To get a good idea of how much the fast-food business has changed over the past month take a good look at Portillo’s recent filing for its initial public offering.
Notably, there is the section in which it discusses its unit volumes. Portillo’s has forever been known for its massive restaurants that generate huge volumes. Those volumes theoretically were threatened during a pandemic that hammered dine-in business.
Portillo’s still has strong unit volumes. But they just shifted. Look at these two pie charts:
Portillo’s did a lot of drive-thru business before the pandemic, averaging $3.4 million per location. So, it wasn’t as if the hot dog and Italian beef chain was running just a few orders through those windows. It takes a lot of work to run a $3.4 million drive-thru.
But that business has taken off during the pandemic, jumping to $4.9 million and accounting for close to two-thirds of its business. Add in the 11% delivery business and three-quarters of its customers don’t bother coming into the restaurant or leaving their house.
That is on par with many other fast-food chains even before the pandemic, and likely suggests that the chain’s business—much like the fast-food sector as a whole—will probably not shift back to where it was before the pandemic.
Most restaurant chains since the outset of the pandemic saw a broad movement of customers from dine-in to takeout and delivery. For fast-food chains, however, the result has left dining rooms largely empty.
McDonald’s going into the pandemic generated about 70% of its sales through the drive-thru, while many of the customers who went inside took their food with them. The pandemic shifted that to about 90% drive-thru.
Few industry insiders expect the fast-food business to return to its prepandemic levels of dine-in service, which explains the effort chains like McDonald’s, Starbucks, Burger King and Taco Bell, among others, are making for their drive-thrus.
For a chain like Portillo’s, however, the shift could have significant implications. Portillo’s palaces have been built for heavy dine-in business along with the drive-thru sales. The company has instead lost half of its dine-in sales, which makes its buildings less efficient.
Indeed, as my colleague Heather Lalley has reported, the chain has a strategy for responding to that just like everybody else: A location without indoor seating at all.