More and more fast food franchises, and food franchises of other types as well, are lessening their indoor footprint and increasing their drive-thru capacity.
The reason why is multi-faceted. For one, with rocketing real estate prices and shipping delays, the monetary and time savings during start-up are significant. Reducing dine-in capacity also has been said to help franchise owners reduce their operating costs without sacrificing revenue.
However, a large factor for the shift is in response to consumer preferences and actions -- particularly in the wake of the pandemic. Mobile ordering and off-site dining was increasing before 2020, but with the safety restrictions resulting from the spread of COVID-19, customers flooded into drive-thrus.
And with analysts stating that the presence of a drive-thru could add as much as 30% in sales to a company’s bottom line in current times, food franchise businesses of all types and sizes are evaluating their service options—and making adjustments accordingly.
<blockquote>“Pre-pandemic, about 50 percent of food was consumed on premise and 50 percent was drive-thru and delivery. Because of the pandemic, that’s now changed to 20-80.” ~ Mark Landini, a retail designer who has worked with multiple high-profile fast food brands</blockquote>
The change is most notable with fast casual restaurant franchises. For example, per a Slate article, Chipotle’s in-restaurant sales now account for just a third of its business. For Panera, the in-restaurant sales has dipped under 20% as of mid-2022. The outlet also notes that Panera has gone as far as to open to-go-only locations. The first of which opened in summer 2022.
A heavy reliance of drive-thru business isn’t new to the food franchise world, though. Fast food sibling brands Checkers and Rally’s have exhibited the business style for virtually their entire existence. But now, many of their contemporaries are joining them in the not only the drive-thru life, but a multiple drive-thru lane life, notably aided by mobile ordering.
Per GlobeSt., “Several of the largest fast food chains, including McDonald’s, Burger King, Taco Bell and KFC, are preparing to introduce mobile-order pickup drive-thru lanes, following the example set by Chipotle. Chipotle, which calls mobile-order drive-thrus “Chipotlanes,” says the lanes now contribute an average of $1M in digital sales to each of its franchises.” In several of these cases, the mobile order pickup drive-thru lane will be in addition to the traditional drive-thru lane.
With all of the attention on the increase in drive-thrus, it should be emphasized that indoor dining isn't going away completely.
One of the lessons learned from the pandemic is that flexibility is crucial to maintaining success, particularly when unforeseen circumstances arise. How this methodology is presenting itself within the food franchise industry is the further expansion of the “hybrid restaurant” concept. A hybrid restaurant is an establishment that fairly equally uses both components of dine-in and off-premises operation.
Again, like the other drive-thru heavy shifts, the hybrid restaurant isn’t exactly a new phenomenon. Even before the pandemic, full service franchise restaurants were beginning to incorporate elements traditionally reserved for their more limited service, or fast food, counterparts in order to keep pace with a consumer base becoming more obsessed with convenience.
But now, by releasing a measure of rigidity surrounding what a certain concept is or isn’t, restaurant operators have been given the opportunity to experiment with ways to increase their profits and test for expansion in ways they perhaps couldn’t before.
Initial Investment and Opening Costs for Drive-Thru Franchises
The amount necessary to open a franchise varies depending on the unique business system and execution requirements.
The opening costs for a food franchisee can depend on many factors, including but not limited to: the franchise fee, land and building costs, training expenses (such as travel and living expenses, not the actual training courses), grand opening advertising and marketing costs, and more.
One of the most important variables in how much it costs to open a drive-thru franchise is the type of franchise being opened and how big it is. The two types of food franchise most commonly offered are traditional and non-traditional. Traditional franchises are usually the biggest option. They are typically standalone buildings where the service of the franchise is the only business offering. Non-traditional franchises are smaller, and typically located within another building like malls, airports, or gas stations.
As for drive-thru franchises specifically, as noted above these franchises are increasingly being run from a small or shared kitchen facility, which is only used for pickup or delivery.
In addition, even if your franchise will be using a more traditional footprint, if the drive-thru franchise is being built to maximize the pickup element, the cost of construction can be lessened by reducing the amount of money spent on furniture or other indoor elements.
Our franchise profiles will present you with a basic range for the initial investment required to open a chicken franchise. But when it comes to finding out the details of an initial investment, the franchise disclosure document (FDD) is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.
Franchisors offer estimates in their FDD based upon their experience establishing, and in some cases operating, units. However, prospective franchisees should keep in mind these estimates are just that—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.
Ongoing Costs for Drive Thru Franchises
Throughout the length of the agreement there are costs for being a part of the franchisor’s business system. These costs include items such as royalty fees, charges for technical support, and continued advertising/marketing costs.
The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.
In addition, it’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.
You can also check out many more related Food Franchises here on Franchise Direct, such as: