If COVID-19 set one change in motion for restaurants, it was the nature of how consumers access brands. During lockdowns, they tapped delivery and pulled up curbside to concepts they once identified as strictly dine-in. Out of necessity, a segment that historically generated roughly 8 percent (or less) of its sales outside the four walls began to exclusively target this channel of business. Whether that came via mobile ordering, apps, delivery, or more likely, some collection of all of the above, full-service restaurants had to compete for diners in a new arena.
This is the base reason why, early on, quick-service brands weathered lockdowns far better. Not only were full-serves catching up from a logistical angle, but they faced a consumer perception gap. As challenging as this was, however, working through setbacks and educating guests could prove fruitful.
The Cheesecake Factory today generates roughly $60,000 per week, per store in off-premises sales. Yet more notable, two-thirds of its “frequent cohort” of consumers in that pool are new customers. It appears restaurants have their answer to a widespread pre-COVID question: Digital and off-premises transactions, largely, are turning out to be incremental.
When you factor in dine-in sales, the result is even more engaging. Quick-serves have not seen this slice of this business return at the same pace. Guests are sticking to the drive-thru, curbside, and pickup, which is leading brands to design stores without dining rooms and other models that focus on turning pads and parking lots into omnichannel hubs.
It’s clear the world has changed for restaurants, Smokey Bones CEO James O’Reilly agrees. There’s been a structural change in the off-premises, on-premises dynamic.
“And not only are more people engaging with the casual-dining brands off-premises than ever before, the on-premises customer even thinks of their experience being a little bit different,” he says. “A little bit more special, which underpins how consumers are spending in on-premises occasions. But all of this led us to ask, how do we support that and keep growing the company and growing the value and becoming more relevant to consumers?”
The answer for Smokey Bones: a full-scale, quick-service style, in function, drive-thru system on one of its restaurants. “With a view to it becoming a part of how we do business going forward,” O’Reilly says.
An element of FSR’s NextGen Casual conversation, where a collection of full-service brands are looking to regain share from quick service by beating them at their own game (and more), is the evolution of convenience. Fast casual is billed as the top end of quick service from a quality standpoint, and also a pricing one. “But our thought process,” O’Reilly says, “is this has the potential to give customers a different look at what true fast casual could be, in terms of doing both.” In other terms, a full-service brand’s ability to deliver the convenience of a fast casual, but also the experience and service of a sit-down concept.
While there are casual chains moving toward some drive-thru element—Applebee’s franchisee Apple Arkansas began testing a window last January in Texarkana, Texas, and Jim ‘N Nicks features drive-thrus—O’Reilly believes 60-plus unit Smokey Bones might be one of the first to put a full drive-thru system on a casual-dining restaurant.
When guests pull up, they’ll see the traditional cues—a drive-thru open sign, signage, pavement marketers, etc. There will be a preview board featuring the items Smokey Bones wants to focus on. And then, consumers will approach a three-paneled digital drive-thru system with integrated audio for ordering and confirmation.
Smokey Bones is working with the Howard Company, a partner O’Reilly knows well from his time at Long John Silver’s, where he served as CEO for four years (he’s also clocked time at Sonic Drive-In and Yum Brands overseas).
The menu will be segregated into “Express” items and made-fresh-for-you choices. “We want guests to be able to order many, many of the menu items that they can get very, very quickly,” he says. “Like sandwich combos and wing combs and things like that. And if the guest wants to order a family meal or something that might take a few minutes longer, we’ll have designated spots where they can wait for their order to be brought up to them.”
Smokey Bones will guide consumers to more convenient options, but not limit their ability to get traditional favorites, like a full rack of ribs, for example.
The first version is popping up in Bowling Green, Kentucky, sometime in late Q1. O’Reilly says they’re already in the planning and permitting phases and expect to go into construction sometime in January/early February.
Inside the store, Smokey Bones dedicated a space to build around the drive-thru area. It will feature a dedicated point of sale and drive-thru audio headsets, as well as some holding equipment for the aforementioned Express items. And the store will hire employees, O’Reilly says, with drive-thru experience.
Perhaps the most trailblazing detail: the drive-thru will not only feature Smokey Bones’ products, but also the brand’s virtual brands. The company developed these, in truth, as quick-service concepts. “So they fit very well within a drive-thru architecture,” O’Reilly says of their The Wing Experience and The Burger Experience brands.
“I think we’d be the first casual-dining brand, and maybe the first brand, to offer its virtual brands in its drive-thru,” he adds.
Virtual brands erupted during COVID thanks to extra kitchen capacity as restaurants’ business models shifted outside. It led to everything from bolt-on virtual opportunities (like a MrBeast) to rebranding a corner of the menu and fulfilling it as a different concept (such as Chili’s It’s Just Wings or Smokey Bones’ two concepts).
For Smokey Bones, virtual brands have their own websites, positioning, ecommerce, and marketing plans. If a customer orders from either, they have to come to the restaurant to pick up. The same is true, naturally, of an aggregator. “So a majority of our virtual brand guests already are coming to the restaurant to pick up their order and take it away,” O’Reilly says. “This innovation makes it easier and more convenient for them.”
“And hopefully guests who are just regular drive-thru guests for Smokey Bones will discover the next time I want some great wings or a great burger, I can get it right here at this drive-thru,” he continues.
That excess capacity point remains in focus, O’Reilly says. But how brands can capitalize going forward, and assert more control, has adjusted. “The industry is shifting toward off-premises, and how can we become more relevant to the off-premises guest within the casual-dining industry?” O’Reilly says. “Every study that we read and everything that we hear about what’s happening in off-premises is that, and even more so in post-COVID world, is that the off-premises customer prefers drive-thru over any other service method.”
In a recent Deloitte study, among the options available today for restaurant ordering, the most popular, at 37 percent, was the drive-thru.
O’Reilly says Smokey Bones’ model won’t interfere with the dine-in experience because cars swing behind the restaurant, which is where the order post will be. Cars exit off the other side of the restaurant. “To the dine-in guest, this is totally invisible, so to speak,” he says.
As the brand develops the Bowling Green store and gains experience from the effort, it will “definitely” lead to building more across Smokey Bones’ portfolio, O’Reilly explains. It could then evolve into ground-up development that starts with a drive-thru.
“That’s a thought process that I think is different from the way the casual-dining industry sees itself today in terms of taking care of its customers, but one that we believe is definitely worth looking at,” he says. “… Our destiny is in our own hands and our team is super energized and we want to lead.”