JThe eff Lobdell restaurant portfolio hit nearly 40% of its revenue during a COVID-19 pandemic in 2020 that wreaked havoc on the hospitality industry.
However, a store under the ownership of his Grand Rapids-based store Restaurant Partners Management LLC made a strong rebound.
Bagel beanie, located at 455 Michigan St. NE in Grand Rapids, took a similar first dive at the start of the pandemic, but ended the year down about 3% in revenue, Lobdell said. Bagel Beanery is also the only casual fast food / fast food restaurant – often referred to as a Quick Service Restaurant (QSR) – in Restaurant Partners’ portfolio.
Lobdell’s experience with Bagel Beanery is a microcosm of a trend that is playing out nationwide, where the food industry is experiencing a sales boom for quick service restaurants, a trend that could have lasting effects after the pandemic.
Fast food rebound
Bagel Beanery’s location on the Medical Mile is outfitted with equipment that proved coveted during the pandemic: a window at the wheel.
Due to drive-thru capabilities, Bagel Beanery was one of only two restaurants in Lobdell’s portfolio that were able to stay open during the pandemic. The other was The belt bar in Grand Rapids, which traditionally generates 15% of its sales from takeout orders.
However, despite the drive-thru window, Bagel Beanery generated about half of its sales from customers ordering inside the store.
This could explain why, despite a healthy rebound, Bagel Beanery was unable to return to the dark like many of its QSR counterparts across the country.
Fast food franchises have been among the biggest winners in the pandemic and the new premier restaurant format.
“When everything was closed – and all the fixed-service restaurants closed – the fast food restaurants stayed open,” Lobdell said. “At first they took a bit of a dive and a lot of them got big P3 loans, then they started pulling back and excelled for the rest of 2020 as the restaurants at the table continued to suffer.
“On the second stop, the fast food restaurants didn’t miss a beat. They were able to reduce some dining room operating costs while maintaining drive-thru efficiency. “
Industry figures highlight the fact that QSR was pretty much the sole winner in the restaurant industry as of 2020.
Restaurant Industry Analysis Company Data MillerPulse chronicled the journey through COVID-19, which began with a 20% drop in same-store sales for QSR restaurants in April when the pandemic began to take hold of the country. In November, quick service restaurants managed to slip into the dark with a 1.1% increase in same-store sales for the month. MillerPulse also predicted that performance would improve even more in 2021.
Many of the usual suspects saw a happy mid to late 2020. McDonald’s Corp. recorded a 4.6% increase in same store sales for the third quarter of last year, while Yum! Brands Inc. reported a 3% increase in comparable store sales for Taco Bell for the third trimester. Kentucky Fried Chicken, also owned by Yum !, saw same-store sales jump 9% in the third quarter.
Based on Grand Rapids Meritage Hotel Group Inc. followed suit. Operator of 340 Wendy’s and other restaurants in 16 states, Meritage sales increased 10.4% for 2020, totaling $ 516.2 million from $ 467.5 million in 2019. The improved sales s ‘is produced after the company only developed or acquired three new restaurants.
Meritage did not respond to requests for comment.
In a earnings report last month, CEO Robert E. Schermer Jr. said, “We achieved record financial results in an unprecedented and difficult year. It was quite an accomplishment given the negative impact of COVID-19 in the first quarter, resulting from the mandatory closures associated with the pandemic.
“Our restaurant operations teams and our property development group ended the remainder of the year strong, supported by a resilient Wendy’s brand. As we continue to strengthen our sales momentum with double-digit growth in the first quarter of 2021, we are focused on executing our core priorities, including employee and customer safety, while delivering speed, convenience and quality food at an affordable price.
While quick service restaurants faced many challenges during what has turned out to be a difficult 2020, the inherent nature of their business models has done them some favor.
Daniel Estrada, CEO of the Grand Rapids-based company 86 Repairs, which provides end-to-end equipment repair and maintenance processes for catering groups, works with many of these types of restaurants. In fact, 90% of the customers of 86 Repairs belong to the QSR sector.
“QSR operators, they’re generally very process-oriented,” Estrada said. “The fast food franchise systems in particular, they have systems for everything. They systematized the creation of the food, the recipes, the way the food is served, all of those things have a lot of process and thinking. Full-service restaurants tend to be more creative and less structured. “
That’s why, since the spring of last year, catering restaurants have tried to emulate the QSR model, which is not easy in some cases.
“A lot of full-service operations have put a lot more thought into their menu design – the size of the menu, the profitability of the menu – and focused on that more than in the past,” said Estrada.
Additionally, with sanitation now on the minds of many more customers than ever before, restaurants have intended to highlight and show customers the steps they have taken to maintain clean and healthy spaces, said Estrada. This includes everything from proper social distancing to adopting paper menus or QR codes.
Lobdell has made these and other pivots to keep his restaurants afloat. He also notes a pent-up demand for on-site meals, especially now that capacity restrictions and the curfew are loosening. While he expects demand for on-site catering to eventually return to pre-pandemic levels, he predicts some long-term effects of this new, fast-food-friendly market.
“I think the size of the dining rooms will probably decrease; meanwhile, outdoor patios and alfresco dining will gain momentum, ”he said. “I think the fast food restaurants, a lot of them, even determined that they were more profitable without their dining room.”