Quick-service restaurants have only recently embraced online pickup and delivery. These new systems are now being adopted at a breakneck pace as the coronavirus forces the world to shift to contactless delivery.
COVID-19 is accelerating existing QSR trends around use of technology to enable contactless delivery, said Yum! Brands CEO David Gibbs during the company’s Q1 earnings call.
Though Yum! Brands’ same-store sales dropped 7% during the first quarter of the year, locations where it already had strong drive-thru or carryout businesses, such as Taco Bell, were less affected than brands where dining in was a big part of the allure, such as Pizza Hut.
Taco Bell saw same-store sales increase 1% (though they were on track to increase 6% before the pandemic), as the fast-food brand moved from 75% drive-thru to nearly 100% drive-thru or contactless delivery. And 10% of Taco Bell overall sales are digital.
Taco Bell also promoted its free delivery through Grubhub for orders over $12.
At KFC, Yum! Brands now projects that one-quarter of its 2020 sales could be through digital channels. The KFC.com ordering portal drove 40% of contactless sales.
Pizza Hut is largely a “dine-in” pizza restaurant, depending on the market. In Hong Kong for instance, a surge in online ordering replaced lost in-store sales. But in other markets, such as the United Kingdom, carryout increased from 50% to 70%, but wasn’t enough to make up for the loss of customers dining in.
But contactless delivery doesn’t work if stores are closed, and 11,000 Yum! Brands’ stores were completely closed during the peak of the pandemic’s social distancing regulations.
Changing the marketing messaging
Yum! Brands completely revamped its marketing messaging during the COVID-19 crisis.
Pizza Hut, where same-store sales declined 5% in Q1, initiated globally a “massive shift in brand messaging,” Gibbs said, focused on food safety, team safety, contactless delivery and giving back to the community.
At Yum! Brands’ 1,200 company-owned restaurants, it gave restaurant managers a $1,000 one-time bonus, paid out hours to employees required to stay at home and will continue to give employees bonuses through Q2 even though they are unlikely to hit numbers.
While other companies have been forecasting dire projections for Q2, Yum! Brands said it was optimistic. Factors including the stimulus check in the United States and excellent messaging around contactless delivery in Japan were encouraging – but overall recovery will be uneven and hard to predict, the company warned investors.