Quick-service chains revisit drive-ins to rev up sales

Quick-service chains revisit drive-ins to rev up sales

As the country wrestles with the worst economic crisis since the Great Depression, consumers are nostalgic for simpler, happier times, and some quick-service players are capitalizing on that sentiment.

While operators such as Sonic Corp. [3] and the six-unit The Varsity [4] chain in Atlanta have long offered a drive-in format, a growing number are reaching back to boost future sales with new prototypes offering a drive-in element. A&W Restaurants Inc. [5] and Ruby’s Restaurant Group [6] each have in the past few months unveiled such plans.

Yet even as these new drive-ins recall scenes from “American Graffiti” and hearken to memories of the 1950s, when America’s love affair with the car ignited, they are designed to cater to a modern customer: one who craves convenience, control or even a moment of peace, operators say.

“There are occasions when people want to stay in their cars,” says Ben Butler, president of A&W and sister brand Long John Silver’s [7], both of which are owned by Louisville, Ky.-based Yum! Brands Inc. “Maybe they’re making a phone call or the mom has the kids in the car after soccer. There are times when you want to go through the drive-thru, and there are times when you just want a moment of peace to eat in your car.”

For Sonic, the granddaddy of drive-in concepts with more than 3,500-units nationwide, the drive-in model offers a point of differentiation within the quick-service segment by putting customers in control, says Drew Ritger, senior vice president of development for Sonic Industries, the chain’s franchising arm, based in Oklahoma City.

“You order when you’re ready,” Ritger says. “You don’t have to get out of your car. People just love the fact that it’s convenient.”

Sonic was founded in 1953 in Shawnee, Okla. It originally was named Top Hat Drive-In, but it later was known for the use of curbside speakers that allowed customers to place orders without leaving their cars, spawning the slogan: “Sonic, service with the speed of sound.”

Now a public company, Sonic’s slogan is “America’s Drive-In.” The chain has locations in all but nine states and is currently expanding in the Chicago area, Southern California and into the Northeast. The first unit in Massachusetts is expected to open later this year, and the first store in New York is under construction, Ritger says.

The chain is also known for a menu that aims for all dayparts, with more than 100,000 possible combinations of beverages, from Slushes and Signature Limeades to milk shakes and premium coffees, and a broad range of food, including breakfast, burgers, ice cream and snack items, all available all day.

Sonic in 2007 rolled out nationwide a Happy Hour from 2 p.m. to 4 p.m., offering half-price drinks and Slushes. The chain also recently launched a new $1 value menu, available all day.

Ritger says Sonic’s average ticket is a little more than $5.50, and the average unit volume is $1.1 million.

For those more interested in “to-go” convenience, most Sonic units also have drive-thru lanes, but, even then, carhops deliver the food by walking out of a doorway to the car, rather than handing it through a window.

The extra step preserves some of the brand’s drive-in experience, Ritger contends.

Most Sonic units have between 20 to 28 car stalls, as well as covered patios with outdoor seating for walk-up diners or when the car stalls are full.

A few Sonic locations have carhops on roller skates, but, as Ritger notes, “it depends on the availability of skaters.”

“Skating and handling food requires a certain set of skills,” he says.

Sonic boasts 22 consecutive years of annual same-store-sales growth, Ritger says.

For the Nov. 30-ended first quarter of fiscal 2009, however, same-store sales were down 3.6 percent, compared with an increase of 2.1 percent the year-earlier period. Ritger blamed the difficult economy, which has forced many consumers to cut back on dining out, even in the quick-service segment.

Franchise units tend to perform better than corporate-owned ones, Ritger notes. Currently, the chain is in the process of refranchising some company-owned locations, with the goal of reducing company ownership from about 20 percent to between 12 percent and 14 percent.

One attractive aspect of the drive-in model for franchisees is the relatively lower build-out costs, Ritger says.

Sonic’s drive-in locations tend to require about the same amount of land as any other quick-service brand with parking, typically about three-quarters of an acre. However, the building is smaller than one with a dine-in format, requiring only about 1,700 square feet.

A&W Restaurants, a chain that began with one of the nation’s first drive-ins, in February unveiled plans for a new prototype that combines a drive-in with a drive-thru and dine-in restaurant, a first for that chain. A&W long has combined aspects of drive-ins, drive-thrus and dine-in locations, but until recently didn’t combine all three.

The new prototype unit allows diners the choice of staying in their cars, eating in the restaurant or driving through to eat elsewhere.

Dubbed the “Three D,” for drive-in, drive-thru and dine-in, the new format attempts to “tap into the heritage of the brand while still looking forward,” Butler says.

