McDonald’s, KFC go to takeout only, Dunkin’ removes seats as Trump encourages contactless restaurant transactions

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Restaurants are taking measures to create a more contactless experience as the coronavirus epidemic drives more diners to seek out “social distancing” methods for receiving and eating their food.

McDonald’s Corp. MCD, +7.05%   said it was turning its U.S. company-owned restaurants into take-out only establishments in the wake of the COVID-19 coronavirus beginning Tuesday and urged franchise owners to do the same.

“McDonald’s USA company-owned restaurants will close seating areas, including the use of self-service beverage bars and kiosks, and shift our focus to serving customers through drive-thru, walk-in take-out and McDelivery,” the company said in a statement.

McDonald’s also said it was closing its PlayPlaces indoor playgrounds effective Monday.

McDonald’s has 14,428 U.S. restaurants, with 93% of those owned by franchisees, according to the company.

See: Kroger’s panic-buying restrictions on coronavirus-related items helps stop price gouging and black markets, experts say

KFC, which is part of the Yum Brands Inc. WEN, +27.31%   portfolio, also announced that it will shift to takeout, drive-thru, pick-up and delivery service only starting March 19. Free delivery will be available through April 26 from the brand’s website, Seamless and Grubhub Inc. GRUB, -1.79%   until April 26. Delivery orders will be packaged in tamper-evident seals, and orders through Grubhub can be made “contact-less.”

Wendy’s Co. US:WEN   has also converted to all takeout, delivery, pick-up and drive-thru service, the company’s Chief Executive Todd Penegor said in a blog post.

Dunkin’ Brands Group Inc. DNKN, +2.54%   said that it will limit service to drive-thru, carry-out and delivery, as a result of the COVID-19 pandemic, effective immediately.

The coffee and doughnut seller said it will remove tables and chairs from all its restaurants and outdoor patios to prevent the congregation of customers. Dunkin’ said it will encourage mobile ordering, delivery through Grubhub Inc. US:GRUB   and other partners, expand curbside service and reduce hours of operations.

All company-owned Starbucks Corp. SBUX, +9.36%   locations have shifted to a to-go model across the U.S. and Canada for the next two weeks. Stores have also been modified to remove seating and changes have been made to the condiment bar.

Starbucks stores in high-traffic areas like malls and universities, and those in places where there are a high number of COVID-19 cases have shuttered all together temporarily.

Also: Amazon ‘out-of-stocks’ rise and deliveries taking longer due to coronavirus-related demand

With more people eating at home and “social distancing,” Domino’s Pizza Inc. DPZ, +8.70%   says it’s hiring full- and part-time workers across a variety of roles. The news sent sharing soaring 6.6% in Thursday trading.

President Donald Trump hosted a call with leaders from the restaurant and tourism industry on Tuesday, including Joe Erlinger, the president of McDonald’s, David Gibbs, chief executive of Yum Brands Inc. YUM, +3.74%  , whose portfolio includes Taco Bell and KFC, and Gene Lee, chief executive of Olive Garden parent, Darden Restaurants Inc. DRI, -1.93%  

According to an email sent to White House pool reporters, Trump encouraged those in attendance to convert to just the kinds of takeaway and delivery models that these large chains are putting in place.

Some state and local governments are also mandating that restaurants, including independent restaurants, change to takeout and delivery only.

“We expect a sharp deceleration in restaurant sales in the months ahead, making February sales trends much less relevant for investors,” wrote SunTrust Robinson Humphrey analysts in a Tuesday note. “However, it is worth noting that trends were solid ahead of the COVID-19 crisis.”

And: Forget baked beans: Here’s how to prepare a healthy ‘pandemic pantry’ in an age of coronavirus

David Portalatin, NPD Group Inc. food industry advisor, notes that fast-food companies will be particularly resilient, even in the face of the coronavirus.

“In good and bad times, consumers are always looking for convenience and value and they get that at QSR [quick-service] restaurants,” he said in a statement.

But the food retailers that may most benefit are grocers.

“Over the near term, we expect grocery to take share of stomach from restaurants,” wrote UBS in a note. Analysts there cite data showing reduced consumer intent to eat out and increased intention to buy groceries.

A GlobalData consumer impact report on the coronavirus has similar findings.

“Mass merchants, grocers and dollar stores are all seeing elevated sales because of the crisis,” the report said.

Walmart Inc. WMT, +1.25%   shares rose 11.7% in Tuesday trading. Target Corp. TGT, -0.68%   stock rose 10.5%. Costco Wholesale Corp. COST, -0.03%   shares rose 8.4%. And Kroger Co. KR, +1.92%   stock rose 6.1% on Tuesday.

The Consumer Staples Select Sector SPDR Fund XLP, -2.30%   is up 0.6% over the last year while the S&P 500 index SPX, +0.73%  is down 13.7%.

Additional reporting by Wallace Witkowski and Tomi Kilgore

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