308 QSR OCTOBER 2023 by WTWH Media LLC

EVOLVING QUICK SERVICE FOR THE FUTURE OCTOBER 2023 / NO. 30 8

® FEATURING:

QSR DRIVE-THRU REPORT ©

The industry’s transformation has been powerful, but this is only the beginning. | P. 38 |

Checkers Changes the Game | COVER STORY |

Led by CEO Frances Allen, the brand is at the forefront of reshaping the drive-thru business. | P. 26 |

PLUS:

Chains Cut Dining Rooms A New Way to Fund Your Restaurant P. 62

P. 84

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October

TABLE OF CONTENTS OCTOBER 2023 #308

Q SR / LIMITE D -SE RVICE , U NLIMITE D POSSIBILITIES

DEPARTMENTS

F E AT U R E S

N E W S

22 FRANCHISE FORWARD

How to be a Franchise All-Star

Tarji Carter is putting more operational resources in the hands of minorities. BY SATYNE DONER

88 INNOVATE

Wheeling and Dealing

Franchising with food trucks has become a viable route for several chains. BY SATYNE DONER I N S I G H T

13 FRESH IDEAS

Caffeinated Convenience The drive-thru coffee business is bursting with activity. BY SAM DANLEY

20 ONES TO WATCH

Village Juice & Kitchen

A fast casual is making waves on college campuses. BY SAM DANLEY

84 OPERATIONS

A New Era of Business Financing CHECKERS

CHECKERS WAS A MASTER OF THE DRIVE-THRU LONG BEFORE THE PANDEMIC.

Checkers, Not Chess

BY BEN COLEY

The decades-old burger chain finds itself leading the industry toward the drive-thru of the future.

4 BRANDED CONTENT

The 2023 QSR Drive-Thru Report BY DANNY KLEIN

The landscape remains a work in progress in COVID’s wake—but one that’s as wide open as it’s ever been.

6 EDITOR’S LETTER

9 SHORT ORDER

Restaurants have another option to obtain funding. BY SAM DANLEY

Drive-Thru Dominance

OUTSIDE INSIGHTS

Building Drive-Thru Coffee Sales

A focused menu is vital, and there’s an important way to do it. BY HOWLAND BLACKISTON

BY BARNEY WOLF

The sales channel exploded during COVID, and quick-service chains are looking to capitalize.

96 START TO FINISH

Chris Britt and Ed St. Geme

95 ADVERTISER INDEX

Learn how the pair are quickly scaling Mountain Mike’s Pizza. O N

QSR is a registered trademark of WTWH Media, LLC. QSR is copyright © 2023 WTWH Media, LLC. All rights reserved. The opinions of columnists are their own. Publication of their writing does not imply endorsement by WTWH Media, LLC. Subscriptions (919) 945-0704. www.qsrmagazine.com/subscribe. QSR is provided without charge upon request to individuals residing in the U.S. meeting subscription criteria as set forth by the publisher. AAM member. All rights reserved. No part of this magazine may be reproduced in any fashion without the express written consent of WTWH Media, LLC. QSR (ISSN 1093-7994) is published monthly by WTWH Media, LLC, 1111 Superior Avenue Suite 2600, Cleveland, OH 44114. Periodicals postage paid at Cleveland, OH and at additional mailing offices. POSTMASTER: Send address changes to QSR, 101 Europa Drive, Suite 150, Chapel Hill, NC 27517-2380.

T H E

C O V E R

Checkers & Rally’s CEO Frances Allen embraces innovation. PHOTOGRAPHY: CHECKERS

www.qsrmagazine.com | QSR | OCTOBER 2023

BB RR AA NN DD EE DDCC OO NN TT EE NN TT EDITORIAL

BRAND BRANDSTORIES STORIESFROM FROMQSR QSR

EDITOR I A L DIR ECTOR

Danny Klein

dklein@wtwhmedia.com

QSR EDITOR

IN INTHIS THISISSUE ISSUE

Ben Coley

bcoley@wtwhmedia.com

FSR EDITOR

Indulgent Indulgent and and accessible accessible LTOs LTOs during during the the holiday holiday season season drive drive sales. sales. SPONSORED SPONSORED BY BY STRATAS STRATAS

HME HOSPITALITY AND SPECIALTY COMMUNICATIONS

1414 How How toto Create Create Innovative Innovative Seasonal Seasonal LTOs LTOs That That Will Will Drive Drive Sales Sales

STRATAS

Callie Evergreen

cevergreen@wtwhmedia.com

24 24 Elevate Elevate Restaurant Restaurant Efficiency Efficiency Through Through Voice Voice AIAI Integration Integration

AS SOCI ATE EDITOR

Sam Danley

sdanley@wtwhmedia.com BRANDED CONTENT STUDIO

DIR ECTOR OF THE BR A NDED CONTENT S T UDIO, FOOD A ND HOSPITA LIT Y

Peggy Carouthers

Future-proof Future-proof your your restaurant restaurant and and streamline streamline operations operations forfor enhanced enhanced customer customer experiences. experiences.

pcarouthers@wtwhmedia.com

BR A NDED CONTENT PRO JECT M A N AGER

Kara Phelps

kphelps@wtwhmedia.com

SPONSORED SPONSORED BY BY HME HME HOSPITALITY HOSPITALITY AND AND SPECIALTY SPECIALTY COMMUNICATIONS COMMUNICATIONS

BR A NDED CONTENT W R ITER

Ya’el McCloud

ymcloud@wtwhmedia.com ART & PRODUCTION

SmartChain SmartChain/ p./71p. 71 OCTOBER 2023

OCTOBER 2023

SmartChain SmartChain V E N D OV RE NRDE OS RO UR RE CS EO SU R/ C TE RS E /N DT SR E/ N N D E S W/

Everyone Everyone from consumers from consumers to management to management deserves deserves to to feel safe feeland safe secure and secure in theirin their businesses. businesses.

Safety Safety

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ADOBE STOCK / WAVEBREAKMEDIAMICRO

/BY YA’EL/BY McLOUD YA’EL McLOUD

Customer Customer Employee Employee AI and AI and Key Key ConcernsConcerns Retention Retention Automation AutomationPlayers Players P72

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SPONSORED SECTION SPONSORED | OCTOBER SECTION 2023 | OCTOBER71 2023

FSR A R T DIR ECTOR

Erica Naftolowitz

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70 70 Addressing Addressing Customer Customer Safety Safety Concerns Concerns

Tory Bartelt

tbartelt@wtwhmedia.com

EVERYONE EVERYONE FROM FROM CONSUMERS CONSUMERS TOTO MANAGEMENT MANAGEMENT DESERVES DESERVES TOTO FEEL FEEL SAFE SAFE AND AND SECURE SECURE ININ THEIR THEIR BUSINESSES. BUSINESSES.

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retention retention and and help help ﬁght fight against against labor labor shortages. shortages.

SALES & BUSINESS DEVELOPMENT

GROUP P UBLISHER

Greg Sanders

gsanders@wtwhmedia.com

80 80 How How creating creating anan AIAI Enhancing Enhancing atmosphere atmosphere ofof safety safety Security can can encourage encourage customers customers Security How How artiﬁ artificial cial intelligence intelligence toto return return toto restaurants. restaurants. is is evolving evolving the the security security and and cash-handling cash-handling 7676 procedures procedures in in quickquickManaging Managing Internal Internal service service restaurants. restaurants. Shrink: Shrink: Employee Employee Retention Retention

High-security High-security standards standards increase increase employee employee

N ATION A L S A LES DIR ECTOR

Eugene Drezner

edrezner@wtwhmedia.com 919-945-0705

N ATION A L S A LES M A N AGER

Edward Richards

erichards@wtwhmedia.com 919-945-0714

N ATION A L S A LES M A N AGER

Amber Dobsovic

adobsovic@wtwhmedia.com 919-945-0712

8383 Key Key Players Players

N ATION A L S A LES M A N AGER

John Krueger

jkrueger@wtwhmedia.com 919-945-0728

CU S TOMER SERV ICE R EPR ESENTATI V E

Tracy Doubts

ONLINE ONLINE S E ES ETEH TE HS E SSET SO TR OI ERSI EAST AQTS QR SMRAMG A GZ AI NZEI N. CEO. CMO/MS P/ SO PN OS NO SR OE RD E D

tdoubts@wtwhmedia.com 919-945-0704

CU S TOMER SERV ICE R EPR ESENTATI V E

Brandy Pinion

The The Budlong Budlong Hot Hot Chicken: Chicken: AA Chicago-Area Chicago-Area Favorite, Favorite, Now Now Franchising Franchising

FOUNDER

Webb C. Howell

secret secret toto success success in in a competitive a competitive market market may may bebe hidden hidden in in your your data. data.

Brand Brand has has developed developed a ‘cult-like’ a ‘cult-like’ following following atat itsits four four locations. locations.

SPONSORED SPONSORED BY BY SAGE SAGE INTACCT INTACCT

SPONSORED SPONSORED BY BY THETHE BUDLONG BUDLONG HOTHOT CHICKEN CHICKEN

THE BUDLONG HOT CHICKEN

How How Multi-Unit Multi-Unit Restaurants Restaurants Can Can Finally Finally Control Control Their Their Finances Finances The The

bpinion@wtwhmedia.com 662-234-5481, EXT 127

THE BUDLONG HOT CHICKEN

SAGE INTACCT / ADOBE STOCK

FRANCHISING FRANCHISING

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OPERATIONS OPERATIONS

ADM I N I STR ATION 919-945-0704 / www.qsrmagazine.com/subscribe QSR is provided without charge upon request to individuals residing in the U.S. who meet subscription criteria as set forth by the publisher. REPRINTS

wing wing nut’s nut’s kind-ofkind-ofwing wing joint joint takes takes aim aim atat 200 200 locations locations in in the the next next ﬁve five years. years.

onon new new locations, locations, remodels, remodels, and and growing growing with with new new and and existing existing multi-unit multi-unit owners. owners. SPONSORED SPONSORED BY BY SUBWAY SUBWAY

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Sponsored content in this magazine is provided to the represented company for a fee. Such content is written to be informational and non-promotional. Comments welcomed at sponsoredcontent@qsrmagazine.com.

SUBWAY

Subway Subway Executes Executes Smart Smart Growth Growth Development Development Strategy Strategy Focused Focused

The YGS Group 800-290-5460 FAX: 717-825-2150 qsrmagazine@theygsgroup.com www.qsrmagazine.com/reprints

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Wing Wing ItIt On! On! Riding Riding AwardAwardWinning Winning Recipe Recipe toto Growth Growth The The WING IT ON!

FRANCHISING FRANCHISING

WING IT ON!

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WTWH MEDIA LLC RETAIL, HOSPITALITY, AND FOOD GROUP

EDITOR’S LETTER

Welcome to the Drive-Thru Evolution The channel is undergoing innovation and growth at a rapid rate.

BCOLEY@WTWHMEDIA.COM QSR MAGAZINE

OCTOBER 2023 | QSR | www.qsrmagazine.com

rive-thru was a popular option before anyone had even heard of COVID. But in the past three years, it’s become nothing short of a lifeline for quick-service restaurants (and a few casual-dining concepts, too). As a result, the annual QSR© DriveThru Report—a comprehensive collection of data around metrics like speed of service, accuracy, and guest satisfaction— has become more relevant than ever. This issue examines how quick-service chains compare and what exactly they’re deploying to ensure they’re staying ahead of the pack. The report is full of organized charts to help you easily digest all the information. It also describes some of the ambitious drive-thru prototypes that companies have either already opened or plan to in the future. Of course, I have to start with Taco Bell’s Defy concept—a 3,000-square-foot, two-story building that looks like it was replicated from a futuristic science fiction movie. Then there’s Chick-fil-A, which plans to open its own four-lane, two-story design in 2024. The brand claimed the store will be able to hold 75 cars at one time. Taco Bell and Chick-fil-A’s “restaurants of the future” feature mobile order lanes where customers and third-party delivery drivers can simply pick up their meals. Prototypes have become such a big part of the drive-thru business that we dedicated a feature to it in this month’s magazine. A host of chains have opened smaller stores with no dining rooms, both on the fast-food and fast-casual side of things. And it makes complete sense. Operators can fit on smaller pieces of land amid a crazy real estate

environment, and they are spending less on build-out costs. And with offpremises being as high as it is now, sales aren’t that much different without the dining room option. There are myriad areas I could mention when it comes to drive-thru, but I’d like to conclude by putting the magnifying glass on artificial intelligence. With labor getting more expensive and harder to retain, it seems more and more likely that fast-food chains will gravitate toward this cutting-edge technology. In the past few years, several concepts have reportedly been connected to drivethru AI voice ordering—McDonald’s, Panera, Hardee’s, Wendy’s, and White Castle are among the biggest. All of those aforementioned restaurants have piloted the drive-thru innovation, but none can quite match what Checkers & Rally’s has accomplished since 2021. After forging a partnership with Presto, the burger brand—relying on decades of experience operating a double drive-thru format—launched AI voice ordering at approximately 400 restaurants as of July. And that’s a combination of corporate stores and franchised locations. These robots don’t get exhausted. They don’t get embarrassed to ask customers whether they want to make it a combo. They also don’t blink when a guest is rude or disagreeable. It’s a solution that’s still in its early days, but will likely become more popular as the post-pandemic environment shakes out. Drive-thru is evolving and will never disappear from the restaurant industry. The pandemic proved as much. Ben Coley, Editor

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SHORT ORDER

Chuck E. Cheese shows it knows how to party.

A Big-Time Birthday Bash CHUCK E. CHEES

Chuck E. Cheese gave kids a celebration to remember.

CHUCK E. CHEESE HOSTED AN EVENT called “Chuck E. Cheese Big Day of Birthdays” on September 7, from 6-7:30 p.m. at stores across the U.S. and Canada. The event marked the time of year with the highest frequency of birthdays and gave away over 500 kids’ birthday parties. During the event, each location held a live giveaway drawing to award a free “Ultimate Fun Birthday Party Package” to one lucky winner. This package included a wide array of offerings, such as unlimited games, a live birthday show featuring Chuck E., pizza and drinks for children and adults, a ticket blaster experience for the birthday child, Dippin’ Dots Ice Cream, complete party setup, and more. In addition to the grand prize, five more winners from every location received a $50 coupon voucher for their next birthday party reservation. This accounts for over $300,000 in total prizes. “There is no better way to celebrate that one time of the year when the most kids have birthdays than by hosting a party for all of our dedicated fans,” CMO Sean Gleason says.

www.qsrmagazine.com | QSR | OCTOBER 2023

SHORT ORDER IN AUGUST, SQUARE RELEASED ITS FIRST QUARTERLY RESTAURANT INDUSTRY REPORT.

DINING OUT SHIFTS FROM FRIDAY TO THE WEEKEND Square discovered that while in-person dining has rebounded, the timing in which customers choose to visit restaurants has changed. Before COVID, spending at restaurants peaked on Fridays around lunchtime. However, with the shift toward remote work, offices are less populated and employees are no longer frequenting their usual food spots for afternoon meals. Currently, transactions are highest during Saturday brunch. In 2019, this time slot (8 a.m. to 1 p.m.) accounted for 8.54 percent of weekly spend; by 2023, it rose to 10.06 percent. “Weekend brunch also tends to be higher-margin and produces higher per-person spend than the typical weekday lunch,” says Ming-Tai Huh, Square’s general manager of restaurants. “These recent consumer habits are likely driving strong revenues per table for the restaurants that attract a regular brunch crowd.”

OCTOBER 2023 | QSR | www.qsrmagazine.com

VACATION SPOTS SEE RISE IN SPENDING

When comparing transactions from before Memorial Day to after, popular vacation destinations such as Ocean City, New Jersey; Ocean City, Maryland; and Provincetown, Massachusetts, witnessed over three-fold growth (250 percent, 240 percent, and 221 percent, respectively). The same trend is evident in national parks; Bar Harbor, Maine (home to Acadia National Park) saw a 148 percent increase, while Estes Park, Colorado (near Rocky Mountain National Park) experienced 97 percent growth. Cities that saw significant growth this summer compared to 2022 include Hampton, New Hampshire; Southampton, New York; Breckenridge, Colorado; Rehoboth Beach, Delaware; and Atlantic City, New Jersey.

BEER COSTS

NIGHTLIFE IS BACK Square analyzed transaction activity in the largest U.S. cities by population between 7 p.m. and 4 a.m. New York led with 41 percent of transactions coming during these late-night hours, followed by Miami (35 percent) and Houston (32 percent). Boston, Philadelphia, and Houston ranked higher in 2023 than in 2022, even though their bars close at 2 a.m.

BRANDED MERCHANDISE

Across the U.S., the average price of beer stood at $5.01. Mississippi offered the most affordable beer at an average of $3.23. Following closely were West Virginia ($3.70), South Dakota ($3.73), South Carolina ($3.78), and Illinois ($3.86). The priciest beers were found in California, averaging $7. Subsequent states included New York ($6.79), Alaska ($6.57), Virginia ($6.16), and Washington ($6.04). In 2022, approximately 37 percent of beer sales took place between May and August. July proved the most popular month, with 9.5 percent of all beer sales occurring then.

Since 2019, the number of food and beverage concepts offering merchandise has doubled. This trend is particularly prevalent among the top quick-service chains in the U.S. For instance, Panera announced in April its plan to launch an online merchandise storefront where customers could purchase clothing inspired by popular menu items. Similarly, KFC unveiled a merchandise store in July, featuring a blend of vintage and contemporary apparel and prints.

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This report used data from more than 800,000 food and beverage concepts to explore consumer dining trends. It examined transactions from April 1 to June 30 spanning the years 2019 to 2023.