A&W was founded in 1919 by Roy Allen, who began by offering root beer in frosty mugs from a stand in Lodi, Calif. Later, Allen opened a second root beer stand in Sacramento, Calif., which the company’s website describes as the first drive-in location, where “tray boys” delivered to vehicles.

By the 1960s, A&W had become one of the first national drive-in chains, at one point growing to more than 2,000 locations with carhop service.

The 90-year-old brand now is owned by Yum Brands, which franchises 1,012 A&W units across the United States. About 650 of those units are co-branded with other Yum concepts, such as KFC, Taco Bell and Long John Silver’s.

Another 362 A&W units are stand-alone restaurants, and, of those, 150 have drive-in service. The rest have dine-in space, drive-thru service or both.

The new prototype uses bold colors, including orange, bright yellow and deep red, with the goal of creating a more contemporary look. The menu, which includes the concept’s signature fresh root beer on tap, also features a line of “Sweets and Treats,” such as sundaes, floats and fried cheese curds, to gain cross-daypart snack business.

A&W now is experimenting with breakfast in a half-dozen undisclosed locations, Butler adds.

The new prototype features between 20 and 30 car stalls for drive-in service, depending on the real estate. The sites, which are typically three-quarters of an acre, include a building of about 2,000 square feet.

Five of the “Three D” units have been tested by franchisees over the past year in Wisconsin. Though company officials would not release sales results, they say they are very pleased.

A&W units with drive-in availability tend to do better than those without, Butler says, and that’s in part because of the convenience variable that drive-in service offers by letting customers stay in their cars if they so desire.

Franchisees are planning to open about 15 more “Three D” locations this year, mostly in Wisconsin, Michigan and Oregon, where the brand already has some penetration, Butler says.

A&W franchisees across the country also have a history of promoting the brand with local vintage car clubs, sometimes creating events to draw in members who want to show off their classic cars, the same way drivers in the 1950s did.

Ruby’s Restaurant Group is tapping into nostalgia for the 1950s-style drive-ins with the opening of its new Ruby’s Five Points Drive In in downtown Anaheim, Calif., the chain’s first drive-in location.

Scheduled to open in June, the 4,000-square-foot restaurant will have the same menu as the company’s 40-unit Ruby’s Diner chain, but carhop service will be available for 12 car stalls. Servers will wear roller skates, and car diners will be able to watch vintage film clips from the glory days of drive-in restaurants. The test could inspire more drive-ins for the Newport Beach, Calif.-based operator.

The Ruby’s Five Points is near Disneyland, where theme restaurants are the standard.

Doug Cavanaugh, Ruby Restaurant Group chairman and chief executive, says, “We wanted to find a unique attraction to garner traffic in a slightly offbeat location.”

Traffic takes on new meaning at The Varsity in Atlanta, a chain of drive-ins founded in 1928. The original downtown location claims to be the largest drive-in in the country, welcoming diners by the bus-load, especially when Georgia Tech plays football. Home games have brought in as many as 30,000 guests in one day, and the dining room seats 600.

The Varsity was founded by Frank Gordy, who died in 1983. The chain is now run by his daughter Nancy Simms and her son Gordon Muir.

Known for its hot dogs, onion rings and the “Frosted Orange,” which evokes the flavor of a Dreamsicle popsicle, The Varsity still greets guests with “What’ll ya have? What’ll ya have?” and the menu has its own lingo. A “hot dog” means a hot dog with chili and mustard. A “steak” is a hamburger with ketchup, mustard and pickle. Potato chips are a “bag of rags” and orders of French fries are “strings.”

The average check is $7 to $8 and systemwide sales for the chain topped about $18 million last year, said Terry Brookshire, assistant general manager for The Varsity downtown, which has the ability to accommodate more than 70 cars at once.

In the early days, carhops were known as “curb men,” and singing and dancing were part of their service. Now, Brookshire says, carhops exhibit their personalities through friendly and efficient service. Each carhop is assigned a number, which is placed on the car windshield in case diners need assistance.

“People will come in and say, ‘Hey, is No. 7 working today?’ They might not remember their names, but people get to know them by their numbers,” Brookshire says of the 15 carhops working the downtown location’s roughly 70 car stalls.

Unlike most modern drive-in restaurants, carhops at The Varsity take orders in person, deliver food and monitor guests—everything a server would do for dine-in guests. Like servers inside the restaurant, carhops also work for tips.

Only one other Varsity location offers carhop service, which Brookshire says was a result of land configuration limitations of the much-smaller subsequent locations.

The original Varsity, however, has a loyal following among those who come looking for the quintessential carhop experience.

“We don’t want to change things too much around here,” Brookshire says. “There are lots of people who never eat inside. People just love it.”