The easier restaurants have made it for customers to order takeout, the better they’ve performed during the pandemic.
That is the only conclusion to make in looking at preliminary second-quarter results from publicly traded restaurant chains, as tracked by Restaurant Business and its sister company Technomic.
Between April and June, same-store sales at companies that issued preliminary reports averaged a decline of 45% and the vast majority of reports were steeply negative.
To be sure, many companies stopped providing updates while some did but only offered vague numbers, making the overall results a flawed look at the industry. Still, the reports reveal the way consumers ordered their food during the quarantine.
For the most part, they took the easy route.
Here is a look at the winners and losers during the quarantine.
Winner: Papa John’s
The strongest performing restaurant chain during the pandemic was the Louisville, Ky.-based Papa John’s, which said same-store sales in May rose 33.5%. That followed its April result of 27%.
Consumers have been ordering a lot of delivery, which will naturally benefit delivery-focused concepts. What’s more, Papa John’s was coming off of weak results from the previous year, and the pandemic coincided with the introduction of its Papadias sandwiches, which have also bolstered the chain’s results.
The morning daypart has been a massive struggle for a lot of chains. While Wendy’s breakfast has seemingly succeeded since its early-March introduction, just about every other chain with the daypart has struggled.
That includes Starbucks, which was still down 32% at the end of May. The family dining chain Denny’s improved as much as any other concept between late March and early June yet was still down 40% by June 10, which just shows you how bad things really were back in March.
Consumers aren’t eating breakfast at restaurants nearly as much, and the results demonstrate that.
Winner: The drive-thru
It’s been clear for a couple of months that drive-thrus have been a massive differentiator. Sales at chains that have drive-thrus did not fall nearly as much back in March and April when the quarantine was at its worst, and they’ve had the quickest recovery to normal.
Wendy’s, for instance, was down in the 25% to 26% range in early April, though that might be modestly inflated due to its addition of breakfast, which is about 8% of sales.
By the end of May they were down just 1.9%. McDonald’s, which depends more heavily on breakfast than any fast-food chain not named Starbucks or Dunkin’, improved from a decline of 19.2% in April to a 5.1% decline in May.
Before the pandemic we worried about the specter of drive-thru bans. That talk has quieted down as the window has become vital to many chains.
Loser: Upscale casual
Several casual dining chains have seen strong improvement, including Olive Garden and Chili’s and Outback Steakhouse. It’s hard to call chains winners when at their peak they’re still down in the 30% range.
Yet they have managed to get their sales to that level with strong takeout and delivery. Upscale casual chains have had a harder time, and as such the performance of chains like Fleming’s, Bonefish Grill and J. Alexander’s have been considerably weaker than their more moderately priced options.
Some of the more interesting results came from the fast-casual chicken wing chain, whose same-store sales were up 33% in April.
Wingstop is something like a pizza concept in that its wings are great for groups, yet it doesn’t offer its own delivery and instead relies on third parties. Yet its heavy investment in technology and a methodical yet steady move into delivery have paid handsomely during the pandemic when ease of ordering has become a major winner.
Loser: Shake Shack
While consumers flocked to restaurants like Wendy’s and McDonald’s, they were far more reluctant to go to Shake Shack.
In fairness, the chain is based in New York City, and had to close a number of its locations during the pandemic. The chain’s same-store sales were still down in the 50% range by the end of June, at a time when its lower-priced, drive-thru heavy rivals had recovered.
Perhaps not surprisingly, the company is considering adding mobile order drive-thrus as well as pickup windows.
Winner: Limited service
Chains with limited service averaged a decline of about 20% in the second quarter, clearly helped by their pre-virus focus on takeout and the prevalence of the drive-thru in their operations. The real number is likely better than that, given that many limited service concepts simply stopped reporting after their sales normalized.
Loser: Full service
Casual dining chains’ preliminary reports averaged a 55% decline, which is to be expected when your dining rooms are closed for most of a quarter. Many chains’ focus on takeout was admirable and surprisingly strong, proving that they have loyal bases of customers. Yet it’s difficult to pivot a concept built for dine-in customers to a takeout world.