The pandemic flipped QSR/fast food on its head. While drive-thrus had usually over the course of history accounted for over half of QSR sales, QSR franchises had never entirely relied on them. Counter sales are a staple of fast food.
But the pandemic eliminated counter sale options. Drive-thrus became lifelines for QSRs, and restaurants encountered obstacles quickly.
Low Tech Solutions to the Surge in Drive Thru Demand
Before we get into A.I. ordering and robots, let’s break it down to the basics.
Some QSRs are taking a low-tech approach to curbing drive-thru congestion by optimizing their operations. Burger King is trimming menus. McAlister’s Deli reduced their customization options. Popeyes is also moving towards efficiency, with over 50% of new stores in its 2022 pipeline planning on having dual drive thrus, along with the implementation of a more efficient kitchen setup to optimize labor, digital order pickup shelves, and automated screen kiosks for ordering food. McDonald’s has implemented the kiosk solution as well (you may have ordered from one already)!
Kiosks are often accused of replacing human workers. But several restaurants have used new technology to allow orders to be processed by an employee working from home!
For employees still on site, one of the market leaders in drive-thru headsets, Quail Digital, released a new product specially designed for the pandemic. The new headset offers three channels, one for pickup and two for drive-thru. It comes equipped with noise-canceling tech which, according to QSR testimonials, eliminates requesting customers to repeat their orders. Modern day headsets offer audio quality that permit efficient service as well.
This new headset will allow more QSRs to emulate Chick Fil A. Chick Fil A was well positioned to adapt to the drive-through surge of the pandemic. Even in its early days, Chick Fil A team members would take customer orders curbside and call them in via phone. Chick Fil A is certainly a leader in the art of labor and human optimization. Team members are now equipped with headsets, tablets, and state of the art apparel for outdoor elements. Following the pandemic, Starbucks has emulated Chick Fil A’s drive thru model. By taking orders in person (in the drive thru), Starbucks claims to provide more of a barista experience outdoors as well.
High Tech Solutions are Surging too
As the restaurant industry struggled to find labor in 2020 – automation was a lifeline.
Automation is commonly associated with robotics. But mobile ordering, customer recognition, and conversational A.I. all fall under the label.
Mobile ordering was offered by QSRs pre-pandemic, but 2020 saw a spike in mobile orders. Taco Bell had to completely redesign its locations to keep up with demand. The future Taco Bell establishment is a two-story quasi vending machine. Customers will order on mobile, scan a QR code at the drive-thru, and retrieve their order from a conveyor belt. The handful of locations Taco Bell has already revamped explains their record fast drive-thru times in 2021.
Fun fact: Chick Fil A was one of the first QSRs to use mobile ordering, yet had some of the slowest drive-thrus of 2020. When drive-thru sales surged from ~60% in of revenues in 2019 to nearly 90% in 2020, even Chick Fil A’s well-oiled drive-thru machine couldn’t keep up. This doesn’t impact their likability, as they dominate customer satisfaction polls.
Mobile ordering can also take place via Mavi. Mavi allows customers to order through their car dashboard.
But most customers order the same thing each time, and this is a massive opportunity. With geofencing, customer’s phones can order for them. Some QSRs are equipping drive thrus with the technology that allows for contact-free toll booths. This won’t even require personal information or WiFi. Other options for this are license plate and facial recognition.
Conversational A.I. is automating the employee on the other side of a drive thru intercom. Leading the way is McDonalds, who sold its drive-thru research lab to IBM in a partnership to improve voice recognition in drive-thrus. Thanks to their efforts to curb drive-thru congestion, McDonald’s had shorter drive-thru durations in 2020 than 2019. McDonalds had also previously invested in and acquired artificial intelligence companies pre-pandemic via their venture division.
Denny’s, Domino’s, and Dunkin’ Brands are incorporating conversational A.I. into their phone ordering. Will QSRs eliminate employees altogether? Not according to White Castle, who has not only automated drive-thrus, but their kitchens with Miso Robotics. White Castle sees automation as enhancing employee productivity, allowing for better hospitality. Chick Fil A and Taco Bell share a similar mindset; it’s all about augmenting the employee, not replacing them.
Additionally, there may eventually be the possibility of metaverse ordering. What this would achieve, I cannot say.
