COVID-19 Forces Changes Large and Small in Zaxby’s 30th Year
Zaxby's, like many restaurant brands, turned its attention to the drive-thru to get its chicken tenders to customers.
Like a lot of franchise concepts, the 30-year-old Zaxby’s took a major hit in the first weeks of the COVID-19 pandemic.
“At the onset of the pandemic, we were told closures were started by our legislative leaders. There was a lot of fear, not just our franchisees but our employees and guests. I think the first two weeks were probably the worst. I was an emotional rollercoaster. It was a traumatic event. At first, we were scared we were going to lose licensees,” said Tony Townley, chief strategic officer and co-founder. “Then as everyone pulled together and figured out how to make this work in a drive-thru only environment, there was elation and excitement that we were going to be OK.”
He said it’s a good time to have a drive-thrus across most of the 900-location concept, but with business going out the window surging to 81 percent of sales from 61 percent historically, and with the remainder going out as takeout, it required some thoughtful changes. Townley said they streamlined some prep work and simply redeployed front-of-house workers to drive-thru duties.
Some franchisees also turned their parking lot into a double drive-thru by sending employees out with ordering iPads, and across the company, they sent employees into the parking lot to speed up simple entry to the lot as lines backed up to the street. But overall, it was about some process and procedure changes. the biggest of which was moving a second register to the drive-thru.
“At the end of the day it comes down to basic industrial engineering that we’ve been working with for the past years,” said Townley. “It’s just making sure the food is beating the car to the window.”
To take a little pressure off that race to the window, CFO Blake Bailey said instead of marketing the physical locations, they pushed users to their third-party delivery operations. He said the company had already integrated orders into the point of sale, but it wasn’t a major focus for the company.
He said adapting to new consumer behaviors was also a key move that has helped their same-store sales grow for more than a month. Part of that was family packs, which drove tickets skyward and also helped speed things up in the drive-thru by replacing four meal orders with a single family pack meal.
“Family packs, instead of people picking and choosing off the menu, helped speed things up,” said Bailey. “What we noticed also; it increased our check average because people were ordering in bulk.”
That was a completely new program for company, and while most customers still order their tried-and-true favorite meals, the surge of families getting the four pack of 20 fingers or wings, and sides for $25 certainly helped the bottom line. During the peak ordering days, it boosted average checks by 22.5 percent.
“We were seeing 20 per day at peak,” said Bailey. “You can see the incremental impact of that of $500-plus a day in a space we never really played.”
As the company seeks a return to normalcy, that bundled approach has become a key lesson. Already, the company has tweaked that as order sizes slim down from the peak of the crisis. It unveiled a Zax Pack for Two, a $15 version that serves two with the similar business benefits.
“We thought it would create further efficiency. It’s just a smaller version for two people,” said Townley.
The company launched the product as a date-night option for quarantined couples looking for a break.
Bailey said the COVID-19 pandemic showed a few cracks in the company, similar to what we all probably felt when turning 30, but it also helped the company innovate on the menu and refocus on what’s really important. Some of the key tweaks for drive-thru efficiency, he said, would be integrated into a new design that is rolling out, new bundles will stick around and technology has been moved to the proverbial front burner.
“This is something that is so cataclysmic to the business that it does shift your strategy,” said Bailey. “We’re mobilizing like never before to change our tech strategy and examining a lot of our IT structures. We had just started changing from an entrepreneurial company. When I started, we had 70 locations, now we have 900. We described ourselves as building the plane and flying at the same time. Now we have to land the plane and figure out the linear logic. It’s time for us to do that.”
Townley said that while it wasn’t exactly the 30th year he had envisioned, a big company blowout is in limbo because of the pandemic and with a patchwork of limited capacity dining rooms and reticent customers the dining rooms won’t be as lively. But the company may just be stronger at 30 than ever.
“Sometimes it is those traumatic events or those scarring events that force growth,” said Townley.