“A new age for QSR”: industry leaders discuss eating-at-home boom, delivery, drive-thru

Top bosses from Subway, Craveable Brands and Guzman y Gomez expect changes in leasing opportunities.

For four of the restaurant industry’s top leaders, the COVID-19 pandemic ruled out business as usual, forcing operators who want to remain trading to adapt quickly.

“Most of us in this space play at the value end of the economy. One thing COVID-19 has really demonstrated to all of us that we all play an important role in feeding Australia. And if we can continue to do that in a compelling, convenient, trusting and hygienic way, then I think it will play well to all of us going forward,” Craveable Brands chief executive officer Karen Bozic said during the QSR Media Sandhurst Conference & Awards’ annual Leaders Panel.

“The game is changing...Right now, people want food delivered, they want hygiene and cleanliness in restaurants...and making sure your crew is healthy,” Guzman y Gomez founder and global CEO Steven Marks added. “It’s a new age for QSR and I think we’re all very lucky to be in this industry.”

Chris Churchmichael, Subway ANZ country director, says the chain remains focused on supporting its 1,300-plus domestic store network and their financial strengths as they anticipate a second economic wave in the third quarter.

“Subway is across a hundred countries and...our results [in Australia] don’t reflect what is happening globally. It is a new world, but we’ve been working in that new world for four to five months. Our customers’ safety, affordability, accessibility (and) digital [are part of] our new way forward,” he said.

Offering a perspective as a former restaurant owner, celebrity chef Manu Feildel is concerned that the pandemic is exacerbating the financial struggles of smaller, independent owners as the industry, he says, was “already in trouble” before the crisis.

“I’m really worried about this because [whilst] big restaurants with big backers might be able to survive...a lot of [smaller] restaurants are still going to close. I don’t know the answer on what’s going to happen after,” he said.

Off-premise channels as growth opportunity, means of survival
Off-premise channels such as delivery, takeaway and drive-thru was a key and expected discussion point between the executives, seeing it as both a growth opportunity for larger chains and a means of survival for smaller businesses.

Marks said Guzman y Gomez experienced “explosive” growth in those specific channels, revealing that digital sales are now 40% of their revenues whilst drive-thru sales are now 60%.

Bozic said drive-thru and delivery saw the biggest change in sales for their Red Rooster, Oporto and Chicken Treat brands.

“It’s substantial,” she remarked. “Convenience is king...what we’re going to see is customers relying on us more often to interact with us in those channels.”

Sharing how COVID-19 impacted their CBD locations, Churchmichael said Subway saw “exponential” growth through its delivery app partners, seeing a rise in eating-at-home occasions and larger basket sizes.

“I don’t think it’s going to change...whilst there might be a small decline, I actually see that new base maintained,” he said.

“Most restaurants have been trying to do takeaway. Does it cover the costs? I’m not sure, but at least they keep on going,” Feildel added.

Expected changes in leasing opportunities
The changes in these sales, the panelists say, is something for chains to consider in future leasing opportunities.

“Landlords really have to take into account the economics of what our business looks like now,” Marks said.

Bozic added: “Rent as a whole and a property reset is another massive opportunity for our sector to get equilibrium across tenants and landlords.”

“There will be opportunities post-September in the way we look at our development strategy. With the changing workforce, there might be some impact in the CBDs...those are the kind of things that will be self-evident in time,” Churchmichael said.

Varied takes on cooking-at-home trend
On the cooking-at home/meal kit trend being done by QSRs, the panelists had varied takes.

Feildel, whose sauce range is being sold at select Woolworths stores, revealed plans to explore the concept.

“That is the business that should work well at the moment, I wish I had been on that wagon a long time ago,” he said.

“Has it fully exploded? Maybe not. It’s something to think about,” Bozic added, referencing Oporto’s sauces sold in take home bottles. “It’s more of an opportunity going forward.”

Churchmichael described this as a challenge for the sandwich chain, in terms of how to present the chain’s customisation experience on their physical stores in the virtual space.

Marks, meanwhile, said the Mexican chain went in an opposite direction, aiming to encourage customers to buy from their stores instead, citing their $3 taco as an example.

“Everybody makes [tacos] at home, we wanted to make it better in our restaurants so you didn’t [have to] make it at home and came to (a) GYG,” he said.

Greater demand for transparency, more communication across industry
Other positive developments mentioned during the panel include a greater customer demand for transparency from chains and the industry communicating and collaborating more, sharing information that are not competitor- or customer-sensitive.

“There’s a lot of issues we can align on to resolve going forward, such as trying to reduce some of this complexity that exists in our operating environment nationally,” Bozic said.

“The mass market of the world and especially Australia have more knowledge about food, which is great so it’s not just about value and convenience. They want to know what’s in their food...that’s our obligation,” Marks explained. ###