October 2020

Feature

Pass Through

Whether it’s concerns about COVID-19 or a need for speed, consumers dig drive-thru service.
Pat Pape

Almost every modern QSR has a drive-thru window, but when it comes to the convenience store industry, drive-thrus have been a rarity. Because of COVID-19, that situation may be changing.

“I have a [convenience-store] customer in the Northeast who was not doing well with his drive-thru,” said Mike Lawshe, president and CEO of Paragon Solutions, the c-store and retail industry design and consulting firm based in Fort Worth. “When COVID hit, his drive-thru business went from 7% to 37% of total sales.”

For almost 20 years, Lawshe has been an advocate of drive-thrus. “Fast feeders would never build a store without a drive-thru,” he said. “When they buy property, they set up their buildings to facilitate that. But c-store legacy sites aren’t set up for it, and that’s been a limiting factor. Now with COVID, people are looking at it through a different lens.”

It’s not just shoppers who worry about entering a store. Store employees do, too.

Phil Lempert, author and food trends editor for NBC’s Today show, believes drive-thru operations—especially when combined with contactess payment—would help negate that concern. “We have a workforce that’s exhausted,” said Lempert. “Employees are working 10 to 12 hours a day. They’re concerned they are being called essential workers but aren’t being treated as essential workers from a pay standpoint. We’re seeing retail clerks in the food business quitting on the spot or not showing up to work. If we have a second wave of COVID, we’re going to see more employees quit. They’re concerned about their health.”

When COVID hit, his drive-thru business went from 7% to 37% of total sales.

Convenience Drive-Thrus

Drive-thru restaurant visits were up 26% in the second quarter and represented 42% of all restaurant visits, according to The NPD Group. In July when more restaurants reopened, drive-thru visits still grew by 13%, the highest increase among the service modes of on-premises, carryout and delivery, the market research firm reported.

In July, Wawa, the 900-store chain based in Pennsylvania, received a landslide of publicity when it announced plans for its first-ever freestanding drive-thru-only convenience store, which is set to open in Falls Township, Pennsylvania, in December. The 1,850 square-foot test store reportedly will be followed by a second drive-thru in Westhampton, New Jersey. Shoppers will pull up to a window to place their order, and a Wawa employee will process payment and hand over the merchandise.

“We are hoping to learn from the layout, workflow and traffic flow at this location as we continue to explore alternatives for longer term application to our stores post-COVID-19,” said Terri Micklin, director of construction, Wawa.

Square One Markets, with 11 stores in Pennsylvania, is a veteran of drive-thru operations. The company operates a 35-year-old drive-thru location in the town of Easton, near the New Jersey border. “It’s a one-window operation because we want to keep the interaction similar to the customer coming into the store,” said Lisa Dell'Alba, president and CEO of Square One. “Most items that customers request are kept right by the window. With COVID, if people don’t have to come in the store, they won’t.”

The most common drive-thru purchases are 20-ounce drinks, tobacco products, chips and bags of ice, but shoppers can get “anything that fits through the window,” she said. Del Alba’s goal is to get customers served in 30 seconds, but “if the employee goes to get a product, it may take a minute or two,” she said. “We try to be as efficient as possible.”

Pak-A-Sak, the Amarillo, Texas-based retailer, has 22 stores, including 13 drive-thrus, the first of which opened in 2008. “We kept going by fast-food restaurants, and people were sitting at drive-thru windows. We thought, ‘we should do that,’” said Russel Barber, district manager, Pak-A-Sak. “Now, we won’t build a new store without a drive-thru. We found that it pulls customers from a further radius.”

A few years ago, Pak-A-Pak turned an empty Starbucks store into the first Pak-A-Sak Express. It has a smaller footprint than other locations but enjoys a bigger drive-thru business. “We’re averaging around 30% of business through our regular drive-thru windows, but the Express can get as high as 70%,” said Barber.

The company also has converted some legacy stores into drive-thrus, “and we got an immediate bump in sales,” he said. “So, that’s proven to us that it’s worth the investment. We were fortunate that we had the big parking lots, and we could go off the end of the building.”

