entire sectors. Third-party delivery, for instance, emerged in 2017 as an option. It grew rapid - ly. But then the pandemic put that business into overdrive, fueling the growth of Door - Dash and Uber Eats. Consumers today have more choices for delivered food than they ever have, and they’ve continued to use the service, despite its expense, because the con - venience is worth it to them. That has had a major impact on pizza chains, which flourished in 2020 and 2021 but have slowed down since then. Consum - ers today can get anything delivered. But they also clearly prefer ordering through the deliv - ery apps, so an increasing percentage of the sales these chains do get is coming through aggregators. Papa Johns, the first major pizza delivery chain to use aggregators before the pandemic, now gets 17% of its business through those apps. Only 35% of its sales come through the chain’s own delivery channels. Rival Pizza Hut, meanwhile, just opened a test concept with a preprepared menu and a drive-thru, suggesting the chain may believe its future is as a traditional fast-food chain. It’s not just pizza, however. There is a certain tension between what chains have become, and what we believe they should be. To get a sense of how this looks on a large scale, look no further than Starbucks. In early November of 2023, the chain was hitting on all cylinders. Nearly a third of its business was ordered on its mobile app. Sixty percent of its sales came from members of its Starbucks Re- wards loyalty program. The chain’s customers were eagerly cus- tomizing drinks, making add-ins such as mo- cha sauce and cold foam into a $1 billion a year business. There were some concerns about operations, but the company had a plan to fix it. And then the bottom fell out, largely fue- led by a social media boycott that evolved into a year-long dose of questions about the conflict between Starbucks’ historic role as “third place” coffee shop and its current sta- tus as a digitally enabled beverage manufac - turing business. By late summer of last year, its traffic was down 10% and the company’s management was overhauled, with Chipotle’s Brian Niccol named CEO. Niccol has since worked to steer the chain back to its coffee shop roots, bringing back handwritten names on cups, adding comfort- able chairs in the shops and letting customers add their own creamer in coffees again. Customers may be gravitating toward takeout and delivery. But that doesn’t mean they don’t want an experience. Consider that, as Starbucks struggled last year, the drive- thru-focused Dutch Bros—which has estab -
WORKING FROM HOME REMAINS HIGH
The percentage of time that employees are working from home remains well above pre-pandemic levels, according to a compilation of multiple studies by WFH Research.
lished a service-oriented business strategy—had the best year since it went public in 2021. Restaurants are gathering places, and people still want a connection. “The data shows that people are craving so much connectivity,” Miller said. “I think we’re doing ourselves a disservice to say, well, we don’t need bigger restaurants because we can’t get people in. So therefore let’s make a smaller restaurant. Then you make a smaller restaurant and then the experience goes. It continues to shrink. “We’re not answering the right problem. The right answer is why aren’t people coming? And it’s because they don’t have the experience they want.” Consumers today still want to dine out. Data from both Miller and the National Restaurant Association say that people aren’t eating out as much as they want. There’s “pent-up demand” to be had. Full-service chains like Chili’s and Texas Roadhouse have tapped into consumers’ desire for good service, generating strong sales last year. Independent restaurants have largely recovered. So, while the restaurant industry has changed, one thing has not. “Consumers love restau - rants,” Byrne said. “They loved them all through the pandemic. You know, for all the challenges and difficulties that restaurants faced, they really were one bright spot for consumers that entire time.”
PIZZA CHAIN SAME-STORE SALES
Average same-store sales for the three publicly traded pizza chains Domino’s, Papa Johns and Pizza Hut have been weak the past three years.
APRIL 2025 RESTAURANT BUSINESS
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