What will a more remote workforce do to restaurants?

Many concepts, like Starbucks and McDonald’s, were developed on commuting patterns. A more remote workforce would upend those assumptions, said RB’s The Bottom Line.
Photograph by Jonathan Maze

The Bottom Line

Americans have gradually returned to normal as more states reopen their economies, allowing more in-restaurant dining and more events and other functions. A few more people are also returning to their work.

But plenty of employees are still at home. Companies such as Google and Twitter have said employees can stay at home this year and beyond. In April, more than half of employees said they expect to work at home more often even when restrictions are lifted, according to Gallup. A number of experts expect more employees to work from home once the quarantine is over.

This has a bigger impact on restaurants than you think.

During the pandemic, the percentage of workers telecommuting doubled. The result was an unsurprising impact on the breakfast daypart in particular. Numerous chains, such as McDonald’s, have noted that their breakfast business suffered in recent weeks even as other dayparts recovered and even improved.

At least some of this is due to competition from Wendy’s, which has maintained a surprisingly strong breakfast business since its pre-COVID introduction.

But it’s notable that chains such as Dunkin’ and Starbucks remain well below their pre-coronavirus sales levels. Dunkin’ same-store sales were down 15% during the week ended May 23.

Such work-from-home tendencies would have bigger impacts on some markets than on others, particularly those markets with heavy concentrations of technology and other office workers.

On Wednesday, Starbucks noted that its same-store sales were down 32% in the last week of May. And CFO Patrick Grismer told analysts that some of its markets will struggle to regain traffic.

“In dense urban metro markets that are more dependent on customer commuting traffic, where those customer patterns or behaviors have been disrupted because more people are working from home, I think it will be more challenging to cover that traffic,” he said, according to a transcript on the financial services site Sentieo. He noted that 15% of the chain’s stores are urban locations.

A larger number of telecommuting consumers could certainly upend many chains’ long-held real estate strategies. Chains like Starbucks and McDonald’s have been developed based on consumers’ commuting patterns.

If more people are working at home, these companies may have to rethink these strategies.

Indeed, Starbucks is already thinking much of its store base. The company previously revealed that it wants to close more mall locations and open more drive-thru units.

It is now planning to close 400 restaurants in the U.S., with plans to replace them, eventually, with repositioned units. Most of those locations would be of its takeout-only versions, of which it has just two now.

Overall, however, the fast-food morning daypart could be operating at a reduced level for some time, based simply on the fact that more consumers are telecommuting and doing more things at home.

That could also upend the lunch business, while we’re thinking about it, because more at-home consumers mean more at-home lunches.

There remains a great deal of uncertainty, to be sure, in how the post-pandemic world looks like. But one with more at-home workers would certainly change a lot of restaurants’ real estate strategies.

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