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Caffeinated Convenience Drive-thru brands are turning to menu innovation, tech upgrades, and personalized touches to stand out in an increasingly crowded segment. BY SAM DANLEY

SCOOTER’S COFFEE

▲

aribou Coffee has opened more than four dozen with a three-digit code to earn points for their purchase. SCOOTER’S HOLDS ITS drive-thru-only locations since launching the They also can pay through the app. With the order placed OWN IN THE DRIVE-THRU scaled-down prototype in 2019. It’s also leaned and paid for at the speaker box, customers simply pull CATEGORY. into the off-premises channel at its more traditional largerup to the window, grab their drink, and are on their way. format stores—spaces that have always embodied the idea of a “Your car’s interior is kind of sacred,” Caron says. “Every time “third place” by fostering personal interactions and warm cusyou’re rolling down the window, you’re saying, ‘OK, I’m going to tomer service. let the snow in, or I’m going to let the heat in, or I’m going to let The company has adapted that people-first mentality over the the rain in.’ So, it better be a worthwhile encounter.” past few years as more of its business flows through the drive-thru Further optimization could come in the form of designated window. That means finding new ways to make the experience spots for customers that order ahead and pick up at the driveas enjoyable as possible, says Eric Caron, senior director of digithru. The company also is exploring ways to enhance its headset tal experience. technology with an AI-driven noise canceling solution. Coran says One strategy involves reducing how often guests need to roll that could reduce friction and improve order accuracy, especially down their window. Caribou earlier this year updated its app with when there’s an engine revving or an 18-wheeler air-braking nearby. a new feature called Perk Code. Instead of reciting their phone Caribou’s off-premises emphasis coincides with a significant number to employees, loyalty members check into the program development push. The company began domestic franchising www.qsrmagazine.com | QSR | OCTOBER 2023

fresh ideas | G R O W T H |

in 2021 and has a pipeline of 300 units that will double its footprint by 2030. Other drive-thru coffee chains also are charting aggressive growth following several years of pandemic-driven tailwinds. Scooter’s Coffee has added more than 230 franchised locations over the past three years, with AUVs increasing from $473,000 in 2019 to nearly $876,000 in 2022. The Human Bean expects its number of franchised units will have doubled since January 2020 by year-end. Its AUVs are up 30 percent on a three-year stack. Sustained strength in the segment has been met with a flurry of menu innovation. Caribou this summer added Raspberry Green Tea with Bubbles and Frozen Matcha with Bubbles alongside two espresso tonic drinks. Scooter’s recently debuted a proprietary energy drink and became one of the few brands in the space to focus on children’s beverages with a lineup of kidCARIBOU sized options. COFFEE IS WINNING “The competitive landscape is changing,” says Scott WITH NEW DESIGNS. Anderson, chief operating officer at The Human Bean.

“It’s not just coffee and espresso anymore. There’s so many emerging specialty beverages, like infused energy and the expansion of tea. Customizations are huge, and it’s no secret that more drinks are sold iced or cold within the entire industry.” The company is testing boba to attract a younger demographic during the p.m. hours. New dayparts opened up for the business after COVID spurred a dramatic fluctuation in traffic patterns.

CARIBOU COFFEE (2)

▼

OCTOBER 2023 | QSR | www.qsrmagazine.com

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With fewer commuters, Anderson says the morning daypart stalled while afternoons, evenings, and weekends skyrocketed. “We had a lot of large tickets and excessive transactions,” he says. “Fortunately, we’d already deployed handheld devices, and while we added a little bit of technology in the drive-thru, it was really just fine-tuning what was already in place without sacrificing the guest interaction.” The Human Bean is less concerned with speed of service than those elements of the drive-thru experience that require a personal touch, he adds. It aims to foster a great interaction, or as the company calls it, “an authentic human connection.” “Our systems, technology, processes, and equipment all make speed and efficiency a key result rather than a driving force,” Anderson says. “If you were buying a 50-cent drip coffee from a gas station, that’d be one thing, but you’re going out of your way for a specialty coffee. Guests deserve better than just speed. Employees do, too. It puts a lot of pressure on teams when you’re only focused on efficiency, and it almost gives them a license to treat customers indifferently.” Scooter’s calls the number of cars served in 30 minutes “smiles per half hour” to ensure top-notch customer service isn’t sidelined by a focus on boosting throughput. It has a goal of reaching 60 smiles per half hour during the 6 to 10 a.m. window at every store. With the average ticket increasing more than 16 percent from 2019 to 2022 and still growing, operators can drive over $500 in additional sales during that four-hour timeframe by earning just five extra smiles per half hour, says Jaime Denney, vice president of franchise operations. “We’ve really leaned in and started having a lot of fun with 16

OCTOBER 2023 | QSR | www.qsrmagazine.com

that goal,” she says. “I have stores that show a 45-second window time or even a 30-second window time. We’re always doing the math with our franchisees to show them what a difference driving speed and smiles per half hour can do for their business. We pride ourselves on being friendly and want you to have a great experience—we also want you to scoot on through to the other side.” The company has an innovation lab at its headquarters in Omaha, Nebraska, that replicates the drive-thru kiosk. It uses cameras and AI-developed simulations to examine every aspect of order preparation and identify opportunities for improvement. And while Scooter’s is exploring technology pieces that could unlock even more efficiencies in the future, Denney says everything it’s done this year has been organic. One successful initiative centers around “Acceleration Days.” Denney and her team give operators three or four weeks to develop a plan for achieving more cars on a designated Friday, then track each store’s performance and share major wins with the rest of the system. In some cases, she says Acceleration Days have resulted in upward of 40-plus stores celebrating new smiles per half hour records. “There’s nothing that we’re doing from a marketing perspective,” Denney says. “It truly is a local effort. Some stores invite customers to come in and help them set a new record. Others take the approach of saying, ‘Let us show you how fast we can be.’ It’s a really fun and organic way to do this, and franchisees absolutely love it.” Sam Danley is the associate editor of QSR. He can be reached at sdanley@wthwmedia.com.

SCOOTER’S COFFEE

SCOOTER’S REFERS TO THE NUMBER OF CARS IT SERVES AS ‘SMILES PER HOUR.’

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How to Create Innovative Seasonal LTOs That Will Drive Sales Indulgent and accessible LTOs during the holiday season drive sales. / BY YA’EL McLOUD

“We are starting to see a lot of people take more traditional desserts and make them into something more handheld and easier to eat on the go.” social media sensations, further amplifying restaurant visibility. “We are trying to discover what it is that makes a handheld menu item stand out to customers,” says Barcelona. Leveraging existing kitchen ingredients to enhance pre-packaged desserts and handheld menu selections opens doors to captivating possibilities for quick-service restaurants. This approach minimizes the need for additional stock-keeping units (SKUs) or operational complexities in the back of the house. Timeless desserts such as cookies, donuts, shakes, and brownies provide an adaptable canvas for innovation, while still maintaining consumer recognition. Similar to the famed Pumpkin Spice Latte that transformed a familiar flavor into a cult-favorite drink, Stratas Foods harnesses indulgent ingredients and recipes to empower quick-service restaurant partners. These partners can seamlessly elevate accessible handheld options within their kitchens. Stratas Foods’ culinary ingenuity offers creative solutions that harmonize with busy back-of-house operations throughout the holiday season. “Dan and I brainstorm for a living. We find what the next ‘aha,’ crave-worthy, buzzworthy, handheld item will be that gets customers in the door,” says Barcelona. By embracing inventive seasonal LTOs, quick-service restaurants can tap into the allure of limited-time experiences, amplify customer engagement, and ultimately boost sales. ◗

For more, visit stratasfoods.com. 14

OCTOBER 2023 | QSR | www.qsrmagazine.com

STRATAS

ncorporating enticing limited-time offerings (ltos) during the holiday season is a proven strategy for boosting restaurant sales. These innovative LTOs offer consumers a chance to explore new tastes while maintaining a sense of familiarity. To stand out in a competitive market, restaurants can leverage the appeal of seasonal LTOs to generate excitement and draw in customers. According to IRI, the snack industry has experienced an impressive 11.7 percent sales increase, reaching $58.7 billion this year. This trend underscores the popularity of pre-packaged snacks and handheld options, particularly in the post-pandemic landscape. For quick-service restaurants and consumers alike, these convenient choices have become a staple. However, the key lies in creating seasonal LTOs that seamlessly adapt to kitchen operations and staff efficiency. Discovering fresh dining experiences drives consumers to explore new restaurant options. A study by Mattson in 2021 revealed that 35 percent of consumers intentionally visited fast-food establishments to sample LTOs. This surge in interest can significantly boost sales as new patrons are enticed while existing loyal customers are encouraged to step outside their culinary comfort zones. The adaptability of seasonal LTOs for efficient kitchen management is a crucial consideration in this process. “Stratas partners with leading manufacturers and chains, supplying high-quality shortenings and oils used in their products. We are starting to see a lot of people take more traditional desserts and make them into something more handheld and easier to eat on the go,” says Dan Moats, national account manager and certified Master Baker for Stratas Foods. By infusing innovation into classic desserts, eateries that focus on handheld items can offer customers a safe and enjoyable culinary journey. Stratas Foods is dedicated to curating the next sensational and viral food trend that drives customer traffic. Chef Vincent Barcelona, director of culinary solutions at Stratas Foods, emphasizes their commitment to creating unique flavors that empower quick-service restaurants to enhance menu offerings. These additions have the potential to become

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Village Juice & Kitchen The emerging brand is bringing healthy alternatives to colleges, hospitals, and other nontraditional locations.

FOUNDERS: Lonnie Atkinson, Nathan Atkinson, and Clyde “CP” Harris HEADQUARTERS: Winston-Salem, North Carolina YEAR STARTED: 2015 ANNUAL SALES: $4.5 million TOTAL UNITS: 9 FRANCHISED UNITS: 2 LICENSED UNITS: 5

VILLAGE JUICE & KITCHEN WAS BORN OUT OF AN RV at a music festival nearly a decade ago. After seeing the positive feedback from the juices Lonnie Atkinson was preparing for her friends and fellow campers, her hus20

OCTOBER 2023 | QSR | www.qsrmagazine.com

band, Nathan Atkinson, and his former college roommate, Clyde “CP” Harris, decided to invest in some equipment and bring her knack for mixing healthy recipes to the masses. The cofounders purchased their first juicer in 2014. They acquired some commercial kitchen space and started selling an array of cold-pressed juices and almond milks at their local farmers market in Winston-Salem, North Carolina. The business quickly gained traction from there. “It went from a farmers market to a food truck to a brick-and-mortar location within two years,” says Harris, who left his career in commercial real estate to become the company’s director of finance six years ago. “There wasn’t anything like it in the middle of North Carolina, which is all about barbe-

cue, fried chicken, and biscuits and gravy.” Village Juice opened its first brick-andmortar location in Winston-Salem in 2016 and gradually expanded the menu beyond smoothies and juices. It evolved to encompass a wide variety of health-forward offerings, like salad bowls, sandwiches, wraps, soups, toasts, and breakfast items, plus a line of plant-based desserts called Billy Cakes. “I like to say that it’s food you can trust,” Harris says. “It’s all minimally processed. We make as much of it from scratch as possible, and we made it so that we can meet just about any dining preference. If you’re vegetarian or vegan, we’ve got you covered. If you’re paleo, gluten-free, or dairy-free, we’ve got options for you.” Village Juice built a corporate kitchen, commissary, and training facility in Winston-Salem in 2018. That same year, it opened two licensed locations at Wake Forest University and Elon University. Harris says the brand’s emphasis on healthy, plant-forward offerings and commitment to accommodating a range of dietary restrictions make it a natural fit for college campuses, where many students aim to reduce their meat intake and half of them follow a special diet or avoid at least one food allergen. With the brick-and-mortar restaurant experiencing steady growth, the corporate kitchen up and running, and more opportunities for college outlets on the horizon, Village Juice was setting itself up for rapid growth when the pandemic hit and put many of its plans on hold. “We had a lot of buzz in our ear about demand for the concept, then 2020 came and we had to hit the brakes for two years,” Harris says. “It was all about staying in business, just like every other brand. We had just built this whole thing to scale, and all of the sudden, we couldn’t scale. That was challenging, but [CONTINUED ON PAGE 90] we made it through it.”

VILLAGE JUICE & KITCHEN

BY SAM DANLEY

DEPARTMENT

FRANCHISE FORWARD

How to be a Franchise All-Star Tarji Carter’s company opens new and better opportunities for minorities in the restaurant business.

s a child growing up in the inner city of Boston, Tarji Carter never envisioned a career in franchising. Her family would eat at McDonald’s a few times a month, but she didn’t think she could make the leap from consumer to owner. Like many others, the concept of working in franchising or even being a franchisee was foreign. When she was introduced to the idea in 2008, it felt as if the world shifted underneath her. Focus Brands took a chance on Carter due to her sales background, and she served as the director of franchise sales for five years. From there, she went on to work for numerous companies, including Wingstop, Dunkin’, and Bojangles. In her 15 years of experience in franchise development, Carter has noticed a lack of inclusivity in the industry. From franchise sales to marketing and even up to the C-suite level, she realized the gap in diversity among candidates. “From a diversity perspective, there were opportunities for growth for almost every brand,” Carter says. “There are disparities at every level, and that’s always been an issue for me as a Black woman in franchising.”

OCTOBER 2023 | QSR | www.qsrmagazine.com

The biggest hurdle for those trying to enter the world of franchising, according to Carter, is having access to the right information. These barriers tend to disproportionately affect minorities. While brands might claim it’s challenging to find diverse candidates who meet their requirements, Carter pushes back. She says, “In my life, I knew people who could very well be franchisees; it was just a matter of having the tools to attain that goal.” Other chains like Wendy’s and Yum! Brands have aimed to help minority franchisees, with initiatives such as the “Own Your Opportunity” and Yum! Franchise Accelerator programs. Similar to those large companies, Carter’s mission is to kick start the conversation on diversity in franchising. According to U.S. Census Bureau data, over 30 percent of franchises are minority-owned. While franchises operated by minorities and women are on a steady increase, Carter believes there is still work to be done to support Tarji Carter launched the Franchise Player those who grew up like she did—with little to earlier this year. no access to information. Carter launched The Franchise Player in January, where she serves as founder and president. The company looks to expand the number of Black-owned franchises across the country by providing resources, education, and opportunities, the website said. The Franchise Player hosts monthly educational workshops, one-on-one coaching sessions with certified franchise executives, and industry networking events—one example being quarterly franchise speed dating. There’s also “The Franchise Game,” an event that highlights African American leadership, with speakers such as Fuddruckers CEO Nicholas Perkins and Pizza Hut franchisee Mike Quinn. Carter brings together industry leaders to discuss current franchising challenges. Other support services include custom mentorship programs and access to lenders—investors, SBA loan sources, and capital advisors. Carter built a platform for aspiring franchisees, experienced operators, future franchisors, and existing franchisees alike. She thoughtfully dubs them as starters, MVPs, all-stars, and coaches. “We have many operators who are looking for their next career move, and they want ownership,” Carter says. [CONTINUED ON PAGE 94]

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ences rises, quick-service restaurant employees must simultaneously manage drive-thrus, mobile orders, curbside pickup, and dine-in service. Employees are expected to manage these points and maintain consistent and welcoming service across all touchpoints, presenting a considerable challenge. To continue to deliver the outstanding service that customers expect, it is important for operators to invest in technology that bridges gaps among touchpoints. Restaurants gain increased efficiency when staff are more connected, leading to faster, more accurate service, and an overall better customer experience.

Communication platforms must provide technology that seamlessly integrates with voice AI. “Choosing a communication platform with voice AI integration helps future-proof a restaurant, setting it up for success whenever the time comes to upgrade,” says Scott Mullica, senior director of product management and innovation for HME Hospitality & Specialty Communications. “Other communication solutions on the market need additional audio boxes or conversions to integrate with your voice AI provider, but NEXEO | HDX provides for a seamless integration for both on premise and cloud-based solutions.” Plus, advanced telemetry continuously monitors and evalu-

ates the system interconnection to ensure it is always operating at peak performance. Effective restaurant communication plays a pivotal role in ensuring customer satisfaction and operational efficiency, and NEXEO | HDX takes it to the next level. “Unlike other platforms on the market, our solution enables seamless communication across critical areas of your entire operation,” says Mullica. “Even if you’re not quite yet on the market for AI-driven ordering, NEXEO | HDX provides the ability to communicate one-to-one with custom defined groups and individuals, get critical alerts from the timer, and more,” Mullica says. NEXEO | HDX is uniquely designed to improve efficiency at every customer touchpoint, offering a total solution for inside and outside the restaurant. Group communication, for example, allows employees to have a separate conversation between the kitchen team and the front counter without disturbing drive-thru communication. “Independent group conversations are custom defined to your restaurant needs, reduce the noise clutter, and improve team collaboration,” says Mullica. Additionally, one-to-group calls allow employees to be fully engaged in their roles while remaining connected to other areas of the restaurant through their own private channel, which has demonstrated to be invaluable to drive-thru line-busting teams. One-to-one communication is well-suited for coaching new employees. Managers can privately speak with trainees to offer additional guidance and celebrate progress. “Discreet coaching improves real-time performance and customer satisfaction while maintaining higher staff morale,” says Mullica. The platform also sends alerts and reminders only to particular team members or groups, ensuring that critical information is delivered to the right person every time while eliminating interruptions to others. Technology in the restaurant industry is undergoing rapid evolution to meet consumer demands for fast and efficient service across multiple order and pickup points. “Restaurant operations have evolved and so should the solutions that support them,” says Mullica. “The NEXEO | HDX platform continuously evolves to help operators stay on top of technology change and future-proof their entire store base. As their business and technology needs grow, NEXEO | HDX grows with them delivering advanced technology and functionality to support their ever-changing needs.” ◗

OCTOBER 2023 | QSR | www.qsrmagazine.com

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TECHNOLOGY CHECKERS’ DRIVE-THRU IS UNDERGOING A MAJOR SHIFT.

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BY BEN COLEY

The decades-old burger chain finds itself leading the industry toward the drive-thru of the future.

