Dive Brief:

• Del Taco's systemwide comp sales increased 4.1% for the period and revenue rose 0.5% during Q3 2020 despite all of its company-owned dining rooms remaining closed, and the restaurant maintained operations through its drive-thru, takeout and expanding delivery channels, CEO John Cappasola said during Del Taco's Q3 earnings call. Because of ongoing demand for off-premise, the company is in the final stages of developing a new drive-thru-only restaurant prototype. 
• The new drive-thru-only prototype will accommodate smaller real estate sites, Cappasola said, and will also include a modernized design, "improved functionality and other operational enhancements."
• Drive-thru only models aren't a new concept in the quick-service space among major and medium-sized chains. Starbucks, for example, has a drive-thru-only model, while Checkers & Rally’s footprint is largely drive-thru only. But demand for the model is growing amid the pandemic as dining rooms remain closed and traffic and sales surge in the drive-thru channel. 

Dive Insight:

Del Taco's drive-thru-only  prototype should allow the company to seek out smaller real estate parcels and infill locations, which could likely save on occupancy costs versus a traditional restaurant with dine-in. Cappasola believes this will also lead to additional growth for franchisees.

The company paused much of its growth plans during the pandemic, but "strong recent results have instilled confidence to revisit and resume" those plans, Cappasola said. The company’s focus on off-premise occasions, including through its future remodel program, is attracting new franchisees, he said.

"Off-premise channels consumer demand is there and we’ve been able to make up for lost dine-in sales for the most part through these channels due to consumer behavior changes," Cappasola said. "This includes expanding the access and convenience of our drive-thru lanes and adding outside order takers to improve throughput in high-volume restaurants."

Like Del Taco, Checkers & Rally’s is also experiencing increased interest from franchisees during the pandemic because of their off-premise-oriented formats. Burger King also unveiled a new drive-thru design in early September, while Taco Bell plans to launch a mobile-focused double drive-thru model in 2021. Even Wawa is shifting its focus to the drive-thru, with plans to open its first freestanding drive-thru model by the end of the year.

The reason for this shift is simple. Drive-thru traffic is not only quick and convenient, it's also largely contactless, which is a top demand from health-conscious diners today. As such, drive-thru visits increased by nearly 30% in the first few months of the pandemic. McDonald's drive-thru business made up 90% of sales during Q2 2020. These consumer habits don't seem likely to change much — at least not quickly — in a post-pandemic world.