Dive Brief:

• An Applebee's franchisee is adding a drive-thru pickup window to an existing restaurant in Texarkana, Texas, early this year. The franchisee will gauge feedback from guests and operators to inform future store design, Nation's Restaurant News reports.  
• The location enables customers to order and pay ahead via their phone or website, or order via mobile and pay in person at the window. Estimated pickup time alerts will be sent to customers after their orders are placed.
• During its Q3 earnings report in late October, parent company Dine Brands Global reported that Applebee's off-premise comp sales increased by 144% and made up 34.6% of the chain's sales mix. Applebee's comp sales were down 13.3% in the quarter, compared to 49.4% in Q2.

Dive Insight:

Retrofitting some of its real estate to cater to off-premise demand could present a major opportunity for Applebee's. Diner interest in convenient restaurant experiences has especially been evident during the pandemic, with drive-thru visits up by nearly 30% during April, May and June, and 39% of diners already used the drive-thru more in 2019 than they did in 2018, according to National Restaurant Association data. 

Applebee's isn't the only casual dining chain exploring alternative channels that focus on off-premise business. Sister chain IHOP is also looking at new real estate opportunities, though a drive-thru model has not specifically been mentioned. President Jay Johns recently told Forbes, "I think consumer behavior will shift permanently to to-go and delivery because people have learned how to use them and, frankly, it looks like they like them."

For Applebee's, off-premise will likely span a number of channels. The chain has gained significant traction for curbside as part of its growing off-premise business, for example, making up 20% of its sales during Q3. While curbside avoids the costs of adding a drive-thru to existing locations or pursuing drive-thru-friendly models, it has proven to yield a quick return on investment, particularly during the pandemic, NPD food industry advisor David Portalatin said.

Drive-thrus have largely insulated quick-service brands from financial fallout during the past year, especially compared to their casual dining peers. McDonald's U.S. comparable sales were up 4.6% during Q3 2020 with positive comps posted each month during the quarter, marking its highest monthly comps in nearly a decade, McDonald's CFO Kevin Ozan said during the company's October earnings call. The company also generated nearly 90% of its business through the drive-thru in Q2 2020. 

Eddie Yoon, founder of advisory firm Eddie Would Grow, predicts in the Harvard Business Review that drive-thrus will become more common in a post-pandemic world, expanding to grocery stores and sit-down restaurants, not just within fast food. This trend is already in motion, with a number of fast casual concepts exploring new channels of accessibility as well as developing drive-thru-centric prototypes.

But drive-thru isn't the only off-premise solution for restaurant brands, fast or casual. Off-premise business across channels, whether curbside, pickup, drive-thru or delivery, are up across the board. In October, off-premise visits increased by 21%, according to The NPD Group, compared to a decline of 53% for dine-in business. As The NPD Group notes, however, off-premises gains come at the expense of full-service restaurants, which continue to experience transaction declines in the double-digits.