Where restaurants are concerned, that means speed of service, shorter wait times, more consistent order accuracy are critical priorities for chains to get right as more of the biz goes off-premises. 

Al Fresco Vs. To Go

Outdoor dining: an opportunity to innovate or a yet-another huge expense for restaurants? The whole restaurant industry is pondering this question as we head into fall and start prepping for winter.

I wonder if restaurants might not be better off forgoing the whole debate and instead keeping their focus fixed on their off-premises strategies.

In many cities, restaurants have relied heavily on outdoor seating at a time when dining rooms remain shuttered or can legally only accommodate a fraction of their normal capacity. Some businesses have gotten very creative in their efforts. And that creativity will need to carry them through the next several months of cold, snow, and wintery mixes, when normally no customer would even consider dining al fresco. There’s no telling when dining rooms will be able to operate in full capacity again, and with reports of rising COVID-19 cases, there’s also no way to predict if we’ll have to shut them down completely again.

In response to the uncertainty, some cities are getting proactive about winterizing the outdoor dining experience. The idea is to reinvent the outdoor seating format to make it more comfortable for restaurants-goers to eat outside, despite the weather. This week, Washington D.C.’s Office of Nightlife and Culture announced a $4 million grant program to help restaurants cover the cost of tents, domes, heaters, furnishings and other operational expenses that specifically relate to outdoor dining. Applicants must submit a budget of their planned expenses before they can receive funds. All locally owned businesses may apply, with a few caveats. (Read the full requirements here.)

The grant program follows recent news of Chicago’s Winter Design Challenge, which was accepting ideas for outdoor dining formats and will announce the winners in a few days. Submissions so far have included tents, solar-powered pergolas, heat-reflecting walls, heated tables, and igloos, among other gems.

All of those ideas sound compelling (including the igloo). None are likely to be cheap, which gets to the real issue of winterizing outdoor dining. It’s less a question of whether these solutions would work as it is of how much more money a restaurant would have to pay in order to implement them? That’s to say nothing of the fact that restaurants must first obtain sidewalk cafe permits to even be allowed to serve outside, which is yet-another expense piled on the heaters, furniture, and other creations meant to protect diners from the weather.

I need hardly say that restaurants can ill afford these options at a time when many are struggling to simply keep the lights on. Off-premises formats are not ideal, but they are going to be a better long-term bet for most businesses. For one thing, the numbers around digital ordering, which powers off-premises orders, say as much: 50 percent of consumers are using restaurant mobile apps “more often or much more often” than they were before the pandemic, according to one recent survey. Another found that its restaurant customers “have seen a 782.7% increase in Online Order sales volume growth.”

At the same time, 60 percent of restaurant operators say that their operational costs are higher now than pre-pandemic, according to the National Restaurant Association, and that’s without heated tents or igloos.

As much as I hate to say it, forgoing the question of outdoor dining altogether and using any remaining funds and resources for improving to-go formats seems like the wiser decision. At least for now. Someone may come along with a truly disruptive idea that could reinvent outdoor dining without breaking the bank, but that’s a wish more than a reality right now.

A Fine-Dining Drive-Thru Extravaganza

Speaking of creative concepts. Reservations platform Resy this week unveiled plans for “The Resy Drive-Thru,” a fine-dining drive-thru event that takes place October 15 and 16 at the Hollywood Palladium in Los Angeles. Resy is doing the event in partnership with Amex, which acquired the platform last year.

Ten noted Los Angeles restaurants will host pop-ups outside the Palladium. Guests will be able to drive through this “whimsical labyrinth,” which effectively amounts to a 10-course tasting dinner on wheels. Chefs include Nancy Silverton, Curtis Stone, Nyesha Arrington, Konbi, Night + Market, and Jon & Vinny’s, among others.

From a Resy press release: 

“Each of the chefs will create a never-before-seen dish from their individual kitchens, to be served in sequence to the guests, who will remain in cars for the duration of the experience.”  

I thought the whole thing faintly ridiculous (and pretentious) at first, until I remembered how badly the pandemic has hit the full-service and fine-dining sectors. No, a fine-dining drive-thru won’t solve all the restaurant industry’s current woes. Yes, the event is partially a way for Resy to promote its business. But it’s also another example of the industry being forced to think of new and unusual ways to connect with customers. And right now, we need as many of those as we can get.

