Future McDonald's Resto - © Mei Architects

Fast Food Dine-In Sales Dwindling – But That’s OK

A new survey of the major Fast Food chains has revealed that dine-in sales have decreased dramatically in recent years. But that’s okay with the brands. They’ve been making a massive effort to get patrons to move to take-out, drive-thru and delivery…

Future Chick-Fil-A - © 2023 Chick-Fil-AChick-Fil-A’s new store concept, revealed last week. Note the heavy emphasis on
drive-thru service; isolation from customer traffic of kitchen on upper floor.

You wouldn’t know unless you’ve visited a major-brand Fast Food outlet recently. Dine-in sales have dropped dramatically – about 10 percent across the sector to around 14 percent today.

According to a recent Wall Street Journal (WSJ) story, McDonald’s has seen the biggest drop in dine-in orders clocking in at only about 10 percent of total sales during the first half of 2023.

Shift already underway

The COVID crisis did push legions of consumers to move their Fast Food habits from dine-in to take-out, drive-thru or delivery. But the trend was already in evidence well before that. The WSJ survey shows that the decade-high for dine-in orders across the sector was just over 22 percent in 2015. It dropped another percentage point in 2021, just before COVID restrictions came in.

One reason could be that younger generations of consumers were coming into their own in the 20-teens. They’ve been found, in a whole raft of studies, to value convenience and immediate gratification over lower prices.

Major brands okay with that

But while dine-in sales are down, take-out, drive-thru and delivery have taken up the slack. At least, most of it. And that’s just fine with the major brands. They ultimately want all their customers to move to non-dine-in habits. Their new business models emphasize the various modes of take-away service over counter service and table seating.

During the COVID era, they found they could serve customers on-the-go faster and more cost effectively than dine-in clientelle. They could reduce staffing significantly, realizing significant savings. And new store designs unveiled in the past year or so by all the major Fast Food players show their new plans reduce the amount of real estate needed to serve just as many or more customers.

Mobile apps go hand in hand

Another important component of the new business models is the emphasis on mobile/smart phone ordering and payment. It seems that just about every second deal or special floated by the big Fast Food players these days requires customers to order through the app. The faster customers switch from dine-in to one of the other order fulfillment modes, the happier the brands will be.

There’s a war on

And all the foregoing cajoling and maneuvering by the Fast Food giants is just part of a larger picture. It’s been a perfect storm, with food and wage costs rising dramatically and sales stagnating.

Faced with plateauing sales even before COVID, competition became intense. The bands were already looking for ways to raise their profiles even higher above their competitiors’. For better or worse, COVID forced them to try a dramatic shift in their business models which – fortunately for them – fit in nicely with their post crisis needs.

My take

I’ve been saying for years that a Great Reckoning is coming in the Fast Food sector. I predicted, back in the mid-20-teens, that smaller chains would be swallowed up by larger ones and many would close their doors, unable to compete with more powerful players.

Now the pressure is on, and growing, toward a major shakeout in the industry. Meanwhile, the world is preparing to segue to a plant-based diet to survive in an imminent future where traditional meat protein is unsustainable. How will the Fast Food brands deal with that mega-shift in eating regimes?

True. they’ve all got onboard with plant-based meat substitutes such the Beyond and Impossible products. But those will prove to be relatively expensive bridging solutions on the way to a plant-based future which looks a lot like the traditional Asian way of eating.

~ Maggie J.