Fast-Casual Restaurants Add Drive-Thru Lanes to Compete With QSRs

Fast-casual restaurants are expanding their drive-thru efforts to attract convenience-seeking consumers, gaining share from QSRs.

In this month’s wave of restaurant earnings calls, leading chains spoke to their efforts in the space. For instance, fast-casual giant Chipotle Mexican Grill, which has nearly 3,200 locations across five countries, said on its earnings call that, in 2023, the company plans to include its mobile order drive-thru lanes at 80% of new restaurants. These locations have been successful at both meeting consumers’ needs and improving productivity.

“The biggest thing [for productivity] that’s happened from … three and a half years ago to today is we’ve moved from having just a handful of Chipotlanes to having the majority of our portfolio [be] Chipotlane,” CFO Jack Hartung said. “When we look at what our Chipotlanes are doing, the 85% compared to 15% without a Chipotlane, they continue to outperform that non-Chipotlane cohort. So, we think the main driver is the Chipotlane and the convenience that our customers find with that digital drive-through.”

Similarly, Shake Shack, which has 440 locations around the world, shared that its early tests of the model, with 12 drive-thru locations up and running, have been yielding positive results.

“We’re encouraged by the initial reads and are targeting to nearly double that with our plans to open 10 to 15 more drive-thrus this year,” CEO Randy Garutti said on the company’s fourth-quarter earnings call. “We know there’s still much we have to learn and much to prove out as we’ve been rolling out a few different designs as well as kitchen flows so that we can optimize this investment for learning quickly and evolving the model for the long run.”

Moreover, Sweetgreen said on its earnings call that, following the “success” of its early test of its digital drive-thru lane concept, Sweetlane, per CEO Jonathan Neman, the company intends to open more next year.

Through these drive-thru lanes, fast-casual brands are able to capture sales that would have previously gone to quick-service restaurants (QSRs), meeting consumers’ demand for on-the-go convenience.

About half of all U.S. restaurants offer drive-thru pickup, according to data from PYMNTS’ 2022 Restaurant Friction Index. Additionally, the study, which drew from a survey of more than 500 managers of QSRs and full-service restaurants (FSRs) in the country, found that almost two-thirds of those that do not offer this ability plan to invest in adopting the feature in the future.

Indeed, pickup as a whole is highly in demand, with the channel accounting for the vast majority of off-premises restaurant orders. According to data from PYMNTS’ new study “Connected Dining: Rising Costs Push Consumers Toward Pickup,” for which we surveyed a census-balanced panel of more than 2,100 United States consumers in January, 39% of consumers ordered their most recent restaurant meal for pickup, and only 10% did so for delivery.

Notably, restaurant-focused B2B software-as-a-service (SaaS) platform Olo sees drive-thru’s share of restaurant sales as even higher, noting an opportunity to digitize the ordering channel as fast-casual brands have been doing with their mobile pickup lanes.

“In the past year, we’ve moved into drive-thru and [on-premises] categories that represent roughly 38% and 24% of overall restaurant transactions respectively, more than doubling our serviceable footprint,” founder and CEO Noah Glass said Wednesday (Feb. 22), on a company earnings call. “Currently, nearly 100% of drive-thru and [on-premises] transactions are analog, and as Olo moves into both on- and off-[premises] as a focus, we have a great opportunity for Olo to unlock the path to digitize 100% of transactions.”

Olo is not the only restaurant technology provider noting the opportunity that the channel presents. Toast announced earlier this month alongside its fourth-quarter 2022 financial results that it has acquired digital drive-thru signage company Delphi Display Systems.

“Drive through is a critical service model for QSR that has become even more important over the past few years,” Toast CEO Chris Comparato said on the call.