Checkers, Not Chess

CHECKERS

OCTOBER 2023 | QSR | www.qsrmagazine.com

TECHNOLOGY

FRANCES ALLEN’S FIRST few weeks as CEO of Checkers & Rally’s were exceptionally crucial. Taking on the lead role of an 800-plus-unit company is inherently challenging, but her onboarding process had the unique twist of coming right before the unprecedented global COVID pandemic. Without knowing what would truly unfold in the following months, Allen smartly planned her training well ahead of time. While the office remained open, she had the opportunity to meet with everyone, engage with franchise advisory committees, and visit restaurants in a couple of markets. Allen felt she was grounded in the brand before the chaos—a level of stability that was necessary to move forward with what she described as a “crisis committee.” The group met every day for an hour. So when offices in Tampa,

www.qsrmagazine.com | QSR | OCTOBER 2023

TECHNOLOGY

Florida, closed in late March, the chain was prepared to keep its employees and customers safe. Fifteen new operational procedures were deployed. “I guess you can look back in hindsight and say it’s a good thing that we are in Florida because we tend to get hit by hurricanes,” Allen says. “And as a result, we had some pretty well-defined crisis management, and we didn’t really miss a beat.” There were adjustments at the restaurant level, like leaning into delivery and prioritizing contactless exchanges of money. But Checkers was in a much better position to ramp up those changes through its decades of experience in drive-thru operations. Not only that, but dual lanes, walk-up windows, and no interior seating—a mode of operation consumers swarmed to when dining rooms shut down nationwide. “I was so impressed with the way this organization moved so incredibly fast,” Allen says. “Organizations have an innate DNA. That was one of the things that was very important that I understood. It was nothing like the pandemic to actually dem-

onstrate to me what this organization’s DNA was all about. We’re the small player, relatively speaking. And therefore, we have to try harder, we have to move faster, and there’s can-do scrappy resilience about the people in this organization that’s just spectacular. And it’s shown through in the pandemic. It’s still there today. It was not manufactured.”

PERFECTING THE DRIVE-THRU

One of the biggest initial shifts was dedicating one drive-thru lane to mobile order pickup across company-owned locations. The brand considered the move before COVID arrived, and like most tech-forward initiatives during the pandemic, innovation timelines accelerated. Because Checkers already had an extra lane to spare, the change mostly required signage and training to ensure employees, customers, and third-party delivery drivers understood how to navigate two different drive-thrus. Fast forward to 2023, a

CHECKERS / CHRIS NESCI

CHECKERS’ NEW PROTOYPE IS WINNING OVER EMPLOYEES AND CUSTOMERS.

OCTOBER 2023 | QSR | www.qsrmagazine.com

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majority of corporate locations have dedicated e-commerce lanes, except for a few stores where the volume is too high through both lanes. Checkers didn’t mandate this change to existing franchisees, but it did share data proving guests were more satisfied with 30

OCTOBER 2023 | QSR | www.qsrmagazine.com

their experience—not just the speed, but the quality of food, accuracy, and other metrics. However, nowadays when the brand looks into approving sites, it must have a mobile order lane. There’s an occasional exception if it’s great real estate and doesn’t have room for two lanes or if it’s a conversion that makes economic sense. Systemwide, the digital lane has become an important part of business, especially since Checkers is testing pickup through DoorDash. “That is a new innovation,” Allen says. “We expect that to do very well. The customer gets to save on the delivery cost and we get all of the benefits of being able to plan ahead and the customer still has all the convenience of picking up ahead. So we think that e-commerce lane is just going to become more and more important. … I think operators, especially during the pandemic, they saw the sense of it and where it worked in their restaurants. I think the majority of them actually implemented it.” The mobile order lane is a key feature of Checkers’ “restaurant of the future” prototype. The new design, which began rolling out in 2021, aims to address multiple opportunities— one of those being the new digital drive-thru. Another is the modernization of Checkers’ exterior. The next is streamlining the interior. The company conducted a study that found workers were collectively walking an unnecessary mile and a half per hour. The chain implemented

CHECKERS (2)

CHECKERS HAS 3X WHITESPACE JUST WITHIN EXISTING MARKETS.

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a FIT Kitchen, which not only reduces that wasted energy, but also replaces flattops with clamshell grills and features holding equipment to keep items hotter for longer and fry and grill stations with better capacity. The format allows for Checkers’ fry-seasoned chicken tenders—an innovation that launched systemwide in early 2022 after having one of the most successful pilots in the past decade. From late 2021 onward, new Checkers locations have opened with this new prototype for the most part. This year, the brand expects to debut roughly 40 restaurants nationwide. Meanwhile, the company is working to remodel existing stores with the new assets. Checkers improved all five of its restaurants in Jacksonville; the last one was completed in May, and the early results have been “extraordinary,” Allen says. “Our theory is if we get a whole market looking like this the results from the remodel will be even better and it just shows the brand has so much appeal, so much character,” Allen says. “And all of that comes out in the remodel itself—it’s brighter, better lighting, more colorful, and more modern contemporary look. That is really encouraging a guest to come back. And the good thing is having the FIT Kitchen in there already, when they come back they’re getting a better experience. We’re also finding that our employees love the new look and so it’s easier to recruit and retain in the remodeled restaurants, which means that the guest is getting a better experience. We could not be more thrilled with how that is going.” Allen says franchisees are “very open” to new ideas and that they are waiting on Checkers to formally announce results from its redesigned restaurants. Franchisees comprise 70 percent of the footprint. Operators were running about 550 locations at the end of 2022. Currently, there are 10 remodeled units in the system, which, according to the CEO, makes for “a very strong test.” The plan is to share official financials during the brand’s franchise convention in December. Similar to most restaurants, Allen says 20 percent of operators want to move even faster than the company, 20 percent resist change, and then a middle 60 percent wait to be convinced. “That’s the important thing. What is the ROI?” Allen says. “They’re smart business people and we want to make sure that we’re asking them to invest in something that’s actually going to deliver for them.”

AN AI PIONEER

Checkers has prided itself on being a leader in the drive-thru space since its inception. So completing an exploration of AI voice ordering—more in-depth than any other quick-service chain in America—made complete sense for the brand. With many customers opting for drive-thru, even into the post-pandemic future, Checkers recognized how much pressure that put on employee execution. The worker is expected to take an order from a customer at the speaker box and quickly prepare the meal for the previous guest. All of this has to be done quickly and courteously, with polite phrases such as “please” and “thank you.” 32

OCTOBER 2023 | QSR | www.qsrmagazine.com

“This is a very, very stressful position,” Allen says. “That’s why we were so passionate about being able to implement voiceactivated ordering. … There’s no human error there with people getting orders mixed up. It is much more accurate. It is such a stress reliever for the customer. It’s been hugely beneficial for us, and our employees love it. That’s the most important thing.” Chief information officer Minh Lee began in 2019 and entered the brand with 20-plus years of restaurant technology experience and a mindset of pushing innovation to make jobs easier. Before COVID, Lee was aware of automated ordering technology in quick service through phone calls. His idea was to replicate it but in a drive-thru setting. So around 2020, Checkers started down that path and spent six months in its lab playing with different scenarios. About that time, COVID was hitting and so were labor shortages. All of it catalyzed the adoption of voice ordering. Checkers initially used two companies that were pioneers in the space and “pretty much put them through the wringer in our lab,” Lee says. About three months into monitoring the technology, Presto—which used Israeli-based firm Hi Auto as its conversational AI partner—joined the ongoing experiment. Since Checkers was still in the early stages, Lee was open to more companies. And looking back on it, the executive is thankful for that decision. The brand threw all of the same challenges toward Presto and Hi Auto, and within the first 30 days, they were able to achieve or surpass what the other two companies spent several months trying to do. “Right then we knew that, hey, this company is different,” Lee says. “This company is invested, they have the talent, they have the motivation, the skillset to make this thing work.” The burger chain first unveiled its partnership with Presto in January 2022. And Checkers wasn’t revealing a pilot either. The chain was ready to roll out the AI technology to its entire company footprint, becoming the first quick-service chain to scale the innovation. As of July, nearly 400 restaurants had automated voice ordering, including some franchised stores. Lee estimated that about 70 percent of corporate units have the technology. There are several reasons why Checkers hasn’t yet reached 100 percent of company-owned restaurants. One is that leadership knew franchisees wanted the technology, so it slowed the corporate side to allow operators to gain traction. The other part is that as Checkers stepped ahead, it was learning a lot. The brand started with a one-size-fits-all approach, but as the technology grew to more markets, the chain realized that the AI needed fine-tuning to adapt to each area’s idiosyncrasies. The process began in Florida and expanded to the Southeast, East Coast, and West Coast. The AI is essentially in every Checkers region, and franchisees have patiently been waiting in line to get the technology installed. The reality, however, is that the brand will never truly reach 100 percent. There are some markets where it doesn’t make sense, like all the nontraditional locales. Right now, it’s optional. Typically when it comes to technology, innovation doesn’t become standard until there’s 85 percent adoption, Lee says. The executive predicts that will happen in

TECHNOLOGY

CHECKERS FOCUSES ON MEETING CUSTOMERS WHERE THEY ARE.

OCTOBER 2023 | QSR | www.qsrmagazine.com

across the country. As the chain traveled to different states it discovered that not many technicians had installed AI voice ordering before. There was a learning curve in getting a core set of workers to install everything remotely and copy the process instead of sending crews to one location at a time. The other piece was dealing with cloud technology and reaching capacity. “Once you start getting to a certain point, you hit a maximum capacity where you have to increase that capacity,” Minh explains. “I know cloud technology is fairly elastic, but even with the elasticity, the cloud, if you think of what it takes for this technology to work, you’re recording audio in real-time, sending it all the way through the cloud and having the natural language processing translate that audio into text, translate the text into a menu item or a response to a question, and send back down in real-time. That’s within a second or so doing all that work.” “It’s easy for 20-25 locations, but you do it for 100-plus locations and that gets really tough,” he adds. “It took us and our vendor a little time to see where the bottlenecks are and work through the bottlenecks where we’re able to scale.” At the approximately 400 locations, Checkers is running 2.5 million transactions per month through the AI system with 95 percent accuracy. There were a few outages in 2021 and early 2022. Since then, the automated voice ordering has been 99.99 percent reliable. There are those customers that refuse

CHECKERS (2)

the future based on the excitement from operators. Checkers first introduced AI voice ordering to franchisees during its convention in December 2021. Lee showcased samples of audio and hosted on-site visits with franchisees. “After that, they were just sold,” Lee recalls. “They see the value, the technology, they see the feedback from the managers, the cashiers, how much easier it made their lives. It wasn’t hard to coerce them or to get them to volunteer after that. We’re about 30 corporate locations in at that point already. But we had well over 200 franchises signed up within the first month.” Having a big list left Checkers with the daunting task of scaling a new piece of technology that wasn’t widely recognized

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to talk to a computer, especially the older change helped Checkers reduce long-term generation, but a majority of guests have debt from $300 million to $75 million. A lot appreciated the swiftness and politeness of of that financial burden came from when the digitized voice. Oak Hill Capital bought Checkers for $525 A key point, Minh says, is that AI isn’t million in 2017. meant to be a replacement. It’s supposed to The chain also received $25 million for complement human workers and fill a gap remodeling and growth initiatives. That’s if a restaurant is unable to hire or when an on top of the $20 million Oak Hill Capital employee calls in sick. provided in 2021. Allen couldn’t be more “You could yell at AI; it doesn’t care,” upbeat about the recent transaction. Minh says. “It doesn’t get its feelings hurt, “We’ve performed well in the first half of it won’t quit. It will just be as polite as possithis year, overcoming a lot of the challenges ble and try to do what it was programmed of inflationary pressures last year,” Allen to do. Customer side, you have people that says. “It just gives me enormous confidence like that about the AI. And on the employee that our five-year plan is working and that side as well. The employees, the managers, we can now move forward both profitably I’d say 98 percent of them love the system and achieve long-term success. It’s a huge and it’s there when needed. When employees positive for the brand and our stakeholders.” call in, the store could still run with the AI. The CEO says the chain has 3x white FR A NCES It solves a lot of labor problems right there. space just in the states it currently operates, A L L EN There’s a real value in filling that labor gap and expansion is being led by a 50/50 split of that’s always been missing, especially since new and existing franchisees. She describes …They loved our the start of COVID.” the pipeline as “robust,” and adds that food growing up, AI-enabled restaurants experience 7 Checkers is continuing to find smaller “A” they loved our fries, and “B+” sites, despite other chains downpercent faster service than non-AI stores. With average check, it’s fairly flat—somesizing their prototype square footage. and they’re also thing Checkers is looking to improve with Checkers finished 2022 with $858 milvery attracted the technology’s upselling capabilities. Curlion in systemwide sales and an AUV of to the fact that rently, the AI has a static upsell by daypart. $996,400. The brand is encouraging expanwe are this The goal is to take different attributes and sion with incentives and said earlier this make it smarter, like recognition of male/ year that it’s interested in the West and East pioneering, female voices, weather, and time of day. coasts—California, Nevada, and Arizona leading format In the past year, several quick-service on one end and North Carolina and South right now in chains have publicly stated their experiCarolina on the other. drive-thru. …” mentation with drive-thru AI, including Inf lation impacted Checkers signifiPanera, Wendy’s, Del Taco, CKE Rescantly in 2022. The cost of equipment, food, taurants ( Hardee’s and Carl’s Jr. ), and and construction was considerably higher Wienerschnitzel. than in 2018/2019. The good news, Allen says, is that the brand Lee foresees exponential growth in the space over the next has been able to match rising expenses with bigger revenue year to year and a half. numbers. New stores are having record weeks, proving there’s “We’ve been working with Siri, Google, Alexa for so long,” a sizable demand for the Checkers brand. The same goes for Lee says. “Today’s consumer is expecting that now. And now franchisees wanting to make a strategic investment. with a lot of restaurant technologies jumping onboard and even “I think many are looking to add a burger chain to their large restaurant companies recently announcing their rollout, portfolios,” Allen says. “We’re seeing more and more multi-unit there are so many more that haven’t announced that have been franchisees coming in. They’re looking for the more personal playing with that technology and slowly rolling out before they attention that they get from us versus some of the bigger brands. make that announcement.” They could be a franchisee that really is dedicated to that community and sees there’s something missing. They loved our food growing up, they loved our fries, and they’re also very attracted STABILIZING THE FUTURE to the fact that we are this pioneering, leading format right Amid all of the drive-thru changes, Checkers is forging ahead now in drive-thru. It’s still relatively less to build a Checkers with new leadership. than others. It’s a very, very efficient format. And they’re very In June, the fast-food brand announced that majority own- attracted to that. They have seen that be really effective and ership switched from private equity firm Oak Hill Capital efficient during the pandemic.” Partners to senior lenders Arbour Lane Capital Management, Garnett Station Partners, and Guggenheim Investments. The Ben Coley is the editor of QSR. He can be reached at bcoley@wthwmedia.com. 36

OCTOBER 2023 | QSR | www.qsrmagazine.com

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DRIVE THRU REPORT

Whether it’s AI, dual lanes, two-story builds, or more, the drive-thru landscape remains a work in progress in COVID’s wake—but one that’s as wide open as it’s ever been. ADOBE STOCK / BY SUWANB

OCTOBER 2023 | QSR | www.qsrmagazine.com

DRIVE THRU REPORT

THE 2023 QSR DRIVETHRU REPORT ©

BY DANNY KLEIN

❯❯❯

www.qsrmagazine.com | QSR | OCTOBER 2023

DRIVE THRU REPORT

TACO BELL’S TWO-STORY, NEON PURPLE-LIT “DEFY” ARRIVED WITH A BOLD OBJECTIVE:

Get customers through the drive-thru in two minutes or less. When franchisee Border Foods built the 3,000-square-foot showstopper in June 2022 in Brooklyn Park, Minnesota, it triggered a tidal of social chatter. Was this the most ambitious prototype ever built in fast food? The buzz was so constant, Border Foods cofounder and CEO Lee Engler said at the time, the only thing that kept Defy from hitting its projection was guests slowing to take videos instead of putting in orders. As eye-catching as the design, with its lift system and four-

lane setup, was, the methodology fit. “Our customers are digitally savvy, so we created digitally forward restaurants that simplify ordering and alleviate the increased drive-thru traffic,” says Matt Shaw, Taco Bell’s chief development of ficer. The chain’s digital sales grew nearly 35 percent, yearover-year, in Q2 2023. So the opportunity Defy aimed to crack was twofold, and orbited by COVID-19’s acceleration of trends: Restaurant customers were suddenly more comfortable with tech in their ordering process; and drive-thru’s elevated usage amid lockdowns created a habit that’s endured. For the first time, QSR, in tandem with Intouch Insight, added an extra layer to its Drive-Thru Report to take stock of the asset battleground. Or to frame it differently, does a revolutionary build like Defy answer the call? We drove through the location 25 times to find out. We did the same with McDonald’s Fort Worth, Texas, small-format prototype that debuted in December with an order-ahead lane for customers to receive food via conveyor.

McDONALD’S / COURTESY OF McDONALD’S OF NORTH TEXAS

QUICK-SERVICE CHAINS LIKE TACO BELL AND McDONALD’S ARE WORKING HARD TO DEVELOP THE NEXT BEST DRIVE-THRU PROTOTYPE.

