Restaurant Roundup: Shake Shack Leverages ‘Digital Daypart’ Promotions; Taco Bell Transforms Drive-Thrus

As restaurants continue to struggle with labor challenges, many are coming up against capacity constraints during the busiest day parts while finding their staff under-utilized at off hours. In an effort to get more bang for its labor buck, New York-based fast-casual chain Shake Shack, which has more than 350 locations across 10 countries, is incentivizing consumers to make purchases in between their usual mealtimes.

On a call with analysts Thursday (Aug. 4) discussing the company’s second quarter 2022 financial results , Shake Shack Chief Financial Officer Katherine Fogertey shared that the company intends to drive off-hours sales through its app and website with targeted “digital daypart” promotions. Last month, the brand kicked off the first such offer, a limited time buy one, get one (BOGO) deal on milkshakes purchased via the brand’s eCommerce channels between 2 p.m. and 5 p.m.

Related news: Milkshake, Anyone? Fast Food Brands Hone Menus to Squeeze out Profits

“Our shacks are very busy at lunch and dinner. However, we view this midday as underutilized from a staffing perspective and are excited about the early read on the incrementality of this offer,” Fogertey said. “It’s driving digital frequency and app downloads and as an added plus, many of our guests are coming in for the Shake Shack Happy Hour and getting other items as well. We’re excited to learn and try new things with this new capability.”

Taco Bell Mulls Rollout of Vertical Drive-Thrus

After testing out a new vertical drive-thru format at a franchisee-owned location in Minnesota, Taco Bell may be ready to implement the concept on a broader scale. On a call Wednesday (Aug. 3) discussing the company’s second-quarter earnings results, Yum Brands , parent company of Taco Bell, KFC, Pizza Hut and The Habit Burger Grill, spoke to the thus-far success of the trial of its “Defy” drive-thru concept.

“It’s a first-of-its-kind two-story restaurant design, featuring a proprietary vertical lift to transport … menu items straight from the kitchen to fans,” Yum Brands Chief Financial Officer Chris Turner explained. “This is on top of unique digital check-in screens for mobile orders that enable a differentiated, fun and seamless experience for consumers.”

He added that many of the restaurant’s features “could show up in future Taco Bell restaurants,” calling the first such location “a hit with consumers” and noting that it is “performing well.”

The first Defy location opened in June after the taco chain announced the concept back in the summer of 2021.

“We believe what the new drive-thru will become in the future … is a technology-reliant operating system that merges both the order and the pickup point into one, which creates less waits for consumers, creates an opportunity to go in places where we didn’t think we could get into and … creates the potential for the perfect drive-thru experience,” Taco Bell Vice President and Chief Operating Officer Mike Grams told PYMNTS in a June interview.

McDonald’s Announces New Digital Leadership

As major restaurant brands race for digital primacy, McDonald’s is putting a new captain at the helm. The quick-service restaurant (QSR) giant announced Monday (Aug. 1) the appointment of a new chief information officer, Brian Rice, who previously served as chief information officer at Cardinal Health and Kellogg’s and as global services information officer at General Motors.

“At each turn, Brian has successfully modernized technology systems, built new capabilities, and elevated the role of digital in building relationships with customers to drive growth,” McDonald’s CEO Chris Kempczinski stated.

He added that the company’s tech priorities include rolling out its loyalty program across its markets and implementing “new innovations like artificial intelligence and automated order taking,” as well as “modernizing data systems.”

The news comes as McDonald’s looks to close Starbucks’ lead as the largest restaurant company by revenue, with the fast-food chain bringing in $23 billion in 2021 to the coffeehouse brand’s $25 billion. Much of Starbucks’ strength comes from its loyal rewards program membership base.

In a recent interview with PYMNTS’ Karen Webster, Rajat Suri , founder and CEO of voice, vision, and touch hospitality technology firm Presto , argued that, for now, Starbucks is the only major restaurant brand that has figured out to maintain a consistent, high level of digital engagement.

“Starbucks … has gotten a really good app experience, makes it easy to order ahead, and they’ve really nailed [it],” Suri said. “I haven’t seen the same level of execution anywhere else.”