5/14/2023

Reduced In-Store Dining Will Backfire on Fast-Feeders

C-stores would be wise to expand indoor and outdoor dining options.

Smart retailers keep abreast of trends in other trade channels as well as their own. You never know where you might find a golden opportunity for growth.

I read this in Supermarket Guru Phil Lempert's "Weekly Food Insights" newsletter last month: "What we've seen during the pandemic is a lot of fast-food restaurants, obviously their sales from drive-thru have increased dramatically. Sales of the restaurant people dining in are down about 16 percent, and 39 percent of all sales at a fast-food restaurant goes through the drive-thru. So, guess what they've decided to do? Let's get rid of in-store dining."

Apparently, according to Lempert, many fast-food chains have decided to reallocate their in-restaurant dining space to put in more drive-thru lanes. They also justify reducing in-restaurant dining as a cost-savings from not having to spend on the labor to keep the space clean. "It's a way to get, you know, bottom line is more money per burger that you sell," said Lempert.

He warns that this thinking could backfire on them. Lempert notes that even if 39 percent of your sales go through your drive-thru, that means 61 percent are from people who are coming into your restaurant and sitting there. "I think that it's a knee-jerk reaction the same way we saw with 15-minute delivery," he said. "Probably, in two or three years, all these fast-food restaurants are gonna have to go back to built-in seating."

I agree with Lempert, for another reason. Fast-feeders could lose more market share to food-forward convenience store retailers if they reduce their in-restaurant dining space. According to the 2023 Convenience Store News Foodservice Study, 48 percent of convenience stores currently offer in-store seating, while 38 percent provide some kind of outdoor dining area. The study also revealed that another 8 percent of c-store retailers plan to add outdoor seating in the near future, and 8 percent said they plan to add indoor seating areas this year.

If, as Lempert predicts, more fast-feeders reduce or eliminate indoor dining, I have to think that smart c-store retailers will increase indoor and outdoor dining options at an even faster rate than stated in this year's research.

When I travel the country by automobile, I always try to stop at convenience store retailers that have an excellent reputation for quality, fresh food. I'm seldom disappointed. But, when I am, it's usually more related to the ambiance of the experience than the actual taste of the food. C-store retailers know they must have spotlessly clean restrooms, yet I still see too many who are lax in the upkeep of their indoor dining areas. Almost as bad is when I have to eat in my car and get ketchup and crumbs all over my shirt and lap.

If fast-feeders abandon inside dining, convenience stores should step up and fill the void.