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Why Curbside Pickup Is Here To Stay—Even After The Pandemic Ends

ForbesSeptember 25, 2020

Curbside service is certainly nothing new. Casual dining giants like Applebee’s and Outback Steakhouse have been squeezing quite a bit of juice out of this channel since the early 2000s.

No doubt the casual dining segment has had the curbside market cornered, offering a convenient and speedy occasion for fast food-fatigued consumers. However, Covid-19 has changed that. Curbside is now everywhere as restaurants, including those with drive-thrus, sprint to find more points of access to make up for closed dining rooms.  

Will curbside stick around after things go back to normal and dine-in picks up again? 

Probably.

During a presentation last week at the JP Morgan Gaming, Lodging, Restaurant and Leisure Conference, Starbucks SBUX CFO Pat Grismer said curbside pickup is one of the chain’s key initiatives fueling its future recovery in the U.S. 

“We see curbside pickup as an important enabler … of our longer-term recovery,” he said, adding that curbside currently exists at about 800 stores and will more than double in the next couple of months. “Curbside pickup is so important because it provides customers another option. I don’t want to get in the drive-thru line. I’ve placed my order via my mobile phone. I can conveniently pull into a parking spot that is designated for pickup and partners will bring my order out to me. That is working beautifully. That is taking pressure off the drive-thru and accommodating more of that customer demand.”

Interestingly, Grismer said stores with drive-thrus are where the chain is getting curbside business, meaning the channel is complementing, not cannibalizing, a critical access point. 

This doesn’t surprise Lisa van Kesteren, CEO of market research company SeeLevel HX, which has published an annual drive-thru study for about 20 years. 

“[Curbside] is an additional channel to accommodate more traffic, which brands need, and some people prefer it,” she said. “The benefit of curbside is primarily the ability to order ahead, which should translate to no waiting. Customers don’t like to wait in line. The perception of curbside is that they are first in line because they don’t see anyone ahead of them, and that their food will be hotter and fresher.” 

Covid-19 has no doubt enabled this habit, as brands like Panera PNRA, Taco Bell, Wendy’s, Burger King and Shake Shack SHAK dedicate time and money to curbside business. As such, a full 50% of consumers are using curbside more often or much more often than they were prior to the outbreak, according to the recently released “The State of What Feeds Us” report by SeeLevel HX and Bluedot. 

It took seven days for Panera to get its curbside channel up and running. Within just a few weeks, curbside was tracking at 5% of Panera’s sales, compared to about 15% of its Rapid Pick-up business, put into place about five years ago. This is promising enough for CEO Niren Chaudhary to predict that curbside will be in play for Panera for the long term, as he said during a May interview. 

Indeed, it seems there’s quite a bit to like here.  

For starters, curbside can allow those brands to serve more customers at the same time, which is good for both impatient customers and revenue. Second, curbside alleviates volume stress from a full drive-thru, where visits have increased by 26% alone in the April, May and June quarter. 

“Drive-thrus are becoming very, very busy, and the waits can be long at prime times during the day, so the more they can dilute the wait at anyone channel, and the more they can leverage different channels, the more money they make,” van Kesteren said. “The drive-thru also has a limited numbers of orders it can take and serve, so it’s one at a time. Carryout can be placed by many customers and they can all pick up at the same time, so there’s less bottleneck.” 

This is perhaps why Wendy’s is focused on curbside. The chain has pulled in about 90% of its business from the drive-thru since the COVID-19 outbreak. During the company’s Q2 call, Wendy’s CEO Todd Penegor said the company will continue to work on initiatives like curbside, adding “we know a frictionless experience is what customers will demand as we move forward in a post-Covid world.”

It’s important to note that curbside doesn’t just happen at the flip of a switch. Most of the brands that have successfully added the channel in the past six months have a robust mobile app in place, which facilitates the ordering process. If such infrastructure already exists, it makes plenty of sense to add another point of access. That seems to be Burger King parent Restaurant Business International’s motivator.   

“For our guests that can’t access our drive-thrus, we’re rolling out new curbside pickup options on our mobile apps. [Curbside] is an additional opportunity from an off-premise standpoint,” RBI CEO Jose Cil said during the company’s Q2 call, adding that the channel presents a long-term growth potential.  

Brands have been slowly building up their apps for the past couple of years, but–like everything else in this business–COVID-19 has accelerated their usage. In fact, 49% of customers have downloaded more than two or more apps during the pandemic.

As such, brands that have had an app in place are making even more investments to utilize the curbside channel efficiently within that space. Dunkin’ is a good example here. During the company’s Q2 call, CEO Dave Hoffman said its investment to bring the Dunkin’ app in-house has allowed the team to make changes more quickly than ever, including the launch of curbside. 

“We launched new curbside capabilities within the app to any franchise who wanted it and added a more sophisticated curbside ordering flow for customers,” he said. There are now more than 1,400 Dunkin’s offering curbside. 

Shake Shack also just launched curbside pickup within its app. The channel is expected to be live at approximately 50 Shacks by the end of Q3. 

“It’s really early, but we’re encouraged by the initial results and convenience this adds for our guests,” CEO Randy Garutti said during the company’s Q2 call

Shake Shack is adding curbside as it simultaneously adds walk-up windows, pickup areas and drive-thrus, underscoring the criticality and long-term viability of off-premise. 

“Our hope is that we create access in places where we may not have had access before,” Garutti said. “[Curbside] has grown a little bit each day. Each day, people are figuring it out. We haven’t marketed it. It literally just pops up in the app … People are trying it more and more every day and we’re really excited about it.” 

He adds that the channel is safe, which is as big a deal right now as convenience. There is also the added benefit of being a high-margin channel, at least as compared to delivery. Because it cuts out the middleman–the third-party delivery company–those notoriously high delivery fees aren’t tacked onto curbside orders. This is perhaps the biggest driver of the channel’s growth. 

“Delivery is getting more and more expensive and that takes a toll. In addition to being cheaper, curbside is also more likely to arrive hot at your dinner table because there weren’t two other stops ahead of yours,” van Kesteren said. “Some customers that never had curbside before have now tried it because of COVID and found that they quite like the convenience. It’s efficient and easy and has less risk of exposure to germs. I believe it will stick around.”

 


 

This article was written by Alicia Kelso from Forbes and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.