We’ve all heard countless times how COVID-19 has changed the landscape for bars and restaurants, and the effects of those closures are already painfully obvious. That being said, certain businesses have now been shut down (or have scaled back operations) long enough that we’re starting to see just how symbiotic different businesses are. This extends to fast food franchises: thanks to COVID, Taco Bell is reporting a drop in sales.
While a fast food chain losing customers isn’t exactly breaking news, the reasons for the dip are actually pretty interesting. When New York’s office-dominated neighborhood of Midtown was basically emptied by the pandemic, it also decimated every other business that relied on those office workers, from street vendors and restaurants to dry cleaners and clothing stores. Some businesses basically owe their existence to the presence of other businesses, and they exist together in a sort of economic ecosystem.
That same phenomenon applies to fast food chains, and, as it turns out, Taco Bell’s “Fourthmeal” campaign wasn’t just a branding exercise, it was a veiled signaling of how the brand actually makes money. According to Restaurant Business, a significant portion of Taco Bell’s sales come from either breakfast rush diners or bar-goers looking for something to eat late at night. With offices closed and bars and restaurants shuttered, facing limited hours and lacking customer density, Taco Bell is finding itself in dire need of the customers it once relied on.
However, despite the dip in sales, the chain is actually making more money than it was before. During the company’s second-quarter earnings call, David Gibbs, CEO of Yum Brands (which owns a number of fast food brands including Taco Bell), said that customers are spending more money per order than they were previously, and having dining rooms closed has improved restaurant efficiency. This same efficiency has also improved the speed of Taco Bell’s drive-thru operation, which (somehow) seems to be resulting in more sales. Perhaps when people drive by a Taco Bell and see burritos being handed off at breakneck speed it makes them want to get in on the action.