A chain restaurant analyst predicts that the $1200 stimulus checks will cause a bump in restaurants' sales
Business Insider hosted a SPOTLIGHT digital live event with restaurant industry leaders last week, moderated by retail correspondent Kate Taylor. Veteran analyst John Gordon predicted that restaurants would soon see a bump in sales as Americans receive stimulus checks. Raising Cane's founder and CEO Todd Graves also said that his chain has seen a recent increase in sales as "people are spending more money." Visit Business Insider's homepage for more stories.
Last week, Business Insider's Kate Taylor hosted a SPOTLIGHT digital live event with restaurant industry leaders. Checkers and Rally's CEO Frances Allen and Raising Cane's CEO Todd Graves were joined by veteran analyst John Gordon, who has 45 years of experience in the restaurant industry. While Gordon acknowledged that restaurants are facing significant challenges during the pandemic, he said that restaurants are likely to see a bump in sales soon due to the stimulus payment. "Government checks are beginning to make their way through," Gordon said. "And the last time that happened in the Obama administration, that was an immediate adrenaline shot to consumer spending." Gordon said that he's seeing a gradual improvement in conditions for restaurants that have drive-thrus. And Graves said that around 70% of Raising Cane's income is currently from drive-thrus. Graves also said he's seen a significant increase in customer spending in the last few days. "Stimulus checks are out there right now," Graves said. "People are spending more money. We started seeing it yesterday." The key for restaurants to capitalize on that stimulus money, Graves said, is to actively let customers know that they're open for business "The main thing is let your customers know you're open. Let them know you're open," Graves said. "Put out a yard sign, put out a banner, all your social media channels down to calling your customers." Gordon said that he drives around in the evenings to see how restaurants' approaches differ. Some have signs out reminding customers they're open, and some have gone completely dark. He said the latter is a mistake. "Maintain some kind of relationship to your employees that at least some of them have jobs and at least have some lights on for customers that are going to come by." SEE ALSO: Key takeaways from Thursday's SPOTLIGHT featuring the CEOs of Raising Cane's and Checkers and Rally's Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
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Burger King is taking a page out of McDonald's playbook, with Amazon-esque drive-thrus that can predict what you want to order
Summary List Placement Burger King, Tim Hortons, and Popeyes are revamping thousands of drive-thrus, as the...Summary List Placement Burger King, Tim Hortons, and Popeyes are revamping thousands of drive-thrus, as the fast-food industry fights to win over to-go customers during the pandemic. Parent company Restaurant Brands International announced on Tuesday that it has started installing high-tech drive-thrus at 10,000 Burger Kings and Tim Hortons. Roll out of the new drive-thrus at Popeyes will begin next year. The revamped drive-thrus will feature digital screens with predictive selling technology, which pushes menu items based on factors such as what the customer is adding to their order, the weather, and the time of day. For example, if a customer shows up at 7 a.m. and adds a breakfast sandwich to their order, the new digital drive-thru menu might highlight the chain's coffee options. McDonald's debuted similar drive-thru tech following its $300 million acquisition of artificial intelligence startup Dynamic Yield last year. Read more: How McDonald's is spending millions of dollars to regain its crown as drive-thru king Digital menu boards will also give chains the ability to integrate loyalty programs and even contactless payment into the drive-thru lane. Frank Liberio, Restaurant Brands International's chief information officer, told Business Insider that the pandemic helped convince the company to revamp its drive-thrus. "It's something we had been discussing even before the pandemic, to be honest," Liberio said. "But I think, maybe, the urgency got ramped up a bit with the pandemic, with more folks going through the drive-thru rather than in store." Beyond tech upgrades, Restaurant Brands International is also installing double drive-thrus whenever possible, essentially doubling capacity. According to Liberio, the drive-thru lane is only going to become a bigger part of Burger King, Popeyes, and Tim Hortons' business down the road. "We're looking at double drive-thrus wherever we can put them in, to increase the firepower and our ability to serve customers even faster," Liberio said. Drive-thru is king during the pandemic The year 2019 brought a drive-thru renaissance, as chains like McDonald's, Starbucks, and Dunkin' rolled out high-tech drive-thru revamps. Chipotle started building its first drive-thrus around the same time, with its mobile order-centric "Chipotlanes." The renewed emphasis on drive-thru could not have come at a better time. In March, the