Drive-thru dominates even as dine-in restrictions ease

Even with cities like New York relaxing rules for dining in, sales figures from chains like McDonalds and Domino’s Pizza on Thursday suggest that most people continue to favor keeping their distance.

Comparable-store U.S. sales at McDonald’s rose 4.6% in the three months ending in September, after a decline of 8.7% in the second quarter.

At Domino’s the same figure, from U.S. stores open at least a year, jumped 17.5%, topping the 16% growth in the previous quarter.

In contrast, at overseas McDonald’s locations, where drive-thru windows are less common, same-store sales dipped compared with a year ago. In McDonald’s key European markets of France, U.K. and Germany, for example, just two-thirds of restaurants offer drive-thru.

Domino’s said its same-store sales overseas climbed 6.2% as stores in hard-hit markets like India and Spain reopened and more business migrated to delivery.

Nearly all U.S. McDonald’s have drive-thru windows and its delivery business is rising. Domino’s, a pioneer in the delivery business, has also introduced car-side delivery at nearly all U.S. stores.

Fast food chains have done much better throughout the pandemic compared with chains that rely in dining rooms almost exclusively.

Visits to full service, sit-down restaurants plummeted 48% in the second quarter year-over-year, compared with a decline of only 17% decline in the same period for fast food chains, according to NPD Group, a data and consulting firm.

This week Ruby Tuesday, the restaurant chain known for its salad bar, filed for bankruptcy protection. California Pizza Kitchen filed for bankruptcy protection in July, while the parent company of the Chuck E. Cheese pizza and entertainment chain filed for bankruptcy in June. Steakhouse chain Sizzler also declared bankruptcy last month.

The shift in consumer habits has been so drastic, NPD said it expects full-service restaurant chains to begin adding drive-thru windows and to beef up delivery even after the pandemic ends.

When combined with international sales, McDonald’s same-store sales fell 2.2%. Still, that was significantly better than the second quarter, when same-store sales fell 24%. It also beat Wall Street’ expectations of a 4.7% decline, according to analysts polled by FactSet.

McDonald’s, based in Chicago, will release third-quarter earnings on Nov. 9.

Domino’s, based in Ann Arbor, Michigan, said that quarterly sales rose 18% to $968 million, beating Wall Street projections. But its per-share earnings of $2.49 fell short, partly due to COVID-related costs, including enhanced sick pay and compensation for workers.

Domino’s shares fell 7% to $401.85 Thursday. McDonald’s shares were flat at $224.36.

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