TACO BELL

OCTOBER 2023 | QSR | www.qsrmagazine.com

ADOBE STOCK / GARGANTIOPA ADOBE STOCK / SMSPSY

Although the unit garnered a bevy of headlines for being an “automated restaurant” early on, it’s not a people-less operation by any means. The orderahead lane deploys technology McDonald’s said enables employees to begin preparing customers’ orders when they’re near the restaurant. There are also kiosks, which accept cash and credit, for consumers to place orders to go, as well as a pickup shelf. Outside, McDonald’s built parking spaces dedicated to curbside order pickup alongside designated blocks for delivery drivers. In addition, Intouch Insight rolled through Chick-fil-A’s Alpharetta, Georgia, location on Old Milton Parkway that invested in robotic delivery from Refraction AI. After sharing results, we’ll get into the overall QSR© Drive-Thru Report, which will paint a portrait of how flashy innovation complements

ADOBE STOCK / OKSANA

DRIVE THRU REPORT

the category’s hallmarks, and where they’re starting to mesh; what challenges remain with these evolutions, and how traditional drive-thrus are learning from revolutionary ones to lift the tide industry-wide. Shaw says Defy created the opportunity to serve more Taco Bell customers and provide two to three times the throughput of standard restaurants thanks to an increase in ecommerce sales. “And it’s not just fans who love the Taco Bell Defy experience,” he says, “it’s team members, too. Taco Bell Defy continues to maintain a steady application flow.” Defy boasts four production lines versus the two Taco Bell generally features. It’s not, despite what some might assume after pulling through a contactless experience, a less-labor intensive operation. Rather, Defy is a restaurant built to improve speed, not replace people.

www.qsrmagazine.com | QSR | OCTOBER 2023

DRIVE THRU REPORT

The below results apply to Taco Bell’s Defy , McDonald’s small-format store in Fort Worth, Texas, and Chick-fil-A’s Alpharetta, Georgia, restaurant. SPEED

TECHNOLOGY

Was your drive-thru order filled correctly and completely (including special request)?

Was the interaction via the speaker clear and understandable?

R E V O L U T I O N A R Y

D R I V E -T H R U S

WAIT TIME SECONDS

Chick-fil-A

65.56

McDonald’s

86.32

Taco Bell Defy

24.24

PERCENT

Chick-fil-A

100%

McDonald’s

96 %

Taco Bell Defy

100

Did you have to repeat any part of your order?

PERCENT

SERVICE TIME SECONDS

Chick-fil-A

245.20

McDonald’s

229.48

13%

Taco Bell Defy

151.96

TOTAL TIME SECONDS

PERCENT

Chick-fil-A

310.76

Chick-fil-A

100

McDonald’s

315.80

McDonald’s

Taco Bell Defy

176.20

Taco Bell Defy

NUMBER OF CARS

Chick-fil-A

2.64

McDonald’s

1.80

Taco Bell Defy

0.48

ORDER ACCURACY

PERCENT

Chick-fil-A

92%

100%

McDonald’s

80 %

100%

Taco Bell Defy

88%

Shaw says. “The restaurant was an industry-wide lesson to embrace the digital age and, at Taco Bell, we see this technology as a tool to interact with our fans.” An example is Taco Bell’s “Go Mobile” concept. Introduced in August 2020, it’s a framework built around improving drive-thru experience through additional access points. Shaw says Taco Bell has since “learned a lot.” Some tools that worked, in particular, are access points via its loyalty program, Go Mobile’s order-ahead capabilities, curbside pickup, and the expansion of physical drive-thru lanes. “While Go Mobile is not the only contributor to success, the uptick of rewards members visiting Go Mobile locations is certainly something we’re excited by,” Shaw says, suggesting the very bones of Taco Bell restaurants can now influence how customers choose to interact with the brand. Go Mobile gives guests a reason to engage on a deeper level than traditional rewards and discounts—convenience and faster access is part of the draw, too.

METHODOLOGY: The 2023 Drive Thru Study ran from the beginning of June to the end of July. There were 1,491 shops conducted, with 8 percent (125) of shops completed during breakfast (5:00 a.m.-10:29 a.m.), 40 percent (592) of shops conducted during lunch (10:30 a.m. –1:30 p.m.), 12 percent (174) of shops conducted during the afternoon (1:31 p.m.–4 p.m.), and 40 percent (600) of shops completed during dinner (4:01 p.m. –7 p.m.). Shops were geographically distributed throughout the U.S. Below is a breakdown of shops per brand:

OCTOBER 2023 | QSR | www.qsrmagazine.com

How many other vehicles were in line for service (in front of you to the speaker) as you entered the drive-thru line?

Was your drive-thru order filled correctly and completely (including special request)?

Was the volume of the speaker loud enough to hear the employee?

In the 25 trips, the average wait time (from arrival to order) for mystery shoppers was 24.24 seconds. The service time (from order taken to order received) was 151.96 seconds. The total time was 176.20 seconds. For perspective, non-Defy Taco Bell locations tested in this year’s Drive-Thru Report posted comparable results of 73.49, 205.35, and 278.84 seconds. Defy might just be the fastest traditional (not just a pickup window) drive-thru in America. What’s worth spotlighting, however, is the cycle of innovation needs refinement. McDonald’s, for instance, lost 8 percentage points in order accuracy as it gained nearly 100 seconds in total time. And while these restaurants are blazing trails, they’re as much pilots as signals of future development. “Despite being the most ambitious concept in Taco Bell’s history, the company is taking Taco Bell Defy’s learnings and exploring how we can integrate the successes into future builds,”

AV E R A G E C A R S IN LINE

ARBY’S ...........................165

HARDEE’S....................... 85

BURGER KING................165

KFC..................................165

CARL’S JR. ..................... 85

McDONALD’S ...............165

CHICK-FIL-A...................166

TACO BELL ....................165

DUNKIN’..........................165

WENDY’S........................165

DRIVE THRU ICON: ADOBE STOCK / FARAHIM

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DRIVE THRU REPORT

AV E R A G E T O TA L TIME

SECONDS

205.35

Carl’s Jr.

37.79

Taco Bell

278.84

Wendy’s

229.95

Hardee’s

40.27

Carl’s Jr.

303.74

KFC

230.10

Arby’s

49.79

KFC

303.95

Dunkin’

263.40

Dunkin’

57.70

Arby’s

319.64

Carl’s Jr.

265.95

Taco Bell

73.49

Dunkin’

321.10

Arby’s

269.85

KFC

73.84

Hardee’s

336.15

Burger King

274.93

Burger King

76.44

Wendy’s

343.07

McDonald’s

291.04

Wendy’s

113.12

Burger King

351.38

Hardee’s

295.88

McDonald’s

122.02

McDonald’s

413.06

Chick-fil-A

312.37

Chick-fil-A

123.72

Chick-fil-A

436.09

TOTAL:

262.09

TOTAL:

343.45

S E R V I C E

Taco Bell

O F

AV E R A G E WAIT TIME

S P E E D

2023 SPEED OF SERVICE

❯❯❯

80.90

FAST FOOD ICON: ADOBE STOCK / KORNKUN

OCTOBER 2023 | QSR | www.qsrmagazine.com

DRIVE THRU REPORT

TACO BELL / JOSH CHO

TACO BELL HAS EXPERIENCE WITH BUILDING A DRIVE-THRU-ONLY UNIT.

More recently, Taco Bell unveiled a Go Mobile design that’s the brand’s first small-box iteration. It touts limited dining space and more digital touchpoints than any other store in the f leet. The first opened in March in El Paso, Texas, and provided solutions for drive-thru bottlenecks created by the increase of mobile delivery orders and drive-thru popularity. There’s no indoor dining area and Taco Bell added dedicated parking for mobile or delivery orders. The unit also includes an outdoor pickup window and grab-and-go shelves. Another opened in Columbus, Georgia, and, likewise to some

of Defy’s learnings, will carry elements into future builds. Clearly, Taco Bell has speed on its mind. For the third consecutive year, the brand topped the QSR© Drive-Thru Report’s total speed chart. This time, at 278.84 seconds, a pretty sizable gap from Carl’s Jr.’s No. 2 result of 303.74. Taco Bell was also the pack leader in average service time at 205.35 seconds, ahead of Wendy’s 229.5. Wendy’s, as we’ll explore further, was one of this year’s big drive-thru winners. The brand ranked in the top five in four out of five categories a year after doing so in just one field. A common theme across the 2023 drive-thru sector appears to be streamlined operations. Pulsing fixes like AI and voice ordering are as much a tool to improve employee experience as they are to correct the labor line. Traditionally, many of quickservice’s mistakes occur at the order-taking point of a drive-thru. An employee is trying to listen to a guest, input, prepare, and fulfill while watching a line of cars queue around the building. Taco Bell rolled a Touch Kitchen Display System that gives

www.qsrmagazine.com | QSR | OCTOBER 2023

DRIVE THRU REPORT

AV E R A G E T O TA L T I M E P E R C H A I N BY VEHICLES IN LINE

V E H I C L E S

I N

L I N E

AVERAGE ADJUSTED CARS TOTAL TOTAL IN LINE TIME TIME

❯❯❯

Arby’s

0.67

319.64

477.07

Burger King

0.92

351.38

381.93

Carl’s Jr.

0.46

303.74

660.30

Chick-fil-A

3.41

436.09

127.88

Dunkin’

0.78

321.10

411.66

Hardee’s

0.48

336.15

700.31

KFC

0.72

303.95

422.15

McDonald’s

2.01

413.06

205.50

Taco Bell

0.96

278.84

290.45

Wendy’s

1.50

343.07

228.71

TOTAL:

1.27

343.45

270.40

workers the ability to prioritize orders based on size and complexity, obtain cards that explain how to build the meal, and share orders with other employees. The system was expected to be live in most units by the end of 2023. Taco Bell is simultaneously working on a new open kitchen floor plan to improve efficiency. Touch KDS, like Go Mobile, debuted in 2020. “Due to the ease of Touch KDS, we increased our efficiency and accuracy, which contributed to Taco Bell being named the fastest drive-thru for the past [three] years by you all at QSR Magazine,” Shaw says. He adds customer and team member perception have become the most important measures of success Taco Bell actively tracks when it comes to the drive-thru. It’s no coincidence they hold hands with accuracy, hospitality, and speed.

THE CHICK-FIL-A PARADOX CONTINUES

Even before COVID, the definition of “speed of service” was a difficult one to pin down. Was it still the

CHICK-FIL-A

DRIVE-THRU ICON: ADOBE STOCK / IMDPRODUCTION

OCTOBER 2023 | QSR | www.qsrmagazine.com

DRIVE THRU REPORT

CHICK-FIL-A

end-all of drive-thru? In a customer’s view, where does it begin? When you arrive? When your order is taken? Is there more leeway for one category or the other? The overall total time in the industry this year was 29 seconds faster than 2022 at 5 minutes and 43 seconds, with the biggest drop taking place in wait time (25 seconds lower), which came in at 1 minute and 20 seconds. Wendy’s alone jumped to 113.12 seconds from 170 seconds. It’s no grand mystery to see quick-serves stress this specific metric. QSR’s survey data last year showed guests would wait six minutes prior to ordering. After that, there was a clear move to pull off the line and head somewhere else. In some ways, this is where the magic of Chick-fil-A’s drivethru experience ignites. It’s become a common sight to see the brand at the bottom of QSR’s total time ranking. But it’s hardly a negative truth. Chick-fil-A’s drive-thru is a long-running amalgam of perception, execution, and customer experience delivered at unrivaled volumes.

CHICK-FIL-A’S MOST INNOVATIVE RESTAURANT YET IS COMING IN ATLANTA.

The brand’s freestanding drive-thrus ended 2022 with average-unit volumes of $8.676 million. Perhaps more impressive, 48 percent of the system reached that mark or higher. One operator was at nearly $17 million. As usual, there are a few levers at work. Chick-fil-A takes a guest’s order via tablet in-line and then conducts hospitality checks throughout the process. So from a perception standpoint, customers don’t feel unattended to or like they’re stagnating, despite how lengthy the line might get. The other, less nuanced fact is Chick-fil-A simply has a lot more cars stacked than the rest of the industry. This year, to help illustrate the dynamic, we created an average total time per chain by vehicles in line distinction. It takes the average cars mystery shoppers saw at pull up and, using total time of service, calculates to uncover how quick the brand is funneling vehicles forward relative to the crowd. In this view, Chick-fil-A’s superpower settles into focus with a time 48.32 seconds faster than Taco Bell’s Defy. A year ago, Chick-fil-A was beginning to try Mobile Thru drive-thru lanes and looking at ways to alleviate what’s the densest capacity in America. Matt Abercrombie, senior director service and hospitality at Chick-fil-A, says the brand continues to expand the option and tacked on additional stores this

www.qsrmagazine.com | QSR | OCTOBER 2023

DRIVE THRU REPORT

CUSTOMER SERVICE

How would you rate the service you received on this visit?

67 +303S +285S67 91 +90S +192S79 76 +167S +333S64 68 +274S +295S66 76 +195S +192S79 Arby’s

C U S T O M E R

S E R V I C E

FRIENDLY

NEUTRAL

19 %

Burger King

Carl’s Jr.

FRIENDLY

NOT FRIENDLY

NEUTRAL

27 %

NOT FRIENDLY

FRIENDLY

❯❯❯

NEUTRAL

19 %

NEUTRAL

16 %

FRIENDLY

NOT FRIENDLY

FRIENDLY

NOT FRIENDLY

NEUTRAL

29 %

FRIENDLY

Hardee’s KFC McDonald’s

Chick-fil-A

FRIENDLY

NOT FRIENDLY

NEUTRAL

33%

NEUTRAL

Taco Bell

NEUTRAL

19 %

NEUTRAL

30 %

NOT FRIENDLY

Wendy’s

FRIENDLY

NOT FRIENDLY

67%

FRIENDLY

NOT FRIENDLY

Dunkin’

67%

FRIENDLY

NOT FRIENDLY

NEUTRAL

28 %

NOT FRIENDLY

S AT I S FAC T I O N W I T H L E V E L O F S E R V I C E R E C E I V E D

Were you satisfited with your order on this visit?

97+3+a 95+5+a 93+7+a 90+10+a 89+11+a 88+12+a 88+12+a 87+13+a 87+13+a 85+15+a Chick-fil-A

Taco Bell

Arby’s

Wendy’s

Carl’s Jr.

SATISFIED

97 %

SATISFIED

95%

SATISFIED

93%

SATISFIED

90%

SATISFIED

Hardee’s

McDonald’s

KFC

Dunkin’

Burger King

88%

SATISFIED

88%

SATISFIED

87 %

SATISFIED

87 %

SATISFIED

fall. “This shift helps customers who prefer to order ahead in our app to receive their meal more quickly in their preferred service channel, the drive-thru. We are also finding that many guests choose to switch between service channels depending on their daily needs,” he says. “We are continuing to meet those needs through various channels, delivering a great customer experience no matter their preference.” One example is Chick-fil-A’s upcoming elevated drivethru that plans to open in 2024 in the chain’s homebase of

OCTOBER 2023 | QSR | www.qsrmagazine.com

85%

Atlanta. The four-lane, two-story concept includes dedicated Mobile Thru and traditional drive-thru lanes. When Chick-fil-A lifted the lid on the restaurant in July, Khalilah Cooper, executive director of restaurant design, noted similar themes to Taco Bell’s Shaw. In some markets, digital orders comprise more than half of sales at Chickfil-A. “So we know,” she said then, “our customers have an appetite for convenience.” The headliner of Chick-fil-A’s rendering was the detail

EMOTION ICON: ADOBE STOCK / ABBASY KAUTSAR

SATISFIED

89%

DRIVE THRU REPORT

it could house 75 cars at once. The kitchen is built above the drive-thru lanes. Meals are expedited to employees who then deliver orders directly to guests in a space protected by the upper level. This way, human interaction remains at the heart of Chick-fil-A’s core experience. Speaking of that, Chick-fil-A, as it has throughout the

history of QSR©’s Drive-Thru Report, topped the customer service chart with a friendly rating of 91 percent. No other brand was above 79 percent. At 92 percent, Chick-fil-A was also the most accurate brand in the Report. Wendy’s made yet another huge jump here year-over-year—from 79.40 to 87 percent.

ORDER ACCURACY

A C C U R A C Y

Was your drive-thru order filled correctly and completely?

❯❯❯

+8a92 90 +10a 88 +12a 87 +13a 87 +13a +18a +14a86 85 +15a 82 +18a 82 +18a 82 Chick-fil-A

Burger King

McDonald’s

Wendy’s

KFC

ACCURATE

92%

ACCURATE

90%

ACCURATE

88%

ACCURATE

87%

ACCURATE

Carl’s Jr.

Taco Bell

Dunkin’

Hardee’s

Arby’s

86%

ACCURATE

85%

ACCURATE

82%

ACCURATE

82%

ACCURATE

87%

82%

TO-GO ORDER ICON: ADOBE STOCK / KORNKUN

OCTOBER 2023 | QSR | www.qsrmagazine.com

McDONALD’S / COURTESY OF McDONALD’S OF NORTH TEXAS

DRIVE THRU REPORT

McDONALD’S / COURTESY OF McDONALD’S OF NORTH TEXAS

McDONALD’S UNDERSTANDS THE GROWING POWER OF DIGITAL AND DELIVERY SALES.

Overall, order accuracy for the chains tested was 86 percent, a 1 percent bump from last year. But here’s a very Chick-fil-Alike point to underline: Order accuracy was 18 percent higher when there was friendly service compared to not friendly service. And yes, it made the experience faster, too: total time was 30 seconds better when employees delivered friendly service.

It’s not a convoluted point: overall satisfaction was 84 percent higher when there was friendly service and overall satisfaction lifted 20 percent when the order was accurate. You generally can’t achieve speed or accuracy at the drive-thru without having employees who care about the guest experience. Abercrombie agrees employee well-being has become tablestakes in delivering across these fronts. It’s especially vivid when face-to-face ordering encourages personal connections, even at the drive-thru. Chick-fil-A invested in employee apparel that includes specialized clothing for heat, cold, and rain. Drivethru canopies were installed in the majority of locations and the brand introduced specially designed enclosures for workers to have a sheltered space to rest and escape the elements. “We are also actively collaborating with operators to develop new solutions to further enhance order-taking with the elements in mind,” Abercrombie says. “One approach we’re exploring will aim to remove team members from the outdoor elements during specific weather conditions, while simultaneously meeting customer expectations for quick, friendly, and efficient service.” News of the two-story restaurant arrived alongside Chickfil-A’s unveiling of a walk-up concept slated for New York City. This urban-market-tailored design allows guests to order ahead via the app. Abercrombie says in-restaurant dining “remains the fullest experience of the Chick-fil-A experience” and it’s a real posi-

www.qsrmagazine.com | QSR | OCTOBER 2023

DRIVE THRU REPORT

ORDER C ONF IRM AT ION B OA RDS

Did the restaurant have an OCB? / Yes, but was out of order or not in use?

93+6 +1 28+62+ 10 61+25+ 14 72+8+ 20 62+36+ 2 71+18+ 12 87+8+ 5 12+84+ 4 23+69+ 8 35+55+ 10

S E L L I N G

Arby’s 93 %

Carl’s Jr.

Burger King

NOT IN USE

S U G G E S T I V E

25 %

10 %

YES

Hardee’s

P R E - S E L L ,

12 %

KFC

McDonald’s

YES

Wendy’s

Taco Bell

NOT IN USE

69 %

NOT IN USE

55 %

35 %

10%

YES

SUGGESTIVE SELLING

90+74+73+73+59+58+37+36+36+24 88+81+79+77+69+60+54+46+25+11 Was a “pre-sell” menuboard in place?

Was a suggestive sell offered?

90 %

88 %

23 %

12 %

YES

NOT IN USE

PRE-SELL MENU IN PLACE

❯❯❯

L NA

D’

R CA

L’ S

’S

R HA

E’

81 % 79% 77%

59 % 58 %

’S

’

E RG

C TA

C HI

OCTOBER 2023 | QSR | www.qsrmagazine.com

69 %

60 %

54 %

F K-

46 %

25 %

24%

-A

tive to see it race back into the fold. But the quick-service game is an omnichannel target in COVID’s departure. “We know that every service channel meets a unique need, and we are dedicated to delivering a great experience and signature Chick-fil-A hospitality for every guest, no matter how they choose to dine with us,” he says. “Our off-premises channels—carryout, curbside, and delivery— are constantly evolving to meet the changing needs of our guests who prefer to dine offsite.” “Dine-in mobile ordering [where a customer orders from their table] is also a unique and convenient way for our guests to dine with us without waiting in line,” he adds. “This unique channel allows our customers to take the time they need to order and customize their meals, and we look

R CA

L’ S

R HA

E’

C HI

F K-

-A

’S

E RG

N DO

D’

C TA

11 %

’

forward to continuing to improve upon and personalize this experience as we refresh dine-in mobile ordering in 2024.”

AI AND THE TECH RUSH

Wendy’s enjoyed a resurgent drive-thru year. Speed of service, and operations in general, is a focus CEO Todd Penegor surfaced often on recent quarterly calls. And it could crystalize further with Wendy’s Global Next Gen design standard, which was optimized to reflect the needs of today’s digital customer preferences while streamlining tasks for the crew, says Deepak Ajmani, Wendy’s U.S chief operating officer, in what’s visibly a repeating thread in this story. “We see technology and innovation as key ingre-

MENUBOARD IMAGE: ADOBE STOCK / LINE-ART

C O N F I R M AT I O N ,

NOT IN USE

20 %

YES

84%

NOT IN USE

72 %

14 %

NOT IN USE

Dunkin’

36 %

YES

87%

NOT IN USE

61 %

28 %

Chick-fil-A

THE EVOLUTION OF DIGITAL DRIVE-THRUS HOW TO ENHANCE YOUR DRIVE-THRU NOW

Human Interaction • Pre-recorded greeting • Order confirmation screen in real time • Rotating images • Schedule dayparts (breakfast, lunch, and dinner menu)

• Multi-lane solutions • Headset communication system • Noise cancelling audio • High quality sound

WHAT WE’RE PILOTING

Artificial Intelligence (AI) • Better AI accuracy - natural speech voice recognition • Easily make changes to your order • 90% accuracy

Self Service Kiosk • Order at the touch of a button in the convenience of your own vehicle • Pull up to pick-up window

DIGITAL & DRIVE-THRU EXPERTS www.howardcompany.com

Fill out our online form to request a consultation! www.howardcompany.com/services/digital-services/digital-content-update-request

DRIVE THRU REPORT

dients to not only push the quick-service restaurant industry forward, but to deliver greater speed, accuracy and consistency our customers expect. As part of delivering a quality customer experience with every single visit, we constantly ask ourselves ‘how can we streamline the work of the restaurant team?’” Ajmani says. Wendy’s Global Next Gen includes dedicated mobile and delivery pickup points and an enhanced drive-thru design. The first units opened in Kansas and Oklahoma less than a year Wendy’s announced the standard, and it has more than 200 slated to debut through 2024. Global Next Gen unlocks 400 times the capacity for digital orders through the Wendy’s app and third-party delivery. In addition to developing cutting-edge blueprints, Ajmani adds, Wendy’s is exploring fresh approaches. Among them is a partnership with Google Cloud to automate drivethru ordering with generative AI. This empowers crew to focus on key elements of customer experience, he says. “With

every Wendy’s order, we remain committed to creating quality experiences and serving the hot, fresh Wendy’s favorites our customers know and love,” he says. “Ultimately, it’s our job to turn customers into Wendy’s fans—and we’re willing to put in the work.” On the AI topic, Wendy’s labeled the system “FreshAI.” As of August, it was testing in a corporate unit in Columbus, Ohio, with restaurant No. 2 on the way. Penegor said, echoing some of Defy’s aims, the tech isn’t about labor savings. Instead, “[it’s] about how do we reposition the labor within the restaurant to drive more throughput, drive speed and accuracy, and a better customer experience to drive frequency and repeat moving forward.” Hardee’s and Carl’s Jr. parent CKE Restaurants delved deep into the AI arena. In May, the company expanded partnerships with Presto, OpenCity, and Valyant AI to spread automated voice ordering across the country. Phil Crawford, CKE’s chief technology officer, says the brands

WENDY’S (4)

WENDY’S GLOBAL NEXT GEN PROTOTYPE IS BUILT FOR THE FUTURE.

OCTOBER 2023 | QSR | www.qsrmagazine.com

DRIVE THRU REPORT

continue to make advances in upsell and meal add-on scripts to complement the ordering experience, not deter from it. “So far,” he says, “we are excited about the results we are seeing, which are measurable changes in service exception, product quality, increased revenue, and a decrease in costs in drive-thru operations.” Presto, a provider that works with Checkers & Rally’s and Del Taco, among others, piloted the tech with CKE going back to the middle of 2022. It says early pilots showed, on average, drive-thrus achieved an 88 percent upsell offer rate to guests. Additionally, more than 46 percent of the upsells offered were accepted by guests. Crawford calls the potential of AI in hospitality “vast.” Beyond improving metrics digital-minded guests look for— efficiency, personalization, easy ordering—it can speed up service times by not putting diners on hold. Pull through the loop detector, place an order. It never takes a break. And employees can focus on making and handing out orders versus taking them and constantly trying to juggle life behind the window. Crawford adds AI can be integrated with inventory management systems to suggest menu items based on real-time supply levels. Leveraging machine learning algorithms, AI also has the ability to up- or suggestive sell products based on promotions and past history. Things like dietary preferences. “This could boost sales while making customers feel individually catered to,” he says. “Modern AI is getting increasingly good at understanding and interpreting human speech,” Crawford adds, “even with ambient noise or various accents. This makes it viable for use in drive-thru scenarios.” And like loyalty and data programs traditionally reserved for email or website collection, AI at the drive captures and analyzes data from each transaction, pushing brands to better understand customers and make informed decisions. But that’s not to say it’s a cover-all topic. In last year’s Report, more than two-fifths (45 percent) of polled customers said they disliked hearing an automated voice when ordering. Only 11 percent noted they wanted AI to help make ordering preferences, although 27 percent were interested in an ordering system that remembered their past history. The results were a bit disjointed, which isn’t all that surprising. In plain, it’s unlikely most of the respondents had even tried it yet. And to Crawford’s point, you have to consider where they saw it in addition to how it worked. What was their expectation of the chain and where did technology fit in? “Some quick-service brands may have a brand image centered on personal, human interaction, which might be diminished with the implementation of AI technology,” he says. “For these brands, it will be crucial to find a balance between tech-driven efficiency and maintaining their personal touch.” Pal’s Sudden Service, as one illustration, is a chain that

OCTOBER 2023 | QSR | www.qsrmagazine.com

not only doesn’t use AI, it doesn’t even have speaker boxes, and it likely never will. One of the regional icon’s core equities is that customers pull up to a window and place orders face-to-face with an employee. Pal’s, by the way, claims to average 18 seconds at the handout window to place an order and 12 seconds at the drive-up window to receive an order. Pal’s also doesn’t suggestive sell and offers everything a la carte. Crawford says brands need to consider demographics. There are certain markets and cohorts of guests that expect human interaction over an AI interface. Conversely, younger, tech-savvier groups might appreciate the convenience and novelty of AI. There’s also the nuts and bolts. “The cost of implementing advanced AI systems can be high, and not every quick-service restaurant might have the necessary resources or see a satisfactory return on investment, especially in the short term,” Crawford says. “Smaller or less profitable quick-serves might find it more challenging to implement such technologies than large, well-established chains.” “The success of AI implementation would require seamless integration with existing systems like POS, inventory management, and others,” he continues. “Some brands might have more adaptable systems than others.” The dressed-down way to phrase all this, regardless of what broad-stroke trend pieces might predict, is the use of AI tech in the quick-service drive-thru is not necessarily an inevitability for all restaurants, Crawford says. Yet that doesn’t mean it’s not a promising avenue. “Brands that can successfully navigate the potential challenges will likely find themselves at a competitive advantage,” he says. “The key will be in thoughtful implementation that enhances customer experience and operational efficiency without sacrificing the brand’s unique qualities.”

STEPPING INTO THE DRIVE-THRU OF THE FUTURE

It’s become evident in recent years that speed is not so easily defined. The definition needs layers. In some ways, you can blame the pandemic and the global shifts it prompted, from safety to digital adoption. There are also smart phones to keep diners busy in cars and how Amazon order procurement reset expectations for good. Consider mobile devices and the ability to order ahead. An order confirmation screen is now in the hands of nearly every consumer in America. Case in point: Order accuracy in the QSR© Drive-Thru Report was 7 percent higher when the customer was asked to confirm their order on the OCB. It lifted 18 percent when the interaction via speaker was clear and understandable and 15 percent when the customer did not have to repeat their order. Order accuracy improved 11 percent when the volume

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DRIVE THRU REPORT

of the speaker was loud enough to hear the employee as well. You can’t even order a movie these days without getting an email prompt. That’s one reason why accuracy has become as vital an indicator of success as speed at the drivethru, and essentially tied at the hip. “While speed remains important, it may not be the ultimate king anymore,” Crawford says. “With the introduction of new ordering technologies and menu items, speed might be compromised in favor of other aspects such as order accuracy or menu complexity. Still, reducing wait times continues to be a major focus for quick-service restaurants.” It’s a point Gagan Sinha, the SVP of technology at Inspire Brands, echoes. “Until recently, speed was the primary measure of success at the drive-thru. Today, we comprehensively analyze speed, convenience, accuracy, and a great guest experience to measure success,” he says. “Drive-thru traffic skyrocketed during the pandemic, and those rates have continued, so we are driven to provide a personalized, high-quality guest experience without sacrificing the perception of speed. This has led us to innovate around different lane configurations and restaurant formats, which unlocks the capability to handle the increased volume and deliver a winning experience.” Thanks to mobile and online ordering, customers have grown accustomed to a high level of accuracy—and seeing receipts before the transaction is fulfilled. Accuracy is now an expectation of the drive-thru, Crawford says. There’s too much parity for restaurants to trade it off with convenience and expect customers to accept the deal. Speed and technology, unsurprisingly, also form a symbiotic relationship. In the Report, service time was a sizable 61 seconds faster and total time 58 seconds better when the volume of the speaker was loud enough to hear the employee. Wait time was 8 seconds faster, service time 64 seconds, and total time 72 seconds better when the customer didn’t have to repeat their order. Service time improved 59 seconds and total time 45 seconds when the interaction via speaker was clear and understandable. In general, service time was 23 seconds faster when there was an OCB. The more stations in use, the slower the service and total time were. “The ability to integrate with digital ordering platforms, apps, and contactless payment methods is now a significant factor. Customers appreciate the convenience and safety of these systems,” Crawford Scan the QR code says. “Brands that seamlessly connect their to access Intouch Insight’s Annual drive-thrus with digital technology generDrive-Thru Study ally have an edge.” in full. Customer experience has become a holistic drive-thru approach. “This can

OCTOBER 2023 | QSR | www.qsrmagazine.com

include the friendliness of service, the ease of ordering, and even the physical design of the drive-thru,” Crawford adds. And it’s also a matter of customization rising to new ideals, from the systems to the layout itself. “As we prioritize providing exceptional guest experiences, innovations like order ahead, loyalty programs, digital menu boards, and drive-thru-only restaurants offer us a chance to personalize their visit,” Sinha says. “By providing choices in how our guests interact with the brand, we can meet them where they need us, whether it’s through the app, drivethru, kiosks, curbside, third-party delivery, or dining-in.” At Inspire, much of the AI focus is tilting toward labor. Through identifying efficiencies and opportunities afforded by automation, chatbots, or other solutions, Sinha says the company can redeploy employees to other areas of the restaurant that are higher touchpoints with guests. “For example, AI can use data on a restaurant’s historical sales, transaction volume, traffic information, order complexity, make times, and guests’ time expectations to help team members prioritize orders,” he says. “This frees them from the time-consuming responsibility of sorting through the noise and empowers them to make the best decisions. The more cumbersome tasks we can take off managers and team members, the better they can support their team and interact with guests.” Inspire of late placed resources into expanding its delivery and mobile pickup areas, especially in locations with higher-channel demand, like college campuses and urban areas. “That is where our digital-only stores have been performing very well,” Sinha says. “By aligning across our key goals—guest satisfaction, team member satisfaction, and restaurant profitability—we continue to evolve our omnichannel strategy across formats.” Amid all the innovation, Crawford says, some other consumer movements will take hold, like sustainability and contactless service. Physical drive-thrus are evolving as expectations climb, from high-quality graphics to locations designed to improve traffic flow and reduce congestion. Just as fast-food interiors refreshed to satisfy changing demand, the same is true of drive-thru aesthetics. You might even see virtual or augmented reality providing interactive experiences someday, such as virtual menu browsing or promotional games. It’s a wide-open universe. “The drive-thru of the future will likely be more technologically advanced, highly personalized, and eco-friendly, catering to a consumer base that values speed, convenience, safety, and sustainability,” he continues. “However, despite these advances, the essential goal will remain the same: to provide customers with a fast, convenient, and satisfying dining experience.” Danny Klein is the editorial director of QSR and FSR. He can be reached at dklein@wtwhmedia.com.

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With more than 65 years of design and development experience, The Howard Company focuses on serving its business partners with high-quality drive-thru menu systems and supporting drive-thru lane products. We are the master of the drive-thru lane with branded products that are guestcentric and guaranteed to bring the best ROI. From custom directional signage at the lane entry to clearance bars, canopies, digital or static pre-sell boards, and main menuboards including our space-saving All-In-One system (menuboard, canopy, and order-confirmation display), communications systems plus coordinated installation of all product lines, you can look to us to be your one source for all your drive-thru needs. We are continually exploring new innovations to bring 21st century technology to the guest experience for all our partners. Make the Howard Company your one call for all your custom drive-thru lane design and development needs. www.howardcompany.com/Products/DriveThruSolutions.htm

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PROTOTYPE INNOVATION THE PANDEMIC PROVED DINING ROOMS AREN’T AS IMPORTANT AS THEY USED TO BE.



The sales channel exploded during COVID, and quick-service chains are looking to capitalize.