drive-thru became many chains' savior, as indoor dining abruptly closed due to the pandemic. Visits to full-service restaurants dropped 47% in April, May, and June, according to data from The NPD Group. Yet, quick-service restaurants — which typically have drive-thrus — only saw traffic drop 17% in the same period. Read more: Shake Shack, Panera, and Chipotle open drive-thrus to keep up with fast-food rivals like McDonald's and Taco Bell Chains doubled down on drive-thru investments as it became clear that the pandemic was going to last longer than a few months. Shake Shack announced it would open its first drive-thru locations in 2021. Chipotle accelerated its rollout of mobile order drive-thrus, with the company saying that 26 of the 44 new restaurants it opened in the third quarter were "Chipotlanes." "While we continue to expect about 60% of new restaurants with a Chipotlane this year, our goal is to have more than 70% openings, including Chipotlanes in 2021," Chipotle's chief finance officer Jack Hartung said on a call with investors in October. "Opening more Chipotlanes will not only enhance customer access and convenience, but it also increases new store restaurant sales, margins and returns." Companies that already invested in their drive-thru business had a leg up on the competition in recent months. For example, McDonald's US sales increased 4.6% in the most recent quarter, while Burger King reported on Tuesday that its US same-store sales dropped 3.2%. Tim Hortons' same-store sales in Canada dropped 13.7% in the same period. Liberio told Business Insider that the positive return on investment helped franchisees get on board with the plan to modernize their drive-thrus. However, rivals rolling out their own high-tech drive-thrus also played a role. "Sharing the positive results with them is a big part of it," Liberio said. "But, when they see it down the street at one of their competitors, I think they also kind of get a sense of: It's time now for us to do this as well." SEE ALSO: Shake Shack, Panera, and Chipotle open drive-thrus to keep up with fast-food rivals like McDonald's and Taco Bell Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
A top House Republican criticized the $400 weekly federal unemployment benefit in the White House stimulus plan, saying the GOP doesn't want 'wasteful spending'
Summary List Placement Rep. Kevin Brady of Texas — the ranking Republican on the tax-writing House...Summary List Placement Rep. Kevin Brady of Texas — the ranking Republican on the tax-writing House Ways and Means Committee — was critical of elements within the White House's stimulus proposal on Thursday, including a $400 weekly federal unemployment benefit. During an interview with Fox Business, Brady said many Republicans are reluctant to back a stimulus plan with a big price tag. "The worry is: 'How much wasteful spending will we have to swallow to do this?" Brady said, adding he wanted the federal government to prioritize spending on thwarting the coronavirus and aiding the jobless. But he expressed concern that a $400 federal supplement to state unemployment checks would disincentivize people from seeking work, arguing many would earn more out of work than on the job as a result. It's a claim often made by Republicans about the economic impact of the $600 federal unemployment benefit that expired in late July. Numerous studies show it didn't keep jobless people out of the workforce. Brady said "targeted help" was needed, particularly to airlines moving ahead with layoffs and the restaurant industry. Read more: BlackRock's investment chief breaks down why Congress passing a second round of fiscal stimulus is 'quite serious' for markets and the economy — and pinpoints which sectors will benefit in either scenario House Democrats led by Speaker Nancy Pelosi are pressing for a $2.2 trillion stimulus plan. It includes a $600 weekly federal unemployment benefit, another wave of $1,200 stimulus checks, and aid to cash-strapped states and small businesses. Meanwhile, the White House put forward a $1.6 trillion virus aid proposal containing many of the same measures, but lower spending amounts. Brady's remarks underscore the opposition to significant federal spending among GOP lawmakers. Many in the GOP say they're opposed to stimulus plans since it would grow the federal debt. Lawmakers have approved over $3 trillion in federal aid since the pandemic began devastating the economy in the spring. Negotiations between Treasury Secretary Steven Mnuchin and Pelosi stretched into their fifth day on Thursday. The California Democrat assailed the White House's proposal in a Bloomberg TV interview. "This isn't half a loaf. What they're offering is the heel of the loaf... and you really can't just say, well, just take this," she said. Read more: Stimulus talks press on as dealmakers push for another boost to unemployment payments. Here's everything you need to know about the rescue package.Join the conversation about this story » NOW WATCH: Why electric planes haven't taken off yet
85% of independent restaurants may go out of business by the end of 2020, according to the Independent Restaurant Coalition
