Fast Food Embraces Slow Food the Wrong Way

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When choosing where to eat, you balance a variety desires: taste, price, quality, nutrition, and time it takes to get food in your mouth. While fast food typically falls short on several of those metrics, its crowning achievement has always been speed. If you want a quick jolt of calories in the form of a burger and fries, McDonald's  (NYSE: MCD  ) Burger King  (UNKNOWN: BKW.DL  ) , or Wendy's (NASDAQ: WEN  )  can feed that prerogative quicker than anyone, right?

Well, at least for now. They're getting slower, opening up opportunities for both competitors and self-improvement.

Not gone in 60 seconds
In QSR Magazine's 2013 Drive-Thru Performance Study, fast food restaurants posted some of their slowest service times since they started measuring efficiency 15 years ago. The average time a typical McDonald's drive-thru customer spent from ordering to grabbing their food hit 189.5 seconds. Wendy's, which set the record average time in 2003 at 116 seconds, posted an average this year of 133.6 seconds. Yum! Brands' (NYSE: YUM  )  Taco Bell averaged 158 seconds from taking an order to taco-in-hand. And Burger King, the only chain to improve their drive-thru performance, was near the slowest at 198.5 seconds.

Why are chains so slow this year?

Ten ingredients too many, and not even the right ones
The causes pointed out include complicated menu items and a lack of order accuracy.

A focus on healthy and fresh meals has complicated the kitchen. A spokesman for Wendy's highlights the complexity of its Berry Almond Chicken Salad, the ingredients of which -- including dressings, almonds, and croutons -- a customer can customize any number of ways. Taco Bell's Cantina Bell menu "has nearly 10 ingredients."

Taco Bell, Wendy's, and McDonald's all fell in the high 80% to low 90% range in terms of accuracy; Burger King lagged behind at 82%. This, of course, reflects its slower-than-average time in drive-thru performance as well.

Finding the fries at the bottom of the bag
For these companies, which take in roughly 60% of their revenue from drive-thrus, each second wasted and each wrong order hurts business. However, investors can choose to be optimistic about potential improvements or pessimistic about the current slow pace. Burger King, for example, can vastly improve its performance, which might help drive revenue to exceed what the market may expect. It would be much easier for Burger King to match the industry average time than for Wendy's to make the same jump in service, as it is already the quickest by far.

Investors can also look at the competitors forcing these changes upon traditional fast food chains. Why must Taco Bell provide a "fresher" menu? Look to fast casual restaurants like Chipotle. As Taco Bell takes more time in preparing its complex items, the time gap between fast casual and fast food evaporates. While the old guard of quick food must transition to new consumer tastes, there are a crop of restaurants already positioned to serve the healthy-minded population with higher quality food.

But while fast casual may start bridging the service time gap, prices will always be in favor of a burger and fries.

Investing where the fast food market is still emerging
While many markets are already inundated with the symbols of American fast food, there are some that have yet to experience french fries, hamburgers, or tacos. And these markets can significantly change the power structure of global fast food. For a look at where and who, check out the Motley Fool's free report, "3 American Companies Set to Dominate the World". Click here to get your free copy before it's gone.

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  • Report this Comment On October 02, 2013, at 10:26 PM, matthewluke wrote:

    I predict more double drive thrus in the not too distant future. Happening already, but increasing their roll-out significantly from this point forward.

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