Like Square One, Pak-A-Sak uses a single window—but no microphones or headsets—to ensure personal interaction with customers, who can get any item sold in the store at the drive-thru. “When customers drive up, they can see five cooler doors, and we put our best-sellers in those doors,” Barber said. “We sell a ton of fountain drinks, cigarettes and beer.”

Drive-Thru Challenges

Just cutting a window in a wall is no guarantee of drive-thru success. “It’s like every other business,” said Lawshe. “You’ve got to work it and understand that your customers are different. But you’re going to be attracting customers that you wouldn’t otherwise have in your store.”

For retailers considering building a store with a drive-thru, there’s no actual formula for selecting a site, he said, but the interior needs at least 500 square feet near the window to house extra coolers and high-demand merchandise.

Placement of the store’s checkout is important. “You try to create efficiencies in the way you design it,” Lawshe said. “By doing that, you’re eliminating steps for your employees and making
it easier for your customers.”

At Square One, the drive-thru’s register is near the front door and in line with the checkout counter. “You can still greet customers and are able to control inventory,” Del Alba said. “It requires more labor. We put one person at the drive-thru, one working with customers inside the store and a third person helping out.”

Successful operators will embrace the concept and commit to the additional labor, Barber said. “We watched another store do it, but basically they just knocked a hole in the wall and said, ‘We have a drive-thru window,’” he recalled. “When a car pulled up to the window, only one clerk would be working and trying to do everything. They just couldn’t do it. You don’t pull up to McDonald’s and they hold up their finger and say, ‘We’ll be with you in a minute.’”

As with everything, there are downsides to drive-thrus. “We spend our lives in the convenience industry trying to get people in the store, and we thrive on impulse,” Del Alba said. “But customers aren’t impulse shopping as much in the drive-thru. You lose that opportunity to tease them with things they don’t really need.”

If an existing store can’t add a physical drive-thru, it can always offer curbside pickup, which is almost like drive-thru—minus the window. “Now, everything is curbside pickup,” said Lawshe. “And it’s not just restaurants. It’s Tractor Supply and Home Depot. Curbside pickup is as simple as designating a couple of parking spots in front of the store and having your employees pick, pull and deliver to the customer. Maybe the customer preorders online or through a loyalty program and pays with an automated payment system. You can do that at Kroger. Why not at convenience stores?”

In September, Casey’s, the Ankeny, Iowa-based retailer, did just that, making curbside service available at 2,000 locations after tests in Kansas City and Des Moines. Customers can order for curbside pickup via the Casey’s app or website, and the service is free. “We see more and more guests seeking curbside pickup options to save time and feel safe,” said Art Sebastian, vice president, digital experience, Casey’s.

Customers aren’t impulse shopping as much in the drive-thru.

QSRs Are Sold on Drive-Thrus

Before the pandemic, about 80% of Starbucks’ U.S. business consisted of on-the-go transactions, thanks to the company’s mobile app that lets customers order and pay ahead. Recently, Starbucks announced plans to replace mall locations with “pickup” stores in high-density areas and enhance drive-thrus in the suburbs, a transformation scheduled over the next 12 to 18 months.

Taco Bell recently released its new “Go Mobile” restaurant design that focuses on drive-thru service and limits human interaction. The chain is cutting back on dining room seating and adding a second drive-thru lane dedicated to pickup orders made on its app.

Rival Chipotle built 56 stores with drive-thru lanes last year and plans to put drive-thrus in 60% of new stores slated for construction. Chipotle drive-thrus had 10% higher sales during the second quarter of 2020 compared with non-drive-thru locations.

“Customers have shown a preference for drive-thru and pickup, and it’s not just customers trying to avoid COVID,” Lawshe said. “It’s moms with kids, seniors and disabled people.”

Drive-thru retailing is all about speed—fast food and fast service—and helping people get on their way—the same premise as convenience retailing.

“Our commodity in the convenience-store industry is time,” said Del Alba. “We don’t have special Twinkies. We sell time. We get people in and out. That’s what we’re known for.”

Pat Pape

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer. See more of her articles at patpape.wordpress.com.