Following the event, Resy and American Express will make a donation to chef Jose Andres’ nonprofit World Central Kitchen.

Restaurant Tech ‘Round the Web

Virtual restaurant company Triver Eats and Urge Gastropub & Common House San Marcos opened their first Taco Box virtual franchise this week in San Diego. The concept offers family-style taco bars available takeout or delivery.

Donatos vs. Dominos: Pizza chain Donatos told NRN this week that it operates “a secret innovation hub” near its Ohio HQ, where it tests new foodservice innovations it hopes will eventually benefit the entire food industry. So Domino’s is clearly not the only pizza company-turned tech innovator in town.

Read this: an extensive breakdown of the many ways in which third-party delivery services are decimating the restaurant industry.

 

Survey: Drive-Thru Orders and Mobile App Usage at Restaurants Are Up

Consumers are using a mobile app more often than just a few months ago to order restaurant food, according to new survey data from Bluedot and research firm SeeLevel HX.

The survey, based on responses from 1,501 U.S. adults between June 23 and July 2, 2020, found that 50 percent of consumers are using restaurant mobile apps “more often or much more often” than they were before the pandemic, up from 42 percent in April. Meanwhile, 64 percent of respondents said they have downloaded at least one or more new apps to purchase restaurant food, up from 51 percent in April.

The spike makes sense, given the rise in off-premises restaurant formats, the push for so-called “contactless” ordering and payments platforms, and widespread consumer concerns around safety and social distancing. 

The report also examines the popularity of off-premises formats among consumers. The drive-thru is far and away the most popular. Seventy-four percent of respondents said they have visited the drive-thru “the same amount or more often than usual” compared to 43 percent in April. Respondents also named drive-thru the “safest” of the to-go formats, which also include curbside pickup and in-store pickup. 

Responses around both mobile app usage and drive-thru visits are in line with developments by restaurants over the last few months. Chains like Chipotle and Shake Shack are reformatting many of their stores to include drive-thru lanes. In many cases, those lanes are dedicated to customers ordering via the restaurants’ mobile apps. 

In many cases, these drive-thrus are one of the main reasons QSRs have fared much better in terms of sales so far during the pandemic.

All that said, the Bluedot and SeeLevel HX report also suggests that drive-thru lines are still frustratingly slow. Of the consumers surveyed, 81 percent said waiting more than 10 minutes in the drive-thru is too long. If you’ve been to a drive-thru recently, you don’t need data to tell you wait times are stretching far beyond that number oftentimes. 

Cutting down wait time in the drive-thru is an old story that pre-dates the pandemic. Making that particular restaurant format more efficient will continue to be a priority for QSRs going forward. 

Shake Shack Pivots to Drive-Thru, Adds Direct Delivery

Shake Shack said on its earnings call yesterday that it will start opening restaurants with drive-thrus, with the first of them slated to open in 2021. The chain didn’t name a location, though CEO Randy Garutti said on the call the chain plans ”to lead with traditional suburban high-traffic quarters.”

This is pivot for Shake Shack, a New York City-based chain that’s historically served urban settings. And unsurprisingly, the move is largely in response to the pandemic’s effect on in-house restaurant dining. Garutti said on the call that fewer than half of all Shake Shack’s have opened their dining rooms, and that while urban Shacks have been heavily impacted by social distancing restrictions, suburban locations are recovering faster.

The company released a rendering of the new drive-thrus (see above) that suggests these would have dedicated lanes for mobile orders as well as traditional ones. It’s a strategy already in use by chains like Dunkin’ and Chipotle. 

Shake Shack had a 49 percent nosedive in same stores sales for the second quarter, though that number is slowly improving, the company said. Digital and off-premises are a big reason the figure wasn’t lower.

And drive-thru lanes are just one piece of that off-premises strategy. On the call, Garutti highlighted the brand’s recent efforts, which include curbside pickup, Shack Tracks, a ghost kitchen in the U.K., and increased focus on digital ordering. In the second quarter, sales through the brand’s own app “more than tripled” compared to the same period last year. 

Perhaps most important, Shake Shack will start offering direct delivery via its own digital properties. Garutti plainly stated that the motivation behind this move is “keeping guests within our native infrastructure and deepening our ability to connect directly with them over time.” 

