Drive-Through Lanes Become Hotter Commodities in Pandemic
02 March 2021 - 9:59PM
Dow Jones News
By Esther Fung and Heather Haddon
The pandemic is sparking a boom in an often-overlooked type of
property, the drive-through.
Food halls and restaurants have taken a big hit from frequent
limits on seating capacity during the Covid-19 crisis. But chains
such as Chick-fil-A Inc., McDonald's Corp. and Checkers &
Rally's Restaurants Inc. said they are enjoying a sales uptick at
stores with drive-through lanes, which have become more popular
during the pandemic.
"You can pull up in your car and stay socially distant," said
Camille Renshaw, chief executive of B+E, a real-estate investment
brokerage firm.
Even restaurant chains that have never offered drive-through
options are rolling out lanes. Shake Shack Inc. is building its
first drive-through this year in Orlando, Fla. The New York
City-based company's urban stores were hit hard by the pandemic.
CEO Randy Garutti said Shake Shack is exploring new formats as it
pushes into the suburbs to boost sales and aims to develop as many
as eight drive-throughs by the end of next year.
Real-estate investors are eager to get a piece of the now
thriving drive-through business, said Derek Waltchack, a partner at
real-estate developer and owner Shannon Waltchack of Birmingham,
Ala.
A property with a drive-through lane typically commands 10% to
20% higher rent compared to one without, he said. Shannon Waltchak
wants to broaden its portfolio so that half of the firm's
properties include drive-throughs, or layouts that would allow for
the construction of the lanes, he added. Seven of the firm's 40
properties currently have drive-throughs.
Drive-through sites are in demand partly because of their
scarcity value. Many municipalities have imposed restrictions on
the lanes at new developments. Applicants often need to seek
approval for zoning changes, which can be difficult to obtain if
concerns are raised about potential traffic congestion and air
pollution. At some drive-through locations, long lines of vehicles
have prompted neighboring businesses to complain that their
customers aren't able to enter the parking lot.
"There is definitely not enough supply," Mr. Waltcheck said.
Indeed, real estate with drive-through lanes was a hot commodity
even before the pandemic, but demand has become more pronounced,
said David Orkin, an executive vice president at commercial
real-estate-services firm CBRE who focuses on restaurants.
Last year, Mr. Orkin and his team created a list of potential
drive-through sites. They called mall landlords and retailers that
own their properties and asked about parking lots that could house
a drive-through restaurant. The list, which includes failed
restaurants, now numbers roughly 4,000 properties, though many
would require zoning-change approvals.
Some restaurant chains that already rely on drive-throughs are
bulking up with even grander versions, in part to help meet a rise
in digital orders. Burger King, part of Restaurant Brands
International Inc., in September unveiled plans for future
restaurants designed with triple drive-through lanes. One of the
lanes would be reserved for customers who order online.
Chipotle Mexican Grill Inc. is expanding a similar strategy. The
company plans to add 200 locations this year, with many offering
customers the option to pick up digital orders via drive-throughs
the company calls Chipotlanes.
Starbucks Corp. said in December that it expects to open about
800 stores annually, particularly in suburban locations with
drive-through lanes. The coffee company said in January that stores
with these lanes drove half of net sales for the quarter ended in
December, up more than 10% from pre-pandemic levels.
Some brokers said it might be easier to find locations for
smaller stores that have little or no indoor seating, such as
Checkers & Rally's properties. That company already has double
drive-through lanes in 726 of its 843 locations. It said it wants
to add 55 restaurants this year, up from 36 in 2020.
Some buildings could require as little as 1,000 square feet on a
half-acre site, said Kristen McDonald, vice president of
development for Checkers & Rally's.
"We're able to fit on a smaller site," she said. "This allows us
to be pretty nimble."
Write to Esther Fung at esther.fung@wsj.com and Heather Haddon
at heather.haddon@wsj.com
(END) Dow Jones Newswires
March 02, 2021 05:44 ET (10:44 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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