Presidents and presidential candidates come and go, with this year’s election no different than many others in our country’s history in that regard. But many of the issues Dunkin’ franchise owners care about are not solely or even principally determined in Washington, D.C. Rather, state lawmakers and their counterparts on the local level – city councilors, county commissioners, or members of various elected boards – often cast the deciding vote when it comes to everything from your property tax bill and the minimum wage to whether you can offer indoor dining. And the influence of state and local governments on these bread and butter issues, as we shall see below, has only been increasing over the last several years.
Against a backdrop of a Congress that is often divided or deadlocked, advocates for various causes, including a $15 an hour minimum wage, have turned their attention to a more profitable playing field, that of state and local politics. So, with the votes now in for the presidential election, it’s time now more than ever to pay attention and focus on those bottom-line issues.
Dunkin’ Beats Out Starbucks on Drive-Thru Ratings
With the Covid-19 pandemic having turned the restaurant industry upside down, drive-thru service has proven to be a critical lifeline for Dunkin’ and other quick-service chains. And that may prove doubly true as coronavirus infection rates rise in states across the country with the coming of winter. A new survey commissioned by QSR magazine has some encouraging results for Dunkin’ franchise owners.
Ok, Dunkin’ did not win any of the top four slots – those went to fast food chains known for their burgers and sandwiches, with Chick-fil-A at No. 1 and Arby’s at No. 2, with the regional burger concept Culver’s at No. 3, and Panera at No. 4. But neither Chick-fil-A nor Panera are highly sought-after coffee destinations. Among the chains people are visiting for coffee, Dunkin’s drive-thru tops its top competitors, Starbucks and McDonald’s.
The survey by FoodserviceResults asked customers how satisfied they were on a number of key metrics, including customer service, speed, and accuracy. The various quick-service chains were then ranked according to the percentage of customers who reported being highly or somewhat satisfied by their experiences.
And in terms of the overall customer experience, there wasn’t that much daylight separating Dunkin’ at No. 5 from Chick-fil-A at No. 1. The chicken chain received a 93 percent satisfaction rating compared to 90 percent for Dunkin’. Starbucks, which has drive-thrus in 58 percent of its 8,800 U.S. locations, garnered an 89 percent satisfaction rate compared to Dunkin’s 90 percent.
McDonald’s, the drive-thru giant, earned an 83 percent satisfaction rate, giving it a rank of 15 in the 17-company survey. Dunkin’ scored higher in speed of service than Starbucks or McDonald’s and earned higher rankings in the staff friendliness and cleanliness categories.
Is Indoor-Dining Truly Cooked?
It’s hard to fully comprehend how much things have changed in just a little over eight months since the initial coronavirus lockdown in March. With orders by local and state governments to shut down indoor dining spaces, Dunkin’ and other quick-service franchise owners scrambled to staff up their drive-thru windows and offer curbside pickup to customers that were revising their own daily coffee routines. Now some are questioning whether these restaurants need to offer indoor dining space?
In the years leading up to the pandemic, chains with a heavy focus on coffee like Dunkin’ were installing comfy seats and encouraging customers to linger over their cup of java together or boosting their Wi-Fi capacity to support customers working remotely on their laptops and phones. But all that has changed; franchise owners have removed seats and taped off seating sections, lest customers miss the point.
And while Dunkin’ and other quick-service chains have been given a green light to reopen seating areas – albeit with limited capacity – in many states, customers have been slow to return amid ongoing concern over the potential for coronavirus spread indoors. Now, according to Restaurant Business, some quick-service chains have apparently seen the future, and it doesn’t include an indoor dining room. The magazine cited Del Taco and Burger King as examples.
Del Taco recently said it will start testing smaller restaurants that are drive-thru only, with no seats inside. Meanwhile, Burger King has rolled out prototypes for a new wave of restaurants some of which do not include seats either. Restaurant Business says BK is instead eyeing two or even three drive-thru lanes, plus walkup windows and lanes for curbside pick-up.