One modern marketing strategy tells companies to “meet customers where they are.” That could be amended in the limited-service restaurant industry to “meet customers where they drive.” As the percentage of customers using drive-thru lanes at quick-service and fast-casual restaurants has grown, an increasing number of dining brands of all sizes have considered—and gone forward with— BISCUITVILLE

OCTOBER 2023 | QSR | www.qsrmagazine.com

PROTOTYPE INNOVATION

DRIVE-THRU

BY BARNEY WOLF

DOMINANCE

launching drive-thru-centric units, many with pickup options. Even before COVID-19 hit in 2020, operators were looking beyond the rising number of consumers using drive-thrus to a variety of other issues, including higher costs for labor, construction, energy, and real estate, as well as diners’ move toward digital ordering. That activity accelerated during the pandemic, as many restaurants became essentially drive-thru-only units because

their dining rooms were closed for weeks at a time. Operators found they could still be profitable by having drive-thrus, pickup options, and delivery options alone. The increased push for drive-thru and pickup-only stores “was definitely driven by COVID,” says Maeve Webster, president of Vermont-based foodservice consultant Menu Matters. While offpremises visits have dipped some since, “they are still higher than pre-pandemic.”

www.qsrmagazine.com | QSR | OCTOBER 2023

It makes sense for operators to look at the drive-thru-only option due to the potential “enormous number of efficiencies and benefits” that such a move could provide, she notes. These range from requiring a smaller footprint to improved speed of service. The challenge with drive-thru and pickup-only locations is for companies to avoid relegating these units solely to providing customers with “transactional events,” not a brand connection, Webster states. Otherwise, the stores become “nothing more than large vending machines.” Still, there are logical sites for these units, she adds, especially as fill-in locations between a company’s regular restaurants and in high-density urban areas with expensive real estate and where customers are seeking a quick meal to eat while traveling or to take to the home or office. Several companies are doing exactly that, dipping their toe into the drive-thru-only pool with a handful of initial units and plans to add more. Many require less than an acre of land, fewer employees, and various cost savings, albeit with lower sales numbers than dine-in ones. Jack in the Box Inc., based in San Diego, is adding drive-thrucentric units at both its namesake and Del Taco brands. At this

point Jack in the Box has two of the restaurants open with about a half-dozen more in development, while Del Taco has one with more on the drawing board. The company has stated the initial Jack in the Box offpremises prototype in Tulsa, Oklahoma, is outperforming expectations. “I was just at a franchise convention, and there’s a lot of energy around this,” says Van Ingram, vice president of franchise development for both brands. “The concept is to have a smaller, really efficient footprint for a higher volume, so there are multiple pickup and convenience” avenues, he notes. Units feature a Y-lane drive-thru, walk-up window for ordering, and a pickup area for mobile and third-party delivery orders. In designing the off-premises prototype, the company built it by integrating its kitchen with key components like the safety of employees, how to get food in the customers’ hands quickly, making pickup easier for third-party delivery, and reducing build-out costs by some 20 percent. With that in hand, the question then became “What is the smallest footprint that meets all these considerations?” Ingram recalls. The answer was 1,375 square feet, with a few parking spaces for employees and delivery drivers, who pick up orders in lockers just inside the building, rather than being delayed by customers—or alternately delaying other customers—in the drive-thru. The drive-thru and walk-up units are among several venue options at both Jack in the Box and Del Taco, providing flexibility in the size of the eateries to meet the markets where they are being built. The smaller stores “allows us to look at niche markets where we couldn’t before,” he says, including both urban and suburban sites with high real-estate costs. Del Taco’s first drive-thru and pickuponly unit, part of its “Fresh Flex” store offerings, is about 100 square feet smaller than its sister company’s non-dine-in restaurants and features pickup lockers that are built into the restaurants’ façade. The interest in pickup options shows that “[Quick-service ] is probably taking some learning from what fast casual has done,” Ingram adds. Both brands are looking at their early units to determine how to move forward with them. For instance, the Tulsa eatery’s industrial image has been changed in the second store. To differentiate themselves from their traditional locations, some companies have provided drive-thru-centric units with new surnames. One favorite is “Express.” Captain D’s is among those, as it already JACK IN THE BOX’S OFF-PREMISES-ONLY has three Express locations open and a DESIGN OPENED IN TULSA, OKLAHOMA.

OCTOBER 2023 | QSR | www.qsrmagazine.com

JACK IN THE BOX INC. (2)

PROTOTYPE INNOVATION

fourth slated for the first quarter of 2024. With buildings of about 970 square feet on sites as small as four-tenths of an acre, these spots join the company’s 22- and 44-seat restaurants— emphasizing the latter. “Prior to COVID, we had determined that we wanted to be in more urban metropolitan areas that are population dense,” says Brad Reed, chief development officer of the Nashville, Tennessee-based entity. When the pandemic hit, “We thought this was something that could really work.” Considerable research went into determining what Captain D’s wanted to accomplish with the new units, which would have fewer sales without dine-in business but also less labor require-

ments and build-out costs. “Then we had to be creative with the kitchen size,” Reed says. The initial prototype, which costs up to $300,000 less to develop than the brand’s large dine-in restaurants, featured a revamped kitchen built for speedy service, a smaller menu than dine-in, a drive-thru lane, far fewer parking spaces, and ordering and pickup windows. “We’ve been pleased with their performance,” Reed states. Still, the company has made a few tweaks in the design after the first two stores opened, including moving some equipment around and adding a second drive-thru lane in new units to help improve speed and flow. In addition, the menu was expanded to include more items Captain D’s offers elsewhere. “Our guests really like the variety, so we went in and added more” options, he points out. “In looking back, we went too far in scaling back.” Plans call for two to three Express locations—combined company- and franchise-owned—to open annually going forward. Captain D’s plans, however, to focus more on dine-in locations, especially in smaller towns, where the restaurants are often strong casual-dining options. North Carolina-based Biscuitville also has dubbed its drivethru-only spots Express. The units are about 1,800 square feet—more than a third smaller than full-size ones—and feature two order lanes that merge into one pay lane plus a walk-up window with a couple of outside tables. “Before COVID, we were doing approximately 70 percent [of sales] through the drive-thrus,” states Blake Jennings, chief

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OCTOBER 2023 | QSR | www.qsrmagazine.com

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development officer. “Post-COVID it’s been about 80 percent. Because of that, it made sense to test drive-thru-only units.” The first Biscuitville Express was a conversion in its hometown of Greensboro, North Carolina, while the initial new build is in nearby Burlington. The plan for now is that the drive-thrucentric stores will be in urban markets that already have several dine-in locations. “This will help us grow because of additional site availability,” he says, explaining that the Express locales require just seven-tenths of an acre, about half that of a regular unit. Not only are the buildings smaller, but less space is needed for parking. The drive-thru-only units are expected to result in a 15 percent development cost savings per unit, including construction and equipment, such as one fewer HVAC unit and restroom. Operationally, “we will be able to manage labor better,” Jennings notes, plus kitchen efficiencies. “We’re looking at a one-to-two-year horizon to tell how successful these will be,” he adds, but “sales preliminarily look like we will be happy.” The idea of using drive-thru-centric stores in busy, urban markets is also the logic at Chicago-based Portillo’s, which is expected to open its second Portillo’s Pick Up in suburban Rosemont. The first came online in Joliet, Illinois. “In markets that begin to mature, conventional sites could be seen as cannibalizing,” says Derrick Pratt, chief operating officer. “We see this as in-fill” that is perfect for smaller sites along busy travel corridors, the executive adds. The name for the new units emphasizes their multichannel off-premises focus. “We operate third-party pickup, independent guest, and catering delivery” in addition to a three-lane drive-thru, he states. “The only channel we’re not operating there is dine-in.” Online orders are picked up on inside shelves. The unique drive-thru is something that evolved as the 68

OCTOBER 2023 | QSR | www.qsrmagazine.com

company evaluated the first unit’s performance. Two lanes will be for full orders, while drivers with orders that can be filled quickly will be directed to a third lane. As at other Portillo’s, the company retains its industry innovative use of employees standing by menu boards to take orders and payment. “We consider the middle lane as an express lane,” Pratt says. “Say if someone orders a piece of cake, they would be sent to that lane, and someone could run [the item] out in 30 seconds.” Portillo’s Pick Up locations are built on less than half the real estate for a conventional dine-in restaurant, even with the third lane. Construction and equipment costs are considerably lower, and the return on investment is “accretive,” he notes. While most companies are looking at the drive-thru-only units for urban locations, Taco John’s is going another direction. The Cheyenne, Wyoming-headquartered chain is eying small towns with fewer than 10,000 residents for its smaller, less expensive Drive-Thru Olé outlets. “Our focus has always been small markets,” notably in the upper Midwest, says Brooks Speirs, vice president of franchise development. Many markets are underserved and “This is a great option for people there, and a good opportunity for franchisees to get a return on investment.” The Drive-Thru Olés, built with customized modular pieces on less than a half-acre of land, cost roughly half of a traditional Taco John’s 38-seat dine-in restaurant, he notes. That means they can be nicely profitable, even with projected sales of 80 percent of the larger units. Construction time is also shortened, because the modular pieces—Taco John’s originally built modular style—can be fabricated while site preparation is going on. The modular pieces are shipped to the restaurant location and can be put together in a few days. With two of these eateries already open—the first in South Dakota in 2021—and another two projected to open early in 2024, the company has gathered valuable insights. It’s learned from some design issues and made several improvements, particularly regarding the kitchen line in the original design. “If you look at the upper Midwest, we think there are 30 small locations, where there is already one competitor, to build smaller units,” Speirs states. And there is potential to put some in newer urban areas, like Boston, but those likely would need to have in-store pickup space. Barney Wolf is a regular contributor to QSR and is based in Ohio.

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Everyone from consumers to management deserves to feel safe and secure in their businesses.

A SENSE OF

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SmartChain Security and Cash Handling

Addressing Customer Safety Concerns

How creating an atmosphere of safety can encourage customers to return to restaurants.

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he customer is always right, and this is never more true than when it comes to customer safety. Customers must know they are safe, especially when spending their hard-earned money. When customers see theft, lax cash handling practices, health hazards like spills on the floor, and little concern for employee safety, they are less likely to be a return customer. “Customers expect to have a safe and 72

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widely, but it all comes down to reducing shrinkage by creating an atmosphere of security. “Operators can do this by increasing camera coverage and advertising that coverage, hiring uniformed security guards, and oﬀering police discounts,” Milner and McBride say. Businesses can add to a sense of security by adding cus-

OCTOBER 2023 | SPONSORED SECTION

pleasant experience when they dine out. You want to make your customers feel safe by making it clear you take their safety seriously,” says Kevin Milner, senior director of audit at Envysion Motorola Solutions Company, and Matthew McBride, loss prevention manager at Envysion Motorola Solutions Company. “Show them you are taking their safety seriously by implementing a visual deterrence strategy.” Visual deterrence strategies can range

“There is an increased focus on physical security, with patrons seeking reassurance that restaurants have measures to address potential threats like aggressive behavior and criminal activities.” tomer-facing monitors. “This has a twofold eﬀect of letting them know they’re protected and watched, which can reduce incidents from starting in the ﬁrst place,” Alex Seidel, special systems manager at Big Dog Surveillance Systems, says. Stores should always aim to avoid uncomfortable situations that could negatively impact customers’ experiences. Of course, employees and managers do not want to be in a position like calling the police or confronting customers regarding poor actions, such as theft. There are ways to avoid this. “With virtual security guard services, a monitoring operation can conduct virtual tours of vulnerable locations to check for suspicious activities, remove unwanted people from the property, deter

SmartChain Security and Cash Handling

OCTOBER 2023 | SPONSORED SECTION

cent, while delivery increased by 116 percent and drive thru grew by 20 percent. “Operators should communicate via a multichannel strategy that their establishments have the highest security protocols and technologies in place to ensure the safety of their employees and customers in place. This would include online, web applications when ordering or reservations and in-store signage,” Thomas says. Customers look for signals that they are safe from criminal activity and they want to trust that the money they are

Being aware of customers’ needs and concerns is critical in strengthening security and creating an atmosphere of safety. “The proper staﬃng levels, sequence of service in greeting patrons upon entry, proper lighting, good signage, overt video camera placement, public view monitors at entry doors, ample lighting in the parking lot, and a clean environment are all statements to the customer by the operator that their needs are being met,” Parish says. “If the customer doesn’t feel safe, then they will go somewhere else.”

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loitering, dumpster diving, and track employees in vulnerable situations, e.g., during bank deposit runs or exiting the outlet at night during closing,” Will Kelso, senior vice president at Interface Systems, says. “This can be done discreetly without negatively aﬀecting the customer experience at the location.” Safety attitudes have shifted in many ways since the COVID-19 pandemic. People now take health considerations much more seriously, and this translates to businesses being held to a higher standard. “Customers now expect restaurants to implement rigorous cleaning protocols, including regular sanitization, social distancing measures, and touchless payment options. Moreover, there is an increased focus on physical security, with patrons seeking reassurance that restaurants have measures to address potential threats like aggressive behavior and criminal activities,” Kelso says. Restaurants have always been held to a higher standard of cleanliness compared to other public businesses. COVID-19 made this a matter of extreme concern to customers’ well-being and safety, but that does not mean restaurants should lose sight of other security measures, which customers are concerned with as well. “Patrons expect a clean and safe environment when visiting a restaurant, which is why it’s important to eliminate potential physical risks, such as a wet ﬂoor or openly handling cash,” John Toneatto, vice president of security and investigations at Loomis, says. To make sure customers feel good about frequenting a restaurant, operators can make sure team members are following a high standard of security, cleanliness, and cash-handling practices. COVID-19 did not only change expectations of safety where health is concerned. “The post-pandemic surge of violent crime, and its subsequent coverage in both traditional and social media, has contributed to the change in customers dining habits,” Scott Thomas, national director of signature brands at Genetec, says. According to NPD from February 2020 through February 2022, carry-out restaurant orders declined by two per-

“If the customer doesn’t feel safe, then they will go somewhere else.” spending is safe. “The consumer understands that it is the operator’s responsibility to provide an environment that deters criminal activity and has the necessary tools on site to report and respond appropriately should something happen,” Paig Parish, business development manager at Hanwha Vision America, says. “The operator’s awareness of their location crime index is important, and their locations should be built proportionately with the level of security measures needed to meet their crime index score.”

Customer safety is paramount to a good experience and great customer service, which means security systems need to be modern and curated to ﬁt the needs of the customers and community the restaurant is serving. Security should be treated as a necessity for customer service, especially as violent crime is on the rise. Consumers will not spend their money at a restaurant if they do not feel safe. Modern, thorough security and cash handling procedures are integral to customer SC experience and satisfaction.

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You’re working differently…So are we Food prep, theft, employee/patron safety, cash handling, cybersecurity... Having “eyes on” situational awareness through video surveillance has never been more important for QSR operations. Whether it’s the front or back of house, entrances and exits, or employee break rooms, Hanwha Vision has the right security and surveillance solutions to help you meet these challenges, protect your operations, and keep your business moving forward. Intelligent surveillance solutions combining 24/7 protection with the latest advancements in AI, analytics, and cloud management. © 2023 Hanwha Vision Co., Ltd. All rights reserved.

SmartChain Security and Cash Handling

Managing Internal Shrink: Employee Retention

ADOBE STOCK / PR IMAGE FACTORY

High-security standards increase employee retention and help fight against labor shortages.

“High staff turnover rates in the quick-service restaurant industry make establishing consistent and reliable cash handling procedures challenging.”

ccording to research by Wisk, restaurants and bars can lose up to 20 percent of their bottom line to internal and external shrink. There are many ways to mitigate shrink, and one of them is to increase retention of employees. One of the most effective ways to support retention is to standardize training and 76

OCTOBER 2023 | SPONSORED SECTION

instill employees with confidence so they are less likely to act inappropriately and are empowered to stop external shrink. “High staﬀ turnover rates in the quickservice restaurant industry make establishing consistent and reliable cash handling procedures challenging,” Will Kelso, senior vice president of Interface Systems,

says. Employees can be part of security and cash-handling best practices and they can also make up a restaurant’s biggest internal shrink problems. “Employee theft and ‘sweetheart deals’ continue to be a major concern for service industry businesses. The same scams happen consistently: till skimming, unrecorded sales, under-ringing, and blunt theft continue to plague owner-operators,” Alex Seidel, special systems manager at Big Dog Surveillance Systems, says. It may be obvious best cash-handling practices depend on employees following security measures in place. How can operators ensure employees are following best practices? “Training is the most important step in loss prevention. You need your employees to follow the right cash-handling procedures to prevent theft. However, it’s also important to build a culture that reduces their likelihood of stealing,” Lianne Neufeld, director of strategic accounts at Solink, says. Employees notice the culture surrounding security in restaurants. When employees know security is a priority, they know their safety is important and are less likely to engage in illicit behavior like till skimming. “The biggest common mistake I see is owner-operators ‘cheaping out’ on their camera systems or purchasing an oﬀ-the-shelf system from a big box store that has no support,” Seidel says. “The return on investment of a smarter high-end system will more times than not exceed the operational cost of using it.” When operators do not invest in security technology and appropriate training, even the best-run store with many veteran employees can create unsafe environments and lose money unduly to shrink. “A lot of businesses assume the veteran

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2500 CityWest Blvd., Suite 2300. Houston, TX 77042

713-435-6700

SmartChain Security and Cash Handling

OCTOBER 2023 | SPONSORED SECTION

“Training is the most important step in loss prevention. You need your employees to follow the right cashhandling procedures to prevent theft.”

