Year in, year out, most fast food restaurants see a steady increase in drive-thru visits by customers. While the rise in business is welcomed, fast food chains get even more excited when diners eat in the restaurant — because when they do, they tend to spend more.
And Wendy’s and McDonald’s are among the chains that have begun employing a straightforward, if pricey strategy to increase the likelihood that customers will dine in, linger longer, and drop more cash on each visit.
What’s the strategy? Just make the restaurant look really nice, inside and out.
On Wendy’s recent Company Investor Day, special attention was devoted to the chain’s “Image Activation” efforts. Abigail Pringle, a Wendy’s senior vice president, told investors, “Image Activation is more than a remodel,” but the physical redesign and renovation of select Wendy’s locations are the first things that most customers will notice.
The features in remodeled Wendy’s around the country include fireplaces, lounge seating, flat-screen TVs, Wi-Fi, digital menu boards, wood laminate floors instead of cafeteria-like linoleum, and an overall hip, modern, almost loft-apartment-type feel.
Based on the performance of eight remodeled U.S. Wendy’s restaurants, the new “Image” gets the approval of customers. Overall sales in these locations have increased by more than 25%, with a particularly noteworthy rise in the dine-in (43%) and pick-up window (44%) categories.
Carry-out orders, by contrast, increased by just 14%, giving some indication that when customers walk into a sleek, modern fast food location, they’re likely to want to hang out and enjoy their meal there.
According to QSRWeb.com, Pringle explained, “Customers who used to do carry out are now staying in the restaurant. And a higher check comes from those who are dining in.”
Restaurant and business owners the world over understand that an inviting, attractive atmosphere is good for sales. But just how good? Wendy’s seems to have the equation down to a science, estimating that the more a franchise spends on remodeling, the higher the payoff in the form of increased sales. A “Tier I” investment, which costs in the neighborhood of $700,000 and includes all the lounge seating and other bells and whistles mentioned above, is expected to boost sales by 25%. A paltry “Tier III” investment of $300,000, however, would only increase sales by 5%, according to Wendy’s executives.
One reason Wendy’s and other traditional quick-service restaurants are pushing for modernized remodels is that they are increasingly competing with “fast-casual” chains such as Panera Bread and Chipotle, which boast far sleeker, more upscale designs than the fast food joints of old. It’s no coincidence that, post-makeover, the color scheme and inviting café feel of certain fast food chains resembles Starbucks or Panera Bread.
Taco Bell is another major chain that’s attempting to reinvent (and modernize) its vibe, as well as its menu, as is McDonald’s.
A New York Times magazine piece about the recent success of McDonald’s focused in particular on a Golden Arches location in Riverside, Calif., a location that features “solar panels on the carport, eco-friendly L.E.D. lights in the ceiling panels, totally new décor — and soaring sales.”
After a complete renovation, the location reopened to the public in 2010, hoping that sales would increase by 12% or so. Instead, sales soared 50% during its first week open, and by 20% overall for the first 12 months after the remodel.
Unsurprisingly, plans are in the works for more and more Wendy’s and McDonald’s to be renovated in a fashion similar to their freshly remodeled, highly successful sister franchises.