“The dining in was something that was interrupted [by the pandemic],” Rapha Abreu, global head of design for Burger King parent company Restaurant Brands International, said on the Restaurant Business podcast “A Deeper Dive” earlier this month. “The car and the takeout [were] the biggest service mode.”
Coffee chains are also getting into the act, with Dutch Bros. Coffee focusing on drive-thru sales, and both Chick-fil-A and McDonald’s (seeking greater coffee sales) have both invested heavily to upgrade the technology and capacity of their drive-thru window service.
Will dine-in service return when COVID-19 is finally shut down? One would think customers will want to come in and congregate over coffee like they used to, so Dunkin’ and other quick-service chains should see a rebound in their indoor dining numbers and capacity, but only time will tell.
States Remain Key Battleground over $15 Minimum Wage
The debate over whether $15 an hour should be the new minimum for the nation’s workers hit the national stage during the final presidential debate on Oct. 22. Joe Biden said he supported boosting the minimum wage – presumably the federal one – to $15 an hour, citing the long-standing Democratic argument that workers need to be guaranteed what supporters call a livable wage. President Donald Trump countered with the argument often heard in the small business community, that raising the minimum to $15 an hour will actually cost jobs. The truth is, elected leaders on the federal level have become minor players in a debate that is increasingly being decided on the state level. While the federal standard has remained at $7.25 an hour, states, cities and towns have been the ones to vote on wage issues. According to Economic Policy Institute (EPI), a non-partisan think tank that advocates for a $15 an hour wage, 29 states and Washington, D.C. have raised their minimum wage over the past six years, while another 48 cities and towns have hiked their minimum wages above their state’s minimum. Yes, California cities are all over the list, with Berkeley, San Francisco and Palo Alto leading the way, but other cities dot the national map, including Birmingham, Chicago, Denver and Flagstaff.
EPI says 18 states and D.C. have also indexed their minimum wage to inflation: Alaska, Arizona, Colorado, Connecticut, Florida, Maine, Minnesota, Missouri, Montana, Nevada, New Jersey, New York, Ohio, Oregon, South Dakota, Vermont, Virginia, Washington, and Washington D.C.
With No Drive-Thru Business, Independents Hurting
Here’s more evidence of the importance of the drive-thru business for Dunkin’ franchises amid the coronavirus pandemic. Independent coffee shop owners, who, for the most part, don’t have drive-thru windows, are truly hurting. A majority of independent coffee shop owners – 57 percent – are worried they won’t be able to generate enough sales to stay open this winter, according to a survey by Daily Coffee News and Joe’s Coffee, which provides an online ordering platform for the indie shops.
An even larger number – 65 percent – says their business has been battered since the coronavirus hit the United States in full force last spring, with 28 percent reporting their revenue has fallen by more than 50 percent. And with the coming of the colder months, 56 percent say they are worried about the impending loss of their outdoor seating. Just 20 percent have seen either a slight increase in revenue since the pandemic struck or have managed to keep their numbers from falling.
National politics may grab most of the headlines, especially in a presidential election season as heated as this one was. But it is in the nation’s 50 state capitals and in innumerable city and town council chambers where laws and regulations that can have a big impact on your franchise’s bottom line are being crafted.
The federal minimum wage has not changed since 2009, when it was raised to $7.25 an hour. But a majority of states have nonetheless raised their own minimum wages past that point, in some cases instituting multi-year increases up to $15 an hour. Local and state regulations – especially those dealing with health and safety – have never been more important to Dunkin’ and other quick-service franchise owners in the wake of the coronavirus crisis.
Shutdowns or large reductions in capacity ordered by municipal and state health officials have forced many quick-service franchises to do a serious rethink on whether they should stick with indoor driving or bet it all on the drive-thru. But remember, modifying the drive-thru, or taking other steps to boost capacity typically requires the green light from local officials. It is yet another example of the impact local government can have on your business. Looking ahead to the new year, the only guarantee is there will be more changes ahead, not just in Washington, D.C., but on the local and state level as well. Here at Independent Joe, we’ll be keeping an eye on it all – regulations, laws and other proposals coming down the turnpike – so you can focus on what you do best, running your business.