Envysion Motorola Solutions Company

can take advantage of those problems. “Employee retention is a universal challenge across many industries, and restaurants are no exception. You may not consider that experienced individuals who leave their jobs have a working knowledge of your security systems and cash handling protocols,” says John Toneatto, vice president of security and investigations at Loomis. When employees are concerned about their safety at a location, they are less likely to stay at that restaurant and are more likely to be lax about customer service and cash handling. “An increase in proactive response via interactive, realtime video monitoring was noted as chains sought to assuage employee concerns,” Scott Thomas, national director of signature brands at Genetec, says. Advancements in technology are also important to note. Not only are security measures becoming more thorough as technology advances, but new technology can lessen the strain of labor shortages. “The ability for a camera to identify

people and their motion helps to eliminate the pixel-based motion alerts and false alarms that historically have made video monitoring extremely cost-prohibitive. It also allows operators to use video veriﬁcation and talk-down options for increased patron and employee safety,” Paig Parish, business development manager at Hanwha Vision America, says. Little mistakes like propping open back doors when it gets hot in the kitchen or not maintaining a timely pickup and deposit schedule for cash can make locations more vulnerable. This is why it is imperative to partner with a security company that provides consistent communications, dedicated customer service, and reliable products. Employees should be kept up to date with training, be given appropriate support inside and outside work, and be able to feel safe with security procedures in place. By doing these things, restaurants can decrease the threat of crime and shrink while retaining employees at higher rates. SC

ENVYSION MOTOROLA SOLUTIONS COMPANY

employees are solid and don’t give them refreshers on updated cash handling procedures,” Neufeld says. Oftentimes, operators will be reactionary rather than proactive with security and cash handling. “Some operators don’t respond until after a significant loss or event has occurred. Operators often focus on the current loss or event, and don’t give the necessary attention needed to prevent future occurrences,” says Kevin Milner, senior director of audit at Envysion Motorola Solutions Company, and Matthew McBride, loss prevention manager at Envysion Motorola Solutions Company. It is integral that team members and customers feel safe while also knowing that stealing is not an option because security measures do not allow for easy theft. Company cultures also must prioritize the well-being of their team. Often, if a team member is stealing, it is not with malicious intent, but rather because they may be in a bad situation. Creating policies to give financial aid to employees can drastically cut down on theft. According to Anthony Moussignac, director of restaurant sales at Solink, one of his clients discovered employees were stealing because they had an unforeseen medical emergency come up and had no way to pay for it. “They’ve since created this loan program where now if anyone on their team needs money, they offer them interest-free loans. This policy has cut internal theft dramatically,” Moussignac says. Labor shortages may make it hard to confront employees who are stealing. In reality, it is very important to address internal shrink when it is identified. “Many operators try to look the other way. The most common situation I see is that they accept that cash losses are the cost of doing business,” Joe Gnorski, executive vice president of retail at Glory Global Solutions, says. “One operator was losing $25,000 a year per store to cash differences. The manual processes they deploy rely on at least one employee to be responsible for the business and prevent theft. Constant turnover in the industry makes that scenario likely to fail.” If there are gaps in your security and cash handling, employees who leave

SmartChain Security and Cash Handling

AI Enhancing Security

ADOBE STOCK / APCHANEL

How artificial intelligence is evolving the security and cash-handling procedures in quickservice restaurants.

he landscape of security and cash handling is rapidly evolving as artificial intelligence and automation remove human error from security and cash handling. There are many benefits to increased automation and AI, including savings on labor costs, increased efficiency, reduced human error, and the ability to ensure adequate security for operators, team members, and customers. However, it is important to ensure that as AI and automation move into cash handling, security operators and restaurants are comfortable using it. “It is imperative to work with a trusted partner with a proven track record. 80

OCTOBER 2023 | SPONSORED SECTION

“Restaurant operators are increasingly leveraging AI-powered security cameras that have video analytics capabilities, as well as solutions for reporting exceptions in point-of-sale transactions.” Artiﬁcial intelligence is everywhere and in everything, so there are new brands and companies springing up literally every day,” Paig Parish, business development manager at Hanwha Vision America, says. Many security companies are entering the market, but it is important to ensure restaurants are choosing the right

company for their needs. Operators and employees have to rely on security measures for their physical safety and to further reduce shrink. “The biggest technological advancements may actually be happening on the other side of the register. Cash payments are now only 18 percent of payments, and

this shift away from cash is continuing. This could eventually lead to a sustainable reduction in armed robbery attempts as heist gains lessen,” Scott Thomas, national director of signature brands at Genetec, says. While cash is becoming less ubiquitous, it still has not fully been eliminated, which means that it is important that any cash in the store is being properly handled, accounted for, and secured. Sometimes issues can become so mundane that they are no longer seen as a concern. Internal shrink is something that will never completely be resolved in businesses; it does not mean that it cannot be reduced. “Cash exposure in the restaurant represents a signiﬁcant safety and security concern for operators. Cash exposure creates more risk for internal theft losses. While cash exposure has been an issue for a long time, it is often just considered a requirement of doing business, but many new solutions automate the cash transaction—making cash a contactless payment method and those same solutions can eliminate cash exposure completely,” Joe Gnorski, executive vice president of retail at Glory Global Solutions, says. Technology continues to take over how customers are paying, but that does not mean it is fully secure and exempt from fraudulent activity. “Increased use of kiosks, third-party deliveries, contactless payments, and mobile or online ordering have reduced the percentage of transactions paid for in cash. What they have not done is eliminate cash transactions. The opportunity to commit fraud still exists with cash transactions and we are now seeing an increase in fraudulent behavior with these other payment methods,” says Kevin Milner, senior director of audit at Envysion Motorola Solutions Company, and Matthew McBride, loss prevention manager at Envysion Motorola Solutions Company. In order to secure diﬀerent forms of payments, there needs to be increased technological security measures taken. “PCI (payment card industry) compliance, in some states, mandates video coverage of the server holding and hosting PCI information. The physical security and cybersecurity of this information is paramount

ADOBE STOCK / OLGA_DEMINA

Security and Cash Handling SmartChain

“It’s all about automation. Automation allows business owners to streamline operations, making them more efﬁcient and safer for everyone.” as a breach or loss is brand damaging on a national and even global scale,” Parish says. This means restaurants need to ensure they have cameras that work and cover the appropriate areas in stores. While this might seem like common sense, not adequately covering vulnerable points in restaurants is a frequent security mistake. “The ﬁrst mistake I most commonly see is putting Ring cameras in your business and assuming that’s good enough. The second is still having 15-year-old analog cameras in 2023. It just doesn’t make sense. There’s no way the managers are using those systems for more than deterrence, so why even have them?” Anthony Moussignac, director of restaurant sales at Solink , asks. While having decoy cameras

to deter theft and make customers feel safe may seem like a cheaper alternative to working cameras, in the end, restaurants may end up paying more if an incident occurs. This is why many operators are turning to AI-based cameras that can identify and report situations without someone having to watch the cameras themselves. “Restaurant operators are increasingly leveraging AI-powered security cameras that have video analytics capabilities, as well as solutions for reporting exceptions in pointof-sale transactions,” Will Kelso, senior vice president at Interface Systems, says. What makes this even better is that as technology gets better at automating security tasks, employees and managers become safer and are freed up for other revenue-generating activities. “The new generation of AI-based cameras with powerful edge analytics goes beyond pure security. No longer a ‘cost of doing business,’ security cameras and infrastructure can provide quick-service restaurants with a wealth of business and operations intelligence that informs and validates decisions from restaurant layout to customer service and signiﬁcantly improves their bottom line,” Kelso says. While AI cameras and virtual security SPONSORED SECTION | OCTOBER 2023

SmartChain Security and Cash Handling

else,” Parish says. Ideally, technology will make businesses more eﬃcient, successful, and proﬁtable, however, that is dependent on the relationship formed with security and automation partners. It is expensive to completely overhaul systems, which is why taking advantage of technology that operations are already using is ideal in many cases. “Restaurant chains that already have an intrusion alarm system and video surveillance cam-

ADOBE STOCK / AFRICA STUDIO

guards can make sure a business and its surroundings are safe at all times, automation can make sure that cash-handling procedures are achieved with increased accuracy and with less risk. “It’s all about automation. Automation allows business owners to streamline operations, making them more eﬃcient and safer for everyone. Smart safes automate the cash depository function and eliminate the need for managers to make risky, time-consuming bank

“The more operators rely on systems and automation, the more it is crucial to work with a trusted brand.” runs while the business receives credit for inserted cash overnight. This solution also allows for a smoother checkout process while reducing the opportunity for mistakes and internal theft,” John Toneatto, vice president of security and investigations at Loomis, says. While automation beneﬁts many businesses, it does often mean partnering with outside ﬁrms like security and technology companies. Choosing what company to work with is vital to the success of operations. “The more operators rely on systems and automation, the more it is crucial to work with a trusted brand. Those systems become the lifeline of an operation, and when they go down, so does everything 82

OCTOBER 2023 | SPONSORED SECTION

eras should consider integrating the two systems to maximize effectiveness and minimize false alarm costs,” Kelso says. False alarms can be costly, especially if police are called or an alarm is triggered, which may unsettle customers and employees and halt the flow of traffic and day-to-day tasks. Combining data from current tools may be less expensive than completely overhauling a system and can mean less training for employees. “Using technology to combine POS data, analytic software, and surveillance video feeds is the best defense for mitigating loss as well as creating training opportunities to improve safety and security,” Alex Seidel, special

systems manager at Big Dog Surveillance Systems, says. Some technological precautions can be taken, like automation and using AI cameras, but that does not mean employees and operators should be any less vigilant. “The importance of on-site situational awareness has become paramount. Operators are increasingly using video technology with edge analytics, audio technology, video verification, voice-down monitoring, and computer-vision business intelligence to proactively respond to a situation. Pre-recorded messages, remote interfaces, and monitoring talk-down can be used to preempt and deescalate a situation,” Parish says. The landscape of security and cash handling is constantly changing and evolving as the market changes and technology becomes more advanced. “Today’s technology boom and the use of artificial intelligence in everything can bring incredible advancements in both security and operational efficiency. As this boom continues to explode, operators need to be ultra-sensitive and aware of the compatibility and integration capabilities of the systems they implement,” Parish says. Safety should never be taken for granted, especially when customers and employees trust operators with their well-being. “Quick-service restaurant leaders need to know that their cameras are there in order to inform better decisions. They aren’t there to catch employees with elbows on the counter. They are there to prevent theft and keep people safe. This changes how cameras are positioned, the quality of the cameras installed, as well as who has access to camera feeds,” Lianne Neufeld, director of strategic accounts at Solink, says. The best way to ensure customer and employee safety in restaurants is, of course, a multi-faceted issue that calls for many different solutions. If doors cannot be propped open for airflow because of possible theft, this can be mitigated with better kitchen ventilation. If automation can be used to decrease shrink and make cashhandling procedures more efficient, then it should be. Security is an everyday task that can help increase profits over time if the right procedures are put in place. SC

Key players SmartChain

Big Dog Surveillance Systems

DTiQ

330 Lexington Drive Buffalo Grove, IL 60089 800-598-2370 shopbigdog.com For over 20 years, Big Dog Surveillance Systems have provided businesses with the surveillance technology needed to protect their assets, mitigate loss, help with training, and improve safety. Big Dog systems range from budgetfriendly HD stand-alone systems to integrated data analytic solutions that merge POS data with video feeds. No matter your surveillance needs, Big Dog can handle it.

111 Speen St. #550 Framingham, MA 01701 800-933-8388 dtiq.com

Genetec Inc.

Glory

Hanwha Vision America

2280 Blvd. Alfred Nobel Montreal, Quebec, Canada H4S 2A4 514-332-4000 genetec.com

3333 Warrenville Road, Suite 310 Lisle, IL 60532 800-577-1000 gloryglobalsolutions.com

1860 SW Fountainview Blvd., Suite 100 Port St. Lucie, FL 34986 772-380-4845 hanwhavisionamerica.com

Genetec Inc. is a global technology company that has been transforming the physical security industry for over 25 years. Today, the company develops solutions designed to improve security, intelligence, and operations for enterprises, governments, and the communities in which we live.

By automating the movement of cash, Glory helps retailers release their staff to focus on customer service, eliminate cash shrinkage, and improve operational efficiency. We offer a complete portfolio of modular solutions at the point of sale, back office, or both—scalable for every location.

Interface Security Systems

Loomis U.S.

Solink Corp.

3773 Corporate Center Drive Earth City, MO 63045 877- 947-1515 interfacesystems.com

2500 City West Blvd., Suite 2300 Houston, TX 77042 713-435-6700 loomis.us

Interface Systems is a leading managed service provider of business security, actionable insights, and purpose-built networks for multi-location restaurants and franchises.

Loomis, a driving force in nationwide quick-service restaurants, excels in efficient, secure cash logistics. With nearly 200 branches and 43,000 SafePoint locations, we’re committed to empowering quick-service restaurants. Our mission is to provide innovative solutions for growth, efficiency, and security in cash handling, supporting your business at every stage.

110-390 March Road Ottawa, Ontario, Canada K2K 0G7 844-635-7305 solink.com

DTiQ is more than a surveillance provider; it’s your trusted partner for operational excellence, security, and profitability. With over 25 years of experience, we offer a suite of solutions including cloud video storage, AI-powered POS integrations, and remote audits, enhancing 8 million daily consumer experiences and safeguarding trillions in assets.

Envysion, Inc.

A Motorola Solutions Company 7237 Church Ranch Blvd., Suite 406 Westminster, CO 80021 877-258-9441 envysion.com Envysion is a loss prevention platform designed to protect your business, brand, people, and profits for the restaurant industry, providing a suite of solutions to mitigate risk, decrease loss, and secure your brand’s promise. Envysion combines video, audio, and transaction POS data into one centralized video management software with actionable insights.

Hanwha Vision has been leading the global video surveillance industry with world-class optical design, image processing, and cybersecurity technologies for more than 30 years. As it broadens its business to become a global vision solution provider, Hanwha Vision will deliver more valuable and meaningful insights to customers by collecting key information and providing big data analytics utilizing AI and cloud technologies.

Solink is a cloud-based video surveillance solution designed for quick-service restaurant operators. By integrating cameras with POS systems, Solink provides insight into every transaction. Monitor the kitchen, drive-thru, and dining area for cleanliness, speed of service, and theft with advanced video analytics tools. Turn your existing cameras into a profit center. SPONSORED SECTION | OCTOBER 2023

DEPARTMENT

OPERATIONS

A New Era of Business Financing Led by repeat entrepreneur Neha Govindraj, Bonside is transforming how the restaurant industry secures growth capital. BY SAM DANLEY

financing, everything that’s left feels a little bit predatory,” she says. “I thought to myself, ‘What if you could actually design an asset class for the entrepreneur?’” That’s the idea behind Bonside, a financing platform for restaurants and other brick-and-mortar businesses that encourages sustainable growth by recognizing and rewarding unit economics. Govindraj structured the platform via Repeatable Revenue Agreements (rras), with businesses gaining quick and seamless access to non-equity capital in exchange for a small percentage of sales. Bonside doesn’t collect sales in perpetuity and sets a fixed cash-on-cash return for each business. Typically, businesses are looking at three to five years of repayment at an average rate of 1-3 percent of monthly revenue. Govindraj says RRAs represent a middle ground between merchant cash advances that require full repayment in under a year and term loans that offer up to a decade for repayment, providing enough time to deploy the capital and see the returns on a build-out while keeping repayment in a window of predictability. And since the payments adjust with the seasonality of the business, RRAs are a form of capital that matches a restaurant’s business operations. Bonside focuses on emerging concepts that have at least two locations and $2 million in revenue, plugging into their point-ofsale and accounting system to gain a comprehensive view of how existing locations are performing. The company has raised over $4 million in equity funding to further enhance its data-driven underwriting capabilities. Specifically, Govindraj sees an opportunity to create more technology around how cost data is structured. “We’re focused on building our engineering team and building technology around our underwriting processes so that over time, we can take all of that cost data and re-bucket it into a standardized view,” she says. “If the cost data is structured really well, you become even more underwritable, and we can give you even more access to cash.” Investments come in two forms for qualifying businesses. There’s a fund for larger investors that Bonside allocates across deals, plus a growing marketplace of individual accredited investors who participate on a deal-by-deal basis. The company launched out of beta in June with more than 200

unding has long been a primary barrier for growth-minded restaurants looking to build new locations and increase their unit count. The options traditionally have been limited to debt financing or venture capital, neither of which is tailor-made to help them grow their real estate footprint. Debt financing demands cumbersome guarantees and lengthy operating histories. Venture capital often requires owners to give up a piece of equity each time they want to build a new location. It also comes with high expectations for hockey stick growth that are unrealistic for brick-and-mortar concepts. These brands tend to follow a step function as their growth curve due to capacity restraints. The same dynamic is true for most service-based retail businesses. It’s what Neha Govindraj encountered while scaling Glowbar, a 30-minute facial concept she launched in 2018 after leaving her post as a management consultant at Bain & Company. As she was charting the future of her skincare treatments business, she realized the options for brick-and-mortar expansion financing fell short. “When you take out venture capital and you take out debt

OCTOBER 2023 | QSR | www.qsrmagazine.com

KATELYN PERRY

Neha Govindraj wants to reduce frustration for operators hoping to expand.

upcoming/ November:

Packaging Solutions DECember:

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Digital Signage

Beverage Solutions & Equipment

April:

June:

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Food Safety

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members already onboarded and over 500 applications from investors looking to join the marketplace. It had also deployed nearly $200 million across six businesses and added more than 100 concepts to the pipeline. “Generally, our deals will be a hybrid between fund allocation and our private network,” Govindraj says. “That side is really scaling and we’re growing our capital base. It’s the same thing on the business side. We’re deploying more capital.” One early success story is JoJo’s ShakeBAR, an emerging concept founded by hospitality veterans Robbie Schloss and Nick Thayer. It specializes in over-the-top shakes and offers a full bar program alongside elevated takes on traditional diner fare. Bonside teamed up with JoJo’s as it geared up to open its sixth unit in Orlando and partnered with the restaurant for financing ahead of the new location. Six months later, JoJo’s was tracking a 30 percent increase in top-line revenue, marking the success of the Orlando opening this spring. Govindraj says Bonside initiated discussions for another financing partnership with the ability to move faster and on stronger terms. Within two weeks, it had financed the restaurant for a second time ahead of its seventh unit in Scottsdale, Arizona. “I think the compelling point from JoJo’s perspective was access to capital on a fast timeline,” she says. “We told them, ‘We know your business and can very quickly underwrite it. You’ve got our investors that have already bought into the concept, so we can present the terms back to them and do a second tranche of financing.’”

Other concepts that are expanding with financing from Bonside include Matchaful, a wellness brand with six cafes across New York, and Bourke Street Bakery, an organic sourdough bakery with five locations in New York and New Jersey. There’s plenty more to come. Food and beverage concepts currently account for half of the deals in the platform’s growing pipeline. The asset class Bonside created is less of a replacement for venture capital than a new tool designed specifically to support unit expansion. With the company offering capital tailor-made to help brick-and-mortar scale, there are other ways businesses can spend those venture capital dollars—more on hiring and corporate growth, less for building out physical locations. As the company signs more restaurants and other service-based retail concepts, Govindraj’s conversations with business leaders and entrepreneurs are increasingly centered around how the RRAs fit into their capital stack. “You’ve got your cash flow from your operations if you’re a profitable business, and maybe you’ve got some dollars that equity investors have put in,” she says. “Now, you have a third piece of the puzzle to work with, which is Bonside financing. You can extend the runway of equity financing by being thoughtful about how you’re using all of those tools. The more you can extend it, the more ownership you have in your business.” Sam Danley is the associate editor of QSR. He can be reached at sdanley@wthwmedia.com.

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DEPARTMENT

INNOVATE

Wheeling and Dealing Quick-service franchisees are looking to food trucks as a serious growth option.