Direct delivery is becoming an increasingly important part of major restaurant chains’ digital arsenal, and is already in use by Panda Express, the Coffee Bean & Tea Leaf, and others. The benefits of direct delivery, where orders go straight to a restaurant’s own app, rather than getting funneled through a third-party delivery app, are obvious. Restaurants pay lower commission fees, since third parties like Uber Eats are only delivering the food, not processing the order. And brands retain valuable customer data they would otherwise not be able to access. 

None of Shake Shack’s announcements this week are particularly eyebrow raising, which is in itself an important point. Every day, off-premises gets further entrenched in consumers’ minds as the de facto restaurant format for quick service and fast casual. Adding drive-thru or curbside, doubling down on digital, and exploring direct delivery are quickly becoming the standard for those chains that can afford them. Those standards were emerging long before the pandemic arrived, and will exist long after it leaves.  

Panasonic and PopID Aim to Make Paying With Your Face the Norm at Restaurants

Using facial recognition to order and pay for food has long been an intriguing concept for restaurants, albeit one that comes with a bit of a creep factor. But now that the pandemic has accelerated the need for contactless systems in restaurants, it may become more widespread.

Case in point: this week, Panasonic and Cali Group’s PopID announced a new partnership that lets restaurant customers pay with their faces at drive-thrus and kiosks. PopID’s technology, which includes its PopPay “wallet,” will be integrated into Panasonic’s ClearConnect Kiosk, which offers restaurants the hardware, software, and UI/UX design needed to install self-order kiosks at restaurants. The two companies will also jointly integrate PopPay at drive-thru systems.

Once customers register for a PopID account, they can use PopPay at any restaurant that accepts the technology. They’ll be able to view past orders and loyalty points, reorder items, and, of course, pay for their meals without the need for human interaction. You can watch a quick explainer video here.

Facial recognition at fast-casual and QSR restaurants has been slowly gaining momentum over the last couple years. Bite, which works with ToGo’s and Noodles World Kitchen, among other restaurants, also offers facial recognition in its kiosks. Some restaurants, namely Dallas-TX Malibu Poke, have offered face recognition for years.

PopID’s tech is already in a number of restaurants, including Cali Group-owned CaliBurger, Bojangles, and Dairi-O. The Panasonic partnership is meant to expand the number of PopID deployments.

The flip side, of course, is that users have to be comfortable with giving away their face data in order to use the this convenient, socially distanced form of ordering and payments. Biometric data remains a controversial topic and comes with its fair share of security and privacy concerns. That means restaurants and tech companies deploying these systems have a responsibility to communicate with customers about how they use the data — and how well they protect it.

In a pandemic-stricken world, some of these systems actually do more than let customers order and pay for meals. Cali Burger recently launched a modified system (using PopID) that can, as well as processing ordering and payments, take staff and guests’ temperatures. A handful of restaurants, including Cali Burger, are using this feature, and if the sensors detect someone has a fever, that person is not allowed to enter the building. 

So while privacy concerns will always be a risk with facial recognition, the ability of these kiosks to actually ensure the safety of guests and staff could sway more folks to hand over their personal data. At the very least, the privacy tradeoff may seem more worth it. 

McDonald’s Slows Development on Its Tech-Forward Store Remodels

In an effort to reduce capital expenditures by $1 billion, McDonald’s is slowing the development of its Experience of the Future store remodels across the U.S., according to a press statement the company sent out today. 

The move comes in the wake of the mega-chain, not to mention the entire restaurant industry, having to adjust both operations and expectations to serve customers during a global health crisis. Restaurant sales are down 80 percent, and many establishments are having to quickly pivot to delivery and takeout models in order to stay in business. 

Unlike smaller restaurants with shallower pockets, McDonald’s isn’t a newcomer to the off-premises world or the technology that powers it. Up to now, the company was running a $4 billion digital business driven largely by delivery orders. Acquisitions in 2019 of Dynamic Yield (AI tech) and Apprente (voice tech) further enhanced the chain’s to-go-friendly business model, and Experience of the Future stores are meant to encompass all these elements under one roof. They also feature self-service kiosks, curbside pickup areas, improved drive-thru lanes, and many other things meant to make the customer experience at McDonald’s as speedy and efficient as possible.