Part of the reason drive thrus cause so many issues is that a drive thru queue is ostensibly infinite. This leads to traffic extending out into primary thoroughfares. Curbside pickup remediates this to an extent. There are a given number of parking spaces. Customers order ahead. The process is more efficient. 1950s-style drive up ordering offers a drive-thru ordering experience without the “driving through”. The QSR that exemplifies this is Sonic. Sonic has preserved the nostalgia of drive-up ordering, even offering roller skating delivery. 2021 was a banner year for Sonic, with many locations clearing $1M AUV and a quarter of locations clearing $2M. Tantamount to this was Sonic’s investment in experience. They redesigned their restaurants to offer aesthetic exterior dining places. They pivoted their ad campaigns, and doubled down on mobile ordering.
Another advance in pickup are smart lockers. Amazon has employed these for package delivery, and now QSRs are using them as well. These eliminate the face-to-face exchange of food altogether, for the especially health conscious.
As QSRs resemble vending machines, actual vending machines have historically seen little innovation. Piestro is raising money to bring an innovative pizza vending machine to the masses. Cafe X and Yummy Future are hoping to bring robotically brewed coffee to the masses. Hopefully we see more innovation here.
The downside of a vending machine is you have to go to the food, it doesn’t come to you.
But with ghost kitchens, it can.
Inspire’s (owner of Dunkin, Sonic, Buffalo Wild Wings, Arby’s) ghost kitchen is a lesson in efficiency. Their location features a kitchen segmented by workstations. Each station fulfills orders for each of the conglomerate’s different brands.
Ghost kitchens have always had a sketchy relation with restaurant regulations.
The term was coined by NBC in 2015 for restaurants that flaunted regulations with shell kitchens. These shell kitchens often lacked food distribution permits.
Unfortunately, ghost kitchens’ relation with the law has never recovered.
One of the largest companies that offers ghost kitchens as a product is Reef. Reef uses trailers or shipping containers. REEF transforms open spaces into multi-purpose places that support the on-demand economy.
Reef has partnered with Wendy’s, who expects that ghost kitchens will be half of their 2022 growth. Reef has also partnered with DJ Khaled for his franchise.
Uber’s founder Travis Kalanick bet on ghost kitchens early, selling his Uber shares and buying a ghost kitchen leasing company. He has launched multiple locations in Europe, primarily Parisian suburbs and Italy. But similar to the Reef’s regulatory skirting in the US, Kalanick has used shell companies and extensive secrecy efforts to scale. This has not had a good effect on culture, and many employees have quit. Nonetheless, Kalanick is among one of the larger players in the competitive European ghost kitchen space.
Where ghost kitchens are trailers or warehouses, cloud kitchens are actual restaurants. This model was popularized by none other than Mr Beast. Mr Beast allows independent restaurants to make and deliver food under his brand. Quality varies from location to location, but the model has grown legs. PopChew has started a platform for matching restaurants and influencers launching food brands. According to PopChew’s investors, cloud kitchens with this model deliver “adult happy meals”. Popchew is not selling food so much as they’re a platform selling access to a creator.
WowBao has introduced a ghost kitchen concept that might be the most sustainable. They lease out a steamer with their ingredients to restaurants and allow them to distribute WowBao’s food under the brand, in a revenue share model. Like with cloud kitchens, independent restaurants are consolidating under digital brand umbrellas.
Ghost kitchens have a history of violations and undercutting independent restaurants. A California startup with an ex-Doordash founder presents a new model putting small business first. Local Kitchens mixes and matches offerings from a region’s small restaurants, allowing for pickup or dine-in. Area restaurants can then advertise their menus in a central location. Local Kitchens’ model has proven cheaper than ghost kitchens.
Hand in hand with ghost or dark kitchens are dark stores, or microwarehouses. Gopuff replaced the convenience store with dark warehouses of booze and snacks that are then delivered directly to consumers. Instacart has adopted the same model, as has Doordash & Walmart. Microfulfillment is a growing trend that complements the trend toward smaller footprint QSRs. Neighborhoods will no longer be segregated from services.
QSRs are becoming like vending machines, independent restaurants like food courts, and stores like warehouses. If it feels as if everything is losing a personal touch, perhaps it is with some brands, but convenience and the customer experience are becoming more important than ever. But the restaurant industry as a whole was nearly decimated by the pandemic, and has had to adapt and reform. The new landscape will be different, and as with any change; we see consolidation, innovation, and improvement.
So don’t cry for the restaurants lost; be glad that more aspiring restaurateurs will be able to live out their dream and make restaurants and eating out a better and more diverse experience for everyone 🙂.