Food truck business is growing coming out of the pandemic.

efore Alicia Powell became a Wetzel’s Pretzels franchisee, she graduated with a political science degree and went on to work in affordable housing for almost 20 years. She owned a fitness studio, which she tragically lost in a fire. She then started helping her friend with a food truck, and it inspired her return to entrepreneurship. Stories like Powell’s are popping up everywhere in the industry. Brands like Wetzel’s, Cousins Maine Lobster, and Capital Tacos have all realized how much of a growth vehicle food trucks can be. Having keys and the ability to go anywhere is one of the biggest draws of food trucks, says Wetzel’s CMO Kim Freer. Operators have more flexibility than ever before and can plan their week around where customers are. “With a food truck, you have to be the mover and shaker,” Freer says. “You are the brand ambassador in your area, and you have to figure out the best place to be in the community.” Taking a brand on wheels requires more trial and error than traditional models, but potential franchisees gravitate towards the increased mobility and creation of their own schedules. It can be a

OCTOBER 2023 | QSR | www.qsrmagazine.com

full-time gig or a weekend side hustle. Wetzel’s has 20 mobile bakeries on the road, with plans to double its franchise fleet by the end of 2023. The chain wants to expand from coast to coast, matching opportunities to the right franchise partner. The Access to Equity program, spearheaded by Wetzel’s, is bridging the gap of female and minority representation in its franchisees. The initiative is meant to help people like Powell take the keys and jumpstart their careers in the restaurant industry. Brands have also noticed an uptick in demand for food trucks from both franchisees and consumers. Cousins Maine Lobster, mostly a mobile concept, emphasizes the food truck experience. “We go where our customers are, and it’s a very unique experience,” says Annie Tselikis, Cousins Maine Lobster’s director of marketing and franchise sales. “We’re able to provide unique food items to people in a variety of different markets.” Cousins Maine Lobster’s food truck menu is optimized for efficiency, with items like fried clams saved for brick-and-mortar locations. This enables the team to quickly turn around tickets, adding a heightened level of convenience for customers. While traditional locations were shuttered during the pandemic, the seafood concept kept moving. Its mobile app supported food truck sales as vehicles delivered fresh lobster rolls to neighborhoods in a socially distant manner. Food trucks have also thrived in a post-pandemic environment where real estate is scarce and costs are at an all-time high. “You could launch multiple trucks for the same price as one brick-and-mortar location,” says Angela Copper, head of development for Cousins Maine Lobster. “Not only that, but it will ultimately generate more revenues and more profits.” The initial investment for a truck is around $250,000, compared to million-dollar traditional locations. For a franchised Cousins Maine Lobster food truck, AUV is $1.4 million. Adjustability and ease of entry have proved attractive for prospective operators, but so have lower labor costs. Earlier this summer, Capital Tacos unveiled food trucks as a new franchise opportunity. During a time when staff [CONTINUED ON PAGE 90]

COUSINS MAINE LOBSTER, WETZEL’S PRETZELS, CAPITAL TACOS

BY SAT YNE DONE R

Customers favor chains that deliver consistent experiences. Promote operational readiness, measure execution, and listen to feedback to keep guests coming back. We can help. Mystery Shopping Inspection & Checklist Software Survey Software CX Analytics

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INNOVATE / CONTINUED FROM PAGE 88

is increasingly hard to find, these vehicles come equipped with a kiosk ordering system that can be operated by a single person. The Tex-Mex brand is offering traditional restaurant formats, static trailers, and mobile trailers. Prospective operators can mix and match. “In today’s world, giving people the option of different entry points makes a more flexible model,” says Josh Luger, cofounder of Capital Tacos. “We’re seeing people who are choosing to combine different elements.” Like Cousins Maine Lobster, Capital Tacos reduced its mobile menu. The traditional one has over 100 menu items, but the food truck’s offerings have been slimmed down to the favorites: chips and queso, queso bites, tacos, and burritos. Technology allows mobile trailers to streamline operations even further. The kiosks take customers’ orders and feed them back to the operator. Customers are notified when the order is ready. The inclusion of technology has not detracted from the customer experience,

ONES TO WATCH / CONTINUED FROM PAGE 20

notes Copper. It’s a representation of the current trends in the industry. “The digital order and mobile app are very relevant experiences within the food truck,” Copper says. “We are seeing [those things] drive sales and increase average checks. It is a big piece of what is going on in the restaurant business right now.” With brands like Wetzel’s growing their food truck numbers twofold, the mobile movement is likely to become more common as legacy chains continue to find creative ways to level up brand recognition. Franchisees are more likely to become multi-unit operators and shrink the brand’s physical footprint. Operators like Powell, with dreams of entering franchising but not sure where to start, are attracted to the lower risks of food trucks. She frames it as an introduction to the franchise world. Her advice for potential franchisees? “Do it,” Powell says. “If you are thinking about it, do not think twice. Try it.” Satyne Doner is a staff writer at QSR. She can be reached at sdoner@ wthwmedia.com.

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OCTOBER 2023 | QSR | www.qsrmagazine.com

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Over the past five years, the footprint has grown to include two more licensed units at the University of North Carolina at Chapel Hill and the University of South Carolina, one company-owned location inside of a hospital, and two franchised stores in Charlotte, North Carolina, and Harrisonburg, Virginia. Future growth will be driven largely by more licensed units in nontraditional venues like colleges and healthcare facilities, thanks to a deal it inked with Aramark three years ago. Village Juice first got on the foodservice company’s radar when it opened the outlets at Wake Forest and Elon, both of which are Aramark schools. That relationship eventually led to a national licensing agreement in 2020. Siler Southerland, vice president of business development, says the partnership is “ just starting to pick up steam.” “We’ve got that structure built into the Aramark system to where we can grow within them, use their marketing efforts in combination with ours, and attack it from two angles,” says Southerland, who joined Village Juice in 2018. “It’s exciting to have this in place at the national level, because it makes the intimate nature of dealing with the schools so much easier… Now we’re seeing where else this can take us. It’s opening up things like airports, stadiums, and everything else in that world.” Village Juice is gearing up to open a new location at High Point University in North Carolina and has several additional colleges in the pipeline. The company also is continuing to target the healthcare vertical and recently signed an agreement with UNC Health. Three additional licensed units are slated to open by the end of the year. That will push the total footprint into the double digits. Another six to 12 licensed locations are expected to open in 2024. The two franchised restaurants are owned by single-unit operators that came on board early in Village Juice’s history. Eventually, the company wants to accelerate growth by bringing in multi-unit franchisees, but Harris says it needs to build more corporate stores before embarking on that journey. Sam Danley is the associate editor of QSR. He can be reached at sdanley@wthwmedia.com.

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OUTSIDE INSIGHTS

Building Drive-Thru Coffee Sales Having a focused menu is crucial to driving throughput in the off-premises channel. BY HOWL AND BL ACKISTON

TURF analysiscan help operators optimize their menu.

increase their list of menu items but fail to remove existing menu items. Menu communications (menu boards, hand-held menus, kiosks, web, and digital) become cluttered and increasingly difficult for customers to navigate. In addition, operations, inventory, and staffing become increasingly complicated. TURF analysis can help by identifying the shortest list of menu items needed to satisfy the majority of customers. TURF’s mathematical analysis eliminates a risky “seat-of-your-pants” approach for identifying, which menu items can be safely eliminated without negatively impacting sales and customer loyalty.

any different tactics can be utilized to optimize your coffee sales in the drive-thru (e.g., loyalty programs, more flavor options, new product options, etc.). But two strategies in particular squarely focus on increasing sales (of coffee and other menu items). These strategies are (1) increasing customer throughput and (2) increasing average check. These income-generating strategies will grow sales and strengthen your bottom line. They are straightforward, relatively fast, and easy to implement. STRATEGY NO 1. INCREASING CUSTOMER THROUGHPUT You can process more orders per hour by speeding up the order process, resulting in increased sales and happier customers. Here are ways to accomplish this strategy.

Simplify Your Menu. Cull your menu down to the fewest items that will satisfy virtually all your customers. Here are a couple of tactics to accomplish this simplification: • CONDUCT A TURF ANALYSIS. ( TURF is an acronym for Total Unduplicated Reach and Frequency). Over time, many brands 92

OCTOBER 2023 | QSR | www.qsrmagazine.com

• CONDUCT A MENU COMPLEXITY ANALYSIS. This is another important tactic for simplifying your menu by rating each item on a numerical scale regarding its time and complexity to prepare and deliver. The rating is based on seven key factors that play an important role in the profitability of your business. Knowing your menu complexity scores is essential, as this information can significantly impact your restaurant’s bottom line. Low-scoring menu items (such as drip coffee) are less complex, while high-scoring ones (such as customized espressos) are more complex and take longer to prepare and assemble. The key factors determining a menu item’s complexity score include assembly time average, cook time average, cook assembly rating, the total number of prep recipes used, unique prep recipes used, unique SKUs, and the number of stations needed to produce the item. Once the rating numbers are added up, an overall complexity score for that individual menu item is formed. This exercise is conducted for every item on the menu, and once the complexity scores have been determined, you can use them to your advantage; to improve operations, streamline your menu, and reduce costs. Knowing your menu complexity scores can sig- [CONTINUED ON PAGE 94]

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In simple terms, TURF provides two types of information: ∘T he shortest list of menu items needed to satisfy the majority of consumers ∘T he average number of menu items on that list that customers would like to order

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nificantly impact your restaurant’s bottom line. These scores allow you to: ∘F eature high-selling, low-complexity menu items ∘D ownplay (or eliminate) low-selling, high-complexity menu items ∘O ptimize staffing ∘R educe cost of goods by better understanding ingredient usage and reducing waste ∘E nhance operational efficiency by streamlining operations related to cooking times, assembly times, recipe complexity, ingredient uniqueness, number of assembly steps, number of stations used, etc. STRATEGY NO 2. INCREASING AVERAGE CHECK • LEVERAGING CUSTOMER ZONE MERCHANDISING.

The most successful brands have recognized that menu communications in the drive-thru include more than what’s on the menu board. They understand that the drive-thru includes a collection of different “customer zones” (street zone; entry zone; pre-order zone; order zone; post-order zone; and exit zone). By identifying these zones, you can craft zone-specific communication strategies that promote popular high-margin coffee items, communicate coffee upsell (non-dairy alternatives), coffee customization options (double shots; signature flavor options), and suggest popular coffee/food pairings. By developing zone-specific menu communications along the entire drive-thru path-topurchase (p2p), you can influence customer purchases (increasing check) and accelerate the decision and order process (improving throughput). For example, “staging” several messages for a signature coffee drink along the customers’ P2P.

• REENGINEERING MENU BOARD COMMUNICATIONS.

The menu board is the most critical communication tool in the drive-thru. Menu reengineering is a business strategy and systematic process for building robust menu board communications. The process includes: ∘U se the results of the TURF analysis to reduce the number of menu board listings objectively. Streamlining your

OCTOBER 2023 | QSR | www.qsrmagazine.com

FRANCHISE FORWARD / CONTINUED FROM PAGE 22

menu will improve customer ease and speed of ordering and accelerate back-of-house menu item prep time ∘U se the menu complexity scores to simplify the menu further while improving operations and reducing costs. ∘C reate a Menu Strategy. This is an essential step in how world-class foodservice communications are developed. It becomes the blueprint for reengineering your menu board, customer zone communications, and all other menu communications (mobile app, website, kiosks, etc.) Interestingly, many brands overlook having a documented menu strategy. But they are missing out. Having a menu strategy allows you to: •E stablish the key business objectives you wish to realize from reengineering your menu communications (examples: Increase profitability; build PM sales; increase food attach; attract a younger demographic) •P rioritize menu categories and items based on their relative contribution to the business (examples: Espresso and frozen drinks are high-priority categories versus lowpriority brewed coffee and tea) • I dentify what new menu items should be developed and which current items should be eliminated (examples: Add energy drinks; delete low-selling cup size) •G uide how menu communications are designed to realize the desired business objectives (examples: Visually feature high priority categories and items; showcase flavor variety of new energy drinks; promote “perfect pairings” of beverages and food) So, there you have it: two proven strategies to increase coffee sales—increasing throughput and the average check. Implementing these is like putting money in the bank. Howland Blackiston is Co-Principal of King-Casey.

“The goal of The Franchise Player is to introduce them to investors and help them establish infrastructure for themselves.” She has also assisted individuals who want to find an investment vehicle for themselves or their children. Regardless of the scenario, the goal is the same: To empower the African American community and create generational wealth through franchising and opportunities, which may not have been available otherwise. Companies interested in collaborating with The Franchise Player must be dedicated to improving inclusivity within their organizations. This can be accomplished by offering minority incentives, mandating unconscious bias training, or having a minimum of five African American franchisees. The Franchise Player offers collaborating partners, qualified leads, sponsorship opportunities, brand promotion, and more. “The lack of access to capital and education is a significant bottleneck for aspiring franchisees right now,” Carter says. “The sales cycle is very short, so they don’t have much time to conduct due diligence before signing on the dotted line.” The moment a candidate inquires with a restaurant about franchising, a salesperson is on the clock immediately to close the deal. Carter’s goal is to prepare candidates for this introduction, and she feels her experience on both sides of the desk helps her. To become a candidate, otherwise known as a “player,” one must have operational excellence and a passion for servant leadership, Carter says. Additionally, $25,000 in liquid capital and at least $100,000 in net worth will be required. Carter is looking for individuals who are sales-focused and have familiarity with community engagement. For existing franchise owners looking for growth opportunities, Carter necessitates multiunit experience and an understanding of profit and loss management. She is also spearheading Guest First Services, Inc., a franchise consulting boutique based in Atlanta. This company takes The Franchise Player a step further by developing strategic franchise expansion plans. Satyne Doner is a staff writer at QSR. She can be reached at sdoner@ wthwmedia.com.

For more information on these companies, visit www.QSRmagazine.com/connect/

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Assa Abloy............................................ 37

Mike’s Hot Honey.................................. 15 mikeshothoney.com/sample

MorningStar Farms .................................8

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Berner..................................................86

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Checkers’ Rally’s .................................. 41

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Coates Group........................................ 57

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Daddy’s Chicken Shack ......................... 21

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Frank’s Red Hot ..................................... 11 800-322-7742 | McCormickForChefs.com/Franks

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RF Technologies .......................... 5, 12, 95 800-598-2370 | rfdrivethru.com

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Subway.................................................23 The Howard Co. .................................... 53 262-782-6000 | howardcompany.com 888-262-2215 | thehumanbean.com

VITO Fryfilter........................................87 847-859-0398 | vitofryfilter.com

WinCup................................................. 31 VioFoam.com

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J&J Snack Foods..................................... 1 jjsnackfoodservice.com

LSI Industries .......................................59 800-436-7800 | lsicorp.com/markets/qsr

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START TO FINISH

Chris Britt & Ed St.Geme Co-CEOs MOUNTAIN MIKE’S PIZZA

What was your first job? CB: In foodservice, at Famous Ramos Hot Dog Place in the Brea Mall!! ESG: At a local car wash near my home—it was tougher work than I’d expected!

What’s your favorite cuisine aside from Pizza? CB: Anything we can throw on a grill and BBQ, from burgers, hot dogs, steaks, and ribs to vegetables such as corn on the cob! ESG: I love Mexican. What’s the best piece of advice that other restaurant executives should hear? CB: Keep an open mind. Be a good listener. Learn every day. And if you focus on culture and people first, your best performance will follow. ESG: Your guests and your people/team are the ultimate source of answers. Observe, absorb, and activate. What are some of your interests outside of work? CB: Anything with our three daughters, Spring Training baseball, Hawaii vacations with my wife, reading, amusement parks, fairs, and sporting events, and, hopefully soon, golf. ESG: My wife, six young adult children (plus ones) and seven grandchildren are the center of my universe.

n many ways, as the co-owners and co-CEOs of Mountain Mike’s Pizza, Ed St. Geme and I play the role of cupid. Does that sound odd? Of course, it does. So, let’s slice it up. Pizza has long been the most popular food in the country, and it seems to be gaining in popularity every year—if that’s even possible. Ed and I have recognized that pizza’s national allure is strong and limitless, fueling our decision to dive headfirst into the pizza business five years ago with our acquisition of the Mountain Mike’s brand. Cupid is clearly just symbolic of our role— simply a metaphor. However, our commitment to America’s love affair with pizza is very real. And, what drives our work is the love we feel for the people, the communities, the families, and the teams who love our pizza and our legendary crispy, curly pepperoni. So, we remain dedicated to our business model, our brand promise and to ensuring that we deliver a fantastic pizza experience that’s just as attractive to new guests as it is to those who have been enjoying Mountain

OCTOBER 2023 | QSR | www.qsrmagazine.com

Mike’s Pizza for more than 40 years. Mountain Mike’s Pizza is not just a big part of our livelihood, it’s a big part of our lives. Although we purchased the brand five years ago, our relationship with Mountain Mike’s—and our friendship with one another—began decades ago at Stanford University in Palo Alto, where the first Mountain Mike’s restaurant opened on the edge of campus. Ed and I were student athletes, and we loved Mountain Mike’s Pizza. Long after graduating and establishing successful (but separate) investment careers, our fond memories of this time in our lives, including the great food and atmosphere we enjoyed at Mountain Mike’s, inspired us to seize the opportunity to acquire a legacy brand that baked in so much personal nostalgia—and professional possibility. Today, with 270-plus restaurants open across seven states, we couldn’t be prouder of our amazing franchisees and our talented franchise support team. Even more, we are affirmed and uplifted each day for the 2017 decision.

MOUNTAIN MIKE’S PIZZA

What’s your favorite menu item at Mountain Mike’s Pizza? CB: If I had to pick just one it would have to be our legendary crispy, curly pepperoni pizza, regular or thin crust. ESG: I have a two-part answer: the crispy, curly pepperoni, but my special favorite of the month is our incredible Garlic Not-Knots.

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