Then came COVID-19. In addition to closing dining rooms across the U.S., McDonald’s has also halted operations entirely at many stores, including 50 in the U.S., and every single one in the United Kingdom. Those shutdowns also include drive-thru and delivery.

“We entered 2020 in a strong position, but of course the world has since changed,” CEO Chris Kempczinski told Nation’s Restaurant News. “While our January and February global comparable sales were strong, changes in consumer behavior and the various restrictions in place by governments around the world have led to a significant decline in sales.” 

To that end, McDonald’s says it plans to build fewer Experience of the Future stores, whether new locations or remodels of old ones, worldwide.  

Whether this is a sign of things to come from other similar chains depends. One of the major factors of Mickey D’s remodels is how costly they are — over $700,000 per store, in some cases. Not every chain’s digital business reinvention requires an architectural overhaul as well, especially if a brand is more interested in improving things like delivery and loyalty programs. That said, we may see fewer Chipotlanes and Starbucks Express Stores rolling out for the rest of 2020 — and possibly beyond.

Burger King, Tim Hortons Aim for Faster Drive Thrus and More Personalized Tech in 2020

Restaurant Brands International (RBI), parent company of Burger King, Tim Horton’s, and Popeye’s, is doubling down on its efforts to modernize its brands and in doing so keep pace with competitors in the world of quick-service restaurants. On its earnings call this week, RBI’s CEO José Cil highlighted several milestones as well as goals for the future around making the drive-thru line faster, stores more digital-friendly, and individual customer orders more personalized. 

Tim Horton’s, a chain largely based in Canada and with a scattering of U.S. locations, is currently testing new digital menu boards in drive-thrus, using technology to gather information like weather, time of day, location, and more, and use it to better tailor offerings to each individual customer. If that sounds like a familiar story, it is. McDonald’s more or less started this wave of AI-powered drive-thru efforts last year when it acquired Dynamic Yield in 2019. Others, including KFC and Dunkin’, are also testing their own iterations of the drive-thru of the future.

Beyond the fact that personalized menu boards are supposed to improve order accuracy and offer more relevant upsell items to each customer, they are also practically speaking, a little easier for the restaurant to manage. Speaking on this week’s call, Cil pointed out that the company’s current menu boards cost “millions of dollars each year” to print and update, and that they are time-consuming to change out, as the task has to be done manually by staff members multiple times per day. “Switching to digital menu boards in the drive-through will free up time for team members to focus on serving guests while ensuring that the proper information is always on display,” he said.

Tim Horton’s already has these menu boards in “several hundred stores” and the company will install them “across most drive-thru locations over the next 12 to 18 months.” As well, the company is revamping its loyalty program for digital orders, moving it into its second phase where rewards and offers will be more tailored to the individual customer. Cil noted that this second phase will “drive digital registration and a lot of powerful tools like sales intelligence and one-to-one marketing that we’ll use to develop stronger relationships with our guests and drive incremental sales over time.”

Getting more intelligence behind its digital platforms to improve personalization is a goal for RBI across all its brands as the company strives to compete with the McDonald’s and Starbucks of the world. At Burger King, this will be in the form of the brand’s Burger King of Tomorrow Restaurants, the chain’s newly redesigned store format that emphasizes things like digital ordering via self-service kiosks and double drive-thru lanes. Cil said on the call that the company opened more than 800 of these stores in 2019.

Burger King of Tomorrow joins a long list of restaurants revamping their store formats to be more tech-centric and better able to fulfill delivery and takeout orders, which will account for the lion’s share of restaurant sales in the coming years. To that end, Burger King also offers delivery at 4,200 of its stores and works with multiple third-party services (DoorDash, Postmates, etc.) to fulfill orders.

As mentioned earlier, a large part of this technology push is to keep up with other QSRs running billion-dollar-plus digital businesses, namely Chipotle and McDonald’s, which are making AI and more customized menus a major part of their strategies. If 2019 was the year off-premises ordering became table stakes, 2020 will (probably) be the year personalization takes that title. RBI’s latest moves and future plans underscore how much the company wants its brands to be ahead, or at least with, the pack when that happens.

Speaking of personalization, you can hear my conversation about how it will change the restaurant business at Customize, the Spoon’s food personalization summit, in just two weeks.