Dive Brief:

• Restaurant construction is getting a quick pick-me-up from a wave of new drive-thrus being built during the coronavirus pandemic. Major chains and retailers such as Starbucks, Chipotle, Shake Shack, Panera Bread and Wawa have been lining up new drive-thru projects since the beginning of the COVID-19 outbreak, according to CNBC.
• While overall food and beverage construction starts have plunged 27% year-to-date through July, according to Dodge Data & Analytics, starts at some chains that offer drive-thrus have actually gone up. Chipotle's starts were up 70% through July, while Chick-fil-A and Starbucks saw increases of 30% and 7%, respectively, according to the firm. 
• In addition, drive-thrus, curbside pickup or takeout capabilities are fast becoming must-have design elements for restaurant projects to get financing approval, according to an observer at a design-build firm that specializes in food and beverage construction.

Dive Insight:

The surge in drive-thru construction provides at least a small glimmer of hope for one of the hardest-hit asset classes during the coronavirus pandemic, when many restaurants with dine-in only options have had to close down. Those that have stayed open have often been relegated to providing curbside pickup service or outside dining options to comply with local health department orders to mitigate the spread of the virus.

According to sister publication Restaurant Dive, drive-thrus have became a near necessity during the crisis. McDonald's, for instance, reported that almost 90% of its business during Q2 came from the drive-thru. 

Pre-pandemic, many municipalities had eschewed new construction of drive-thrus at restaurants due to complaints of noise and environmental impacts from idling cars, CNBC reported. But that may be changing amidst the impacts of the coronavirus, which has forced many local governments to choose between quality-of-life measures and relaxing regulations to help businesses survive.

At Newport Beach, California-based design-build firm SCGWest Development, which specializes in the hard-hit retail and restaurant sectors, drive-thrus are quickly becoming the single differentiator that can make or break financing on a food and beverage construction project.

“Drive-thrus are viewed as COVID-19 proof,” said Kyle Gorman, managing partner at the firm. “Lenders have told us that there is basically a freeze on all new lending that does not have a drive-thru or take away or delivery aspect, like pizza.”

Gorman said the firm has been keeping itself busy in the sector, and has even started multiple design-build projects since the beginning of the pandemic that have had drive-thru or carry out components written into their business plans.

“Financing is tied directly to the lender’s view of how each business will perform,” Gorman said. “Drive-thrus and to-go restaurant concepts are currently viewed as less risky. Those are the ones that are getting funded."