As many as 85% of independent restaurants may permanently close because of the pandemic by the...As many as 85% of independent restaurants may permanently close because of the pandemic by the end of 2020, according to a report commissioned by the Independent Restaurant Coalition. Independent restaurants, which comprise 70% of all restaurants, rely more heavily on dine-in revenue than chains and don't have a corporate safety net or support system to fall back on. Restaurant owners say that while the Paycheck Protection Program provides a temporary lifeline, it won't prevent most independent restaurants from massive losses that will force them out of business. Owners also say it will be a long time before dine-in revenue will return to pre-pandemic levels, meaning that many restaurants will be forced to operate at a loss. The IRC is pushing for $120 billion in grant funding from Congress in the form of Oregon Representative Earl Blumenauer's RESTAURANTS Act. Visit Business Insider's homepage for more stories. As many as 85% of independent restaurants may be forced out of business by the end of the year, according to a new report commissioned by the Independent Restaurant Coalition. The report, which was conducted by consulting company Compass Lexecon, outlines the threats facing independent restaurants as the pandemic continues to affect business. Although the restaurant industry as a whole has suffered major losses, independent restaurants like mom-and-pop diners, neighborhood Thai joints, and fine dining staples, are much more at risk than fast-food chains like McDonald's and Starbucks. Independents, which comprise 70% of all restaurants, rely much more heavily on dine-in revenue and don't have the corporate resources that make some chains so resilient in the face of disaster. "What I'm afraid of is the people that are the least likely to survive are going to be these small, single-location, immigrant-run, women-run, people-of-color-run operations. That we're the ones that don't have the infrastructure like the chain restaurants to survive this," Dan Wu, owner of Atomic Ramen in Lexington, Kentucky, said on an IRC press call. Wu is an immigrant, like many other independent restaurant owners and workers. Business Insider spoke with Amanda Cohen, who runs Dirt Candy, a vegetarian restaurant in New York City, and is a member of the IRC leadership. Cohen said that what originally seemed a two-week problem has turned into a two-year problem. "I think it's going to be a long haul to get back to where we were," Cohen said. "I still have most of the same bills that I had before I closed. I still have to pay electricity and gas and purveyors. And I don't think I will have enough customers to keep my business going." Restaurant owners say that while the Paycheck Protection Program has provided immediate relief for many independent restaurants, it's a temporary band-aid for their long-term problems. "We do have the support of the PPP loans and also the grants that are paid by the government but simply not enough to stay open long term. I don't think most restaurants will even last to December," Nina Compton said on the IRC press call. Compton is the chef and owner of Compère Lapin and Bywater American Bistro in New Orleans. "We don't have the infrastructure or the financial support that chain restaurants have," Cohen said. Cohen received a PPP loan that she said will last her through December, but she's unsure if she'll be able to stay open after that. "I don't know who I turn to now if I need more money." Restaurants already operate on razor-thin margins. For sit-down restaurants, those margins are decimated by capacity limits, which will likely be in place until a vaccine is found. Many restaurants that have pivoted to delivery have found that it still isn't profitable — even with cities capping delivery platform fees at 15%. A recent Eater survey of San Francisco restaurant owners found that 87% said they would not be able to survive on just delivery and takeout, and 60% said they're losing money by staying open. It's likely that restaurants won't be able to return to pre-pandemic business levels until they're able to open dining rooms at full capacity without social distancing restrictions. Although May saw the return of nearly 1.4 million restaurant jobs, that recovery trajectory is unlikely to persist through the coming months as most restaurants continue to operate at a loss. Especially in dense urban areas like New York, social distancing protocols are a death sentence for small restaurants that pay high rent and rely on densely-packed dining rooms "There's just no way any of us in Manhattan can survive," Cohen said. In Congress, the IRC is pushing for restaurant-specific funding in addition to the PPP with a new bill spearheaded by Oregon Representative Earl Blumenauer. Blumenauer's proposed bill, the RESTAURANTS Act, or the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed To Survive Act, would provide $120 billion in grant support to independent restaurants. SEE ALSO: Food delivery with third-party apps like Grubhub and Uber Eats is booming, but no one's making money. Here's why their business is broken. Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid