The pandemic has sparked a new wave of American migration. More individuals and families have relocated from big cities to rural areas and small towns. As more Americans prefer to live in these areas, fast food and other quick service restaurants (QSRs) have begun to recognize this changing consumer sentiment and have begun expanding into new, previously untapped markets. Major coffee brands and other well-known QSRs have recently placed emphasis on rural and small town America in their respective growth plans. Business leaders argue that these areas offer many other benefits, including lower rent and reduced labor costs.
In addition to renovating existing buildings on Main Street, rural and small towns have the opportunity to build new restaurant locations that complement post-pandemic consumer behavior. Notably, American fast food consumers are spending less time inside restaurants, instead opting for restaurants that offer drive-thru options. Research on consumer dining behavior also shows that when choosing between two locations of the same business, consumers prefer locations that offer drive-thru. Data shows that consumers not only prefer drive-thru locations, but also locations with ample drive-thru capacity.
There are three key things to consider when considering the transition to a modern drive-thru.
1. Existing community infrastructure and zoning regulations may limit your options.
Given the recent influx of Americans into small towns, existing roads and traffic patterns may be strained beyond what they were originally designed for. Restaurants that rely on existing drive-thru services in these areas can exacerbate these issues, leading to congested intersections and closed sidewalks and bike paths.
In some areas, local government leaders are trying to restrict or ban drive-thru locations. However, you can forestall these attempts by working with community leaders to develop new traffic patterns, strategize ways to improve pedestrian access, and reduce traffic congestion. Where existing zoning restrictions limit the expansion of fast food restaurants, QSRs should work with local leaders to revise or eliminate these restrictions. Additionally, increased traffic in areas shared by pedestrians and other road users increases the risk of accidents. Therefore, advance planning is key to minimizing driver and pedestrian accidents in drive-thru areas.
2. Modern drive-thrus require more space.
Gone are the days of a single drive-thru lane and a single point of sale. Instead, consumers are looking for options that maximize convenience and efficiency, such as double or triple drive-thrus (i.e. drive-thrus with two or three lanes) and dedicated mobile ordering queues. Experts don't see this trend ending anytime soon.
With this in mind, fast-food restaurants and other QSRs are having to purchase or rent plots that provide enough space for new stores with expanded drive-thru options.Several major chicken and burger brands are introducing store concepts and prototypes that minimize in-store dining space while maximizing consumer access by car.
3. Supply chains can be challenging in rural areas.
The fast-food industry is already accustomed to supply chain constraints. Operating in rural areas where suppliers are less easily and quickly accessible can be challenging, especially as the industry grapples with global shortages. Overcoming these challenges will require creative thinking, contingency planning, and strategic alliances.
Restaurants with operations in rural and small-town markets are using data systems to track local consumer purchasing behavior so they can better plan for when supplies are limited or depleted. Additionally, industry experts recommend that restaurants identify alternative suppliers when possible. However, because rural and small-town markets have unique constraints, experts suggest that alternative suppliers should serve as a contingency plan rather than a core supply chain strategy.
Finally, fast-food restaurants in rural and small towns could consider how best to work with the communities in which they operate. Local agricultural industries often provide economic support to rural towns, and restaurants could leverage these local producers as suppliers. Large salad QSRs have already had success building local supplier networks for their menu options.
Key Takeaways
While urban areas were once key to successful restaurant expansion, changes in American consumer behavior suggest that small towns and rural areas are (re)the new frontier for fast food and QSR. More Americans are relocating to these areas and preferring dining options that offer maximum convenience. Restaurants can capitalize on this cultural shift by exploring expansion strategies that focus on small town and rural markets. Industry leaders recommend renovating existing locations or renovating vacant storefronts to build new locations with expanded drive-thru and mobile order pickup. Successful expansion strategies must adapt to the needs of specific and unique communities. Restaurants can work closely with local leaders to ensure seamless integration.
Additional research and writing was provided by Sean Worley, a summer 2024 associate in ArentFox Schiff’s Washington, DC office and a law student at Georgetown University Law Center.
