McDonalds, Starbucks, others slow to embrace indoor dining as restaurants boom

With more than 50 percent of the U.S. population vaccinated, local restaurants are seeing the light at the end of the tunnel as reservations surge — yet most fast food chains have been slow to embrace indoor dining again, even with new COVID-19 infections on the decline.

Part of the issue lies with pandemic-era dining trends, which became entrenched during lockdowns. During that period, takeout and app-based ordering were embraced by consumers and restaurants alike: In fact, McDonald’s (MCD) just this week announced a new digital loyalty program that will begin on July 8.

Yet with newly vaccinated denizens eager to dine out again, data suggests food chains might be hurting themselves by keeping their dining rooms shuttered. Most continue to be guided by local regulations, which are slowly being relaxed as vaccinated populations hit a certain threshold.

During the month of April of 2021, visits at Starbucks (SBUX) were down 4.2 percent compared to 2019, Panera Bread saw a decline of 17.6 percent, whereas Dunkin’ saw the same exact of amount of visitors as 2019, according to foot traffic intelligence platform Yet Starbucks has seen sales topping pre-pandemic levels in areas where COVID-19 vaccinations are prevalent.

This comes as restaurants and eateries around the country are flinging open their dining room doors. Yet in key markets, Popeye’s, McDonald’s, Chipotle (CMG) and Yum! Brands (YUM) have been slow to embrace the old status quo.

Starbucks was among the first wave to relax masking guidelines for vaccinated customers, but has yet to re-open the plush in-store seating in most places that allowed patrons to nurse handcrafted drinks over laptops and cellphones for hours on end.

Recently, however, CEO Kevin Johnson said the coffee giant was moving to open up more of its public seating to accommodate patrons working from home.

In-store eating at Shake Shack (SHAK) locations has been open in New York City and elsewhere in limited capacity, but depends on guidance given by the local communities, according to the company. Mask mandates are in accordance with CDC guidance including that vaccinated individuals are no longer required to wear masks.

According to McDonald’s site, 99 percent of restaurants are reopen, but the company is complying with local regulations, “which unfortunately does mean that restaurants in select locations may be operating on limited hours or may be closed temporarily.”

Chipotle’s indoor dining also depends on local guidelines, and while employees are still required to wear masks, fully vaccinated guests do not need to wear a mask.

“With restrictions loosening across the country, it’s exciting to see more guests opting to dine in-restaurant again,” Jack Hartung, Chipotle Chief Financial Officer, told Yahoo Finance in a statement. “We are providing guidance for our teams to safely unwind various restrictions and expand seating capacity based on local regulations.”

Meanwhile at YUM! Brands restaurants, which include Taco Bell, Pizza Hut and KFC, a slow re-opening is underway.

“In the U.S., we and our franchisees are in the process of reopening dining rooms — however, it varies by brand and by state,” a spokesperson told Yahoo Finance.

“We continue to run our restaurants in accordance with guidance from the CDC, and our restaurants continue to follow all applicable local regulations and guidelines for employee and customer mask usage.”

‘Omni-channel’ eating is the buzzword

MIAMI BEACH, FLORIDA - JULY 20: A McDonalds closed for indoor dining with tables and chairs wrapped with plastic by order of Miami-Dade County Mayor Carlos Gimenez on July 20, 2020 in Miami Beach, Florida. Miami Dade County imposed a daily 8 p.m. to 6 a.m curfew. The City of Miami Beach put the curfew back into place to fight the spread of the coronavirus (COVID-19), which has spiked in recent days after the Phase 1 reopening of businesses. Florida Gov. Ron DeSantis refused calls to impose a statewide face mask mandate despite the record numbers of coronavirus cases and deaths in the state in recent days. (Photo by Johnny Louis/Getty Images)

A McDonalds closed for indoor dining with tables and chairs wrapped with plastic by order of Miami-Dade County Mayor Carlos Gimenez on July 20, 2020 in Miami Beach, Florida. Miami Dade County imposed a daily 8 p.m. to 6 a.m curfew. (Photo by Johnny Louis/Getty Images)

What’s clear is that the echoes of COVID-19 continue to influence the business decisions of food chains. Shake Shack, McDonald’s and Burger King, among others, invested heavily into digital during the COVID-19 pandemic.

Even high-end delivery service Goldbelly got a boost as small and midsize restaurants looked to an “omni-channel future” — and these major investments will likely pay off, according to CMO Ethan Chernofsky.

“We got this great opportunity for brands to really focus on how can they meet the customer where they want to be met,” Chernofsky said. That includes “really strong delivery drive through takeaway options” and “a really strong presence” onsite, as people look to escape from working from home for a couple of hours in the middle of the day.

“The in-store growth of the omni-channel piece is just as important as the digital side,” he noted in an interview with Yahoo Finance LIVE.

It’s a philosophy that California Pizza Kitchen CEO Jim Hyatt has also embraced.

In an interview with Yahoo Finance LIVE, Hyatt says the restaurant chain’s indoor dining is “pretty much in full mode right now,” in line with California’s reopening efforts.

He says having customers back inside the dining rooms is a “big plus,” but there are some COVID-19 era trends that are remaining, like third-party business that’s boosting current sales.

Traditionally the company saw 18 to 20 percent of its business through third-party sellers, but now the company is seeing 35 to 40 percent of its percent via third parties and it “seems like it’s going to stay,” Hyatt added.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected]. Check out her latest:

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