The restaurant industry has been hit hard by the pandemic, and potentially a third of restaurants in the U.S. will close their doors by the end of the year. Fortunately, some are succeeding and finding new opportunities amidst Covid-19 restriction.
According to McKinsey More than 80 percent of US consumers have anxiety about dining in at casual and quick-service restaurants. But nearly 50 percent feel fine about picking up fast food from a drive-through.
Fast-casual restaurants with established takeout and delivery had the starting advantage, but others have managed to innovate and adapt during the pandemic, not only to survive, but to thrive.
Chipotle Mexican Grill didn’t have far to pivot
Chipotle Mexican Grill, with over 2,600 U.S. locations, has done well this year in the fast-casual restaurant space. As one of the first major restaurant brands to adopt mobile ordering in 2008, they were well-positioned to focus on digital ordering, pickup, and delivery when dining rooms closed down earlier this year.
Despite a drop of 10% in overall sales in the second quarter of 2020, digital sales rose by 216%, and now makeup over 60% of total sales. By the end of July, Chipotle had reopened 85% of its restaurants for in-person dining with Covid-19 protocols in place, bringing same-store monthly sales up by 9.8% over 2019.
A few years ago, Chipotle began adding second make-lines to its restaurants to exclusively fill digital orders, allowing the other line to focus on in-person and phone orders. For delivery, the chain works with third-party delivery services including GrubHub, Postmates, and DoorDash, and also offers some menu items exclusively for orders placed through their app to increase online engagement and direct delivery.
Dozens of stores now also include Chipotlanes, which are used strictly for drive-thru pickup of online orders.
Chipotle has incorporated AI solutions to make ordering easier, including using Amazon’s Alexa to reorder meals by voice command.
Nicole West, VP of Digital strategy and product development, credits Chipotle’s early adoption of digital ordering for much of their current success, and she recommends keeping it simple when it comes to going digital: the more accessible and personalized, the better.
Texas Roadhouse kept it simple
Texas Roadhouse, the family-friendly restaurant chain known for its warm hospitality, operates 600 full-service steakhouses across 49 states and prides itself on being a people-forward brand.
In March, when dining rooms closed down across the U.S., all Texas Roadhouse locations switched their full menu to takeout, later adding online ordering and curbside pickup. They further supplemented their regular menu with family packs and ready-to-grill steaks and paired with local businesses to initiate drive-through farmer’s markets at several locations.
AI-driven social media and touchless ordering
To keep customers engaged while dining rooms were closed, they leveraged a custom AI to drive online engagement as well as to target content by location.
For dine-in service, guests can browse menus on their mobiles by QR code, and other Covid-19 precautions include enhanced cleaning protocols, mask and glove requirements and temperature checks for staff.
Sticking to pickup-up
Despite skyrocketing demand for delivery with Covid-19 restrictions, the company stuck with its takeout and curbside pickup-model, preferring to provide service directly to customers, and also avoiding third-party delivery fees.
The model has paid off: in May, takeout sales were up 575% year-over-year. With most dining rooms reopening with significant capacity restrictions, take-out sales have helped make up the shortfall, accounting for 29.7% of Q2 sales, and bringing the brand up to nearly pre-pandemic numbers in June.
Ghost kitchens are working for Dog Haus
Dog Haus opened its doors as a ‘craft casual’ gourmet hot dog concept in California in 2010 and has since expanded across multiple states. Its 50 locations were hit hard by pandemic restrictions, with a majority of their 35 traditional locations designed as atmospheric social gathering spots and 15 outposts located in sports arenas.
Fortunately, the brand had opened its first ghost kitchen (offering take-out by delivery only with no storefront) in the Kitchen United space in Pasadena in 2019, and prior to the pandemic was already working on a new virtual kitchen project, The Absolute Brands. The project adds 8 virtual concepts to the original Dog Haus brand, all designed for production in existing Dog Haus kitchens or from an offsite ghost of a virtual kitchen.
Set to launch in August 2020, the co-founders moved up the timeline and launched 4 of The Absolute Brands concepts in March, when Covid-19 restrictions closed dining rooms across the country.
From their shuttered brick-and-mortar Dog Haus locations, they made three of the virtual concepts available for both pick-up and delivery while dining rooms remained closed:
- Bad Mutha Clucka wings and fried chicken sandwiches
- Plant B gourmet veggie burgers and sausages
- Bad-Ass Breakfast Burritos
The fourth brand, Frieburger gourmet burgers, was launched at the same time, but for delivery only.
Creating streamlined virtual menus with in-house components minimized SKUs while maximizing third-party delivery searches. According to co-founder André Verner, between all four virtual brands, the only items they had to add to Dog Haus’s kitchen inventory were a flour tortilla and bowl.
From 30-40% delivery to in-house sales mix pre-pandemic, delivery jumped to 60-70% of sales where dining rooms are open, and at several locations, overall sales have actually exceeded pre-pandemic levels.
The inherent integration of ghost kitchens with social media, delivery apps, and contactless payment helps Dog Haus make data-driven decisions and pivot quickly in response to customer feedback and demand.
As Covid-19 continues to drive customer sentiment, consumers are increasingly concerned about how employees are treated, and what precautions businesses are taking to ensure the health and safety of staff and guests.
Klēn offers AI-driven solutions for businesses to easily monitor national, state, and local mandates and recommendations through a single application, helping businesses make changes as needed and stay focused on building trust and enhancing the customer experience.