September 3, 2020
Quick service restaurants were among the first to be impacted by this year’s Great Lockdown. Restaurants were forced to temporarily close and the ‘new normal’ mandated substantial changes in business protocols and interaction between employees and consumers – all while sales for most were trending downward. As a result, companies in this space had to retool not only their food preparation processes and operations, but also the way they connect with consumers to maintain brand loyalty during a time when, for the most part, consumers are dining out a lot less.
In light of this reality, the fast-food industry has engaged several strategies, including introducing and updating apps for contact-free service as well as customer perks, partnering with delivery services, developing more efficient drive-throughs, among others. On the public relations front, virtually every brand in this space has made announcements demonstrating their support – financial or otherwise – of a variety of causes ranging from local education organizations to LGBTQ and environmental groups to communities of color.
Here is a look at what some of the largest publicly traded players in this space are doing to remain relevant and maintain market share during a time of COVID.
Chipotle Mexican Grill (Tii:CMG)
As with many other companies in this space, Chipotle saw sales decline – to the tune of 4.8 percent for its second quarter ended June 30, 2020 on temporary store closures (mainly those in shopping centers and malls) due to COVID-19. However, the sales decline was partially offset by a substantial spike in digital sales, which grew 216.3 percent and accounted for 60.7 percent of sales for the quarter. To further connect with consumers who may be shutting themselves in, Chipotle, which operates 2,650 restaurants, launched Free Delivery Monday Matchup. This gives Chipotle Rewards members free delivery each Monday and offers the opportunity to win free burritos each week for a year for those who correctly predict the final score for a pre-selected sporting event.
Domino's Pizza Inc. (Tii:DPZ)
The world leader in pizza delivery, Domino's is bucking the trend of COVID-related revenue declines. In fact, the company’s sales increased 5.7 percent for its second quarter as consumers opted for easy home delivery options – a space where the company excels. Domino’s also initiated a carside delivery option early on, allowing consumers to have food delivered to the passenger side, backseat or trunk of their car upon arrival. As a result of its strong sales, Domino's corporate and franchise stores are looking to fill more than 20,000 positions, including delivery persons, pizza makers, customer service representatives, managers, and assistant managers. The company even announced it is opening its first location in Croatia.
Dunkin' Brands Group, Inc. (Tii:DNKN)
Though temporary store closures and the ongoing impact of the pandemic resulted in a 20 percent decline in revenues for Dunkin’s second quarter ended June 27th, the company demonstrated its financial health by reinstating a quarterly dividend for its third quarter. The company also poured resources into digital marketing by creating and filling a new position, Chief Digital and Strategy Officer, to oversee a new Dunkin’ U.S. digital engagement team that includes consumer and business insights, digital marketing, media, and customer care. Dunkin' Brands' 100 percent franchised business model includes over 13,000 Dunkin' restaurants and more than 8,000 Baskin-Robbins restaurants.
McDonald's Corp. (Tii:MCD)
The world's leading global foodservice retailer with roughly 39,000 locations worldwide recently reported that sales for its last quarter declined due to temporary restaurant closures, limited operations and dramatic changes in consumer behavior as a result of COVID-19. To assuage consumers who may be hesitant to dine on prepared food, McDonald’s partnered with Mayo Clinic, a global leader in serious and complex healthcare, to provide ongoing counsel and expertise on best practices to mitigate the spread of COVID-19 in restaurant and office settings. The company also reported that it updated company values with a greater focus on diversity and inclusion.
Starbucks Corp. (Tii:SBUX)
Autumn is right around the corner and that means it’s Pumpkin Spice Latte season. The largest coffee shop chain in the world with over 32,000 stores also lays claim to some of the most die-hard brand loyal consumers. The company recently posted all-time-high customer connection scores as customers returned, indicating the strength of the recovery across its businesses. Illustrating this, Starbucks’s Mobile Order and Pay digital platform reached a record 22 percent of transactions in the third quarter, thanks in part to the company’s contactless approach in stores. Delivery usage tripled from the prior quarter. The company is doubling down on its customer engagement with plans to update its Starbucks Rewards loyalty program (which has 19.4 million members) by offering more payment options and ways to earn points through the Starbucks app.
The Wendy's Company (Tii:WEN)
In response to a decline in sales, the franchisor of more than 6,700 restaurants worldwide increased its menu options and announced plans to allocate resources to build up its breakfast daypart, grow its digital business, and expanding Wendy's international footprint. Like others in the space, Wendy's recently launched its own take on a rewards program. Wendy's Rewards allows customers the opportunity to earn points to unlock rewards for their favorite menu items using Wendy's mobile app.
Yum! Brands (Tii:YUM)
While sales for Yum! Brands’ second-quarter ended June 30 declined 12 percent, the parent company of KFC, Pizza Hut and Taco Bell pivoted to leveraging consumer insights and digitally-enabled off-premises capabilities to adjust operations, menu options and marketing across the globe. As a result, digital sales reached an all-time high of $3.5 billion for the quarter, an increase of more than $1 billion over the prior year. Yum! Brands has over 50,000 restaurants in more than 150 countries and territories.
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