Five chains that are winning during the pandemic

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Photo courtesy of Wingstop

The pandemic has hit much of the restaurant industry quite hard, particularly independents, small chains, mid-sized casual diners and 24-hour breakfast restaurants.

But there have been plenty of winners, particularly among the largest names, as restaurants adapted to consumers’ shifting tastes. A number of restaurant companies are emerging from quarantine looking better than ever.

Here is a selection of some of the biggest winners of the quarantine.

Wingstop

Sure, go ahead and ogle Wingstop’s 32% second-quarter same-store sales. But the best indication of the chain’s success in fact came from other chains, all of which have jumped enthusiastically upon the chicken-wing-delivery bandwagon.

Domino’s, one of the most data-driven restaurant chains in the world, upgraded its chicken wing recipe to heed demand for the product. Chili’s and Applebee’s both have virtual chicken-wing brands, and a slew of other competitors do, too, as that tiny product has become even more popular, even without sports.

They’re all basically gunning for Wingstop, the Dallas-based chain that, like most of the companies on this ranking, focused all of its pre-pandemic attention on bolstering its digital and delivery capabilities. The largely takeout-focused concept has thrived as consumers have bought group-sized orders of chicken wings, enough to get the attention of a ton of rivals. Wingstop is arguably the pandemic’s big winner among restaurants. But there is plenty of competition.

Chipotle Mexican Grill

In February, Chipotle’s stock price hit $900 per share as it was seemingly bulldozing its way toward $1,000 as it fully recovered from its post-food-safety problems. State shutdowns due to COVID-19 sent its stock plunging, cutting it in half by mid-March.

As it turned out, that was only a speed bump. On Tuesday, Chipotle’s stock closed at $1,236.69, more than tripling its pandemic lows and up by a third from that pre-pandemic price.

It’s not rocket science, either. Chipotle had no debt, a ton of cash, and an operation that has focused intently on digital sales. These advantages have only been accentuated by the pandemic, which has emphasized ease of takeout sales—its second makeline now generates the unit volumes of a decent fast-casual concept. The company now has the financial strength to aggressively go after closed locations.

Papa John’s

Few chains have seen their outlook change as drastically during the pandemic as the Louisville, Ky.-based pizza concept, which has now officially fully recovered from its two-year exile following controversy surrounding founder John Schnatter.

As pizza delivery concepts surged after quarantine began—all the pizza delivery names saw strong same-store sales growth—Papa John’s led the way, hitting record sales last quarter, and continuing even as dining rooms reopened. Its Papadias sandwiches turned out to be a hit.

And the company’s risky decision to partner with third-party delivery services has also worked out, generating sales the locations wouldn’t get otherwise during busy times of day when its drivers were otherwise occupied.

Wendy’s

The burger chain’s decision to jump into the breakfast business was a risky one, given its previous failures with an a.m. menu. But the timing could not have been worse. Wendy’s introduced its morning daypart in early March, just two weeks before the world turned on its head.

What’s more, few dayparts have been hurt as much as breakfast, especially at fast-food chains that suddenly lost a huge percentage of commuters. Wendy’s breakfast, much like that of rival McDonald’s, was built for the drive-thru customer. Its restaurants aren’t even open in the early part of the morning.

Instead of dying on the vine, however, Wendy’s breakfast has taken off, sustaining at 8% of sales, which is strong for an early introduction of the habitual daypart. The chain’s post-breakfast sales have also fully recovered, as Wendy’s total same-store sales hit 8.2% in July. The company is now spending $15 million later this year to push the daypart even further. Wendy’s is officially an important morning competitor.

Texas Roadhouse

The Louisville, Ky.-based casual dining chain is the exception on this list. For one thing, its founder is almost religious in his anti-delivery fervor, and that has not changed. The company was also caught without a particularly strong strategy for takeout, like many of its rivals had.

What’s more, its same-store sales were still down 13% in July, which is not exactly “winning.”

Still, its sales have been steadily improving. It quickly added curbside service to generate sales while its dining rooms were closed, a service the company now considers permanent. Things have improved so much that Roadhouse is now resuming development, which given the expected casual-dining closures could be good for its long-term growth.

Texas Roadhouse’s stock has yet to recover to its February high, but has recovered enough that it is up for the year. You would not have expected that in March. So it gets to be the casual dining chain on this list.



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