April 28, 2021 at 09:51PM

To weather the last year, amid mass closures of restaurant dine-in spaces and widespread contagion concerns, restaurants have had to lean heavily on digital tools and off-premises channels, with even the most dine-in-reliant restaurants turning to takeout and delivery. Now, as vaccines roll out and reopening becomes possible, restaurants have the opportunity to reorient themselves for the post-pandemic future. Two major restaurant businesses — Yum Brands, parent company of KFC and Taco Bell among others, and Brinker International, which owns Chili’s Grill & Bar and Maggiano’s Little Italy — announced their earnings for the first three months of 2021 on Wednesday (April 28), and while the former remains focused on its digital investments, the latter is banking its future on the return of dine-in.

Yum Brands saw worldwide system sales grow 11 percent, with record-high digital sales surpassing $5 billion. For KFC, digital sales mix reached 43 percent, the highest yet, which, Yum Brands CEO David Gibbs told analysts on a call was “driven by the rapid expansion of delivery, click and collect and the introduction of new channel ordering options.” Taco Bell also saw a “much bigger digital mix,” according to Gibbs, and Pizza Hut stores performed best in markets with high off-premises capabilities and digital strength.

This strong digital performance is hardly surprising given the major investments that Yum Brands has made in technological upgrades in recent months. In March, the company acquired artificial intelligence (AI) analytics company Kvantum, Inc. and chat-based ordering company Tictuk. Additionally, the company continued “to make tangible progress on scaling our in-house built technology platform,” which included launching the company’s “first-ever custom-built KFC app,” featuring a range of mobile ordering options, and building out the membership of Taco Bell’s relatively new loyalty program with digital-only offers.

The company intends to continue to develop its own technology and acquire other tech providers. Discussing technological innovations, Yum Brands Chief Financial Officer Chris Turner said on the call, “We do ask ourselves the question of should we build the capability in-house, should we acquire it and bring it in-house, or should we contract with an external provider? … We then assess our ability to develop it versus the speed of integrating and the opportunity to attract or find a great candidate to acquire.”

Of the Kvantum and Tictuk acquisitions, Gibbs said, “Both of these, we think are high return — they are on the smaller side, but high return acquisitions.”

The company expects digital sales to remain high even as newly vaccinated consumers return to stores.

“The increases that we’ve had in digital, that’s going to be stickier and stay in our business, even in the U.S., as we see dining rooms reopen,” Turner said. “We’re not seeing, for example, a decline in Taco Bell’s digital business. So we’re holding onto those gains.”

Even as the company expands its footprint, with 435 net new units during the quarter, digital remains key to this strategy. Gibbs noted, “you’re seeing us now integrate digital into the formats.” For instance, Taco Bell’s “dine-ins, drive-thrus and digital” approach to store design even includes a digital-only store with self-serve kiosks and mobile order pickup cubbies.

While both Yum Brands and Brinker International are benefitting from the return of dine-in, Brinker may have more at stake — revenues fell 3.7 percent year over year for the company during the quarter, totaling $828.4 million compared to last year’s $860 million, though Chili’s sales increased slightly year over year to $749 million from $748.7 million. This slight uptick came from strong off-premises sales, according to the earnings release, driven in part by Chili’s ghost kitchen chain It’s Just Wings. Maggiano’s, meanwhile, struggled against low dine-in sales, with sales falling almost 30 percent year over year.

Overall, the company is focusing on the return of dine-in to grow sales going forward. The company’s digital mix is already falling closer to 30 percent, a significant increase from its pre-pandemic mix of about 20 percent but a steep drop from the digital mix at the height of the pandemic.

“There is a stimulus environment out there — I think that’s very apparent,” Brinker International Chief Financial Officer and Executive Vice President Joe Taylor told analysts on a call. “It’s more than simply the stimulus checks. I think you have … that pent-up demand … We also continue to see restaurant reopenings and capacity restrictions lifting. The progression that we’re seeing in the performance of our restaurants as a percentage of ’19 continues to go up materially as we work through each of the months.”


Read More On Restaurants:

Restaurant Chains Rethink Channel Mix For The Post-Pandemic Future …

Selected by EFXA

Search Web: Restaurant Chains Rethink Channel Mix For The Post-Pandemic Future

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>