Coffee in the Drive-Thru: The Modern 'Third Place'

Caribou Coffee has inaugurated over fifty drive-thru-only locations since introducing the downsized prototype in 2019. It has also embraced the off-premises channel in its more traditional, larger-format stores, spaces that have always embodied the concept of a "third place" by promoting personal interactions and friendly customer service.

The company has embraced this people-centric mindset as more of its business is conducted through the drive-thru window. Eric Caron, senior director of digital experience, explains that this means finding new ways to make the experience as enjoyable as possible.

One strategy involves minimizing the need for customers to lower their car windows. Earlier this year, Caribou updated its app with a new feature called Perk Code. Instead of giving their phone number to employees, loyalty members can check into the program with a three-digit code to earn points for their purchase. They can also pay through the app. With the order placed and paid for at the speaker box, customers can simply drive up to the window, collect their drink, and be on their way.

"Your vehicle's interior is somewhat sacred," Caron asserts. "Every time you roll down the window, you're essentially saying, 'Okay, I'm going to let the snow in, or I'm going to let the heat in, or I'm going to let the rain in.' So, it better be a worthwhile encounter."

Further improvements could involve designated spots for customers who order ahead and pick up at the drive-thru. The company is also exploring ways to enhance its headset technology using an AI-driven noise-canceling solution. Caron believes this could reduce friction and improve order accuracy, especially in the presence of loud engine noises or nearby air-braking 18-wheelers.

Caribou's focus on off-premises service coincides with a significant expansion effort. The company began offering domestic franchising opportunities in 2021 and has a pipeline of 300 locations that will double its presence by 2030.

Other drive-thru coffee chains are also experiencing accelerated growth following several years of favorable market conditions driven by the pandemic. Scooter's Coffee has added over 230 franchised locations in the past three years, with average unit volumes increasing from $473,000 in 2019 to almost 6,000 in 2022. The Human Bean projects that the number of franchised units will have doubled since January 2020 by the end of this year, and its average unit volumes have risen by 30% over the past three years.

The strong performance of this segment has sparked a wave of menu innovation. Caribou recently introduced Raspberry Green Tea with Bubbles and Frozen Matcha with Bubbles, as well as two espresso tonic drinks. Scooter's unveiled its own proprietary energy drink and became one of the few brands in the industry to focus on children's beverages, offering a range of options in kid-sized servings.

"The competitive landscape is evolving," notes Scott Anderson, chief operating officer at The Human Bean. "It's not just about coffee and espresso anymore. There's a wide variety of emerging specialty beverages, such as infused energy drinks and the expansion of tea. Customization is essential, and it's no secret that a growing number of drinks in the industry are being sold iced or cold."

The company is currently testing boba as a means to attract a younger demographic during the afternoon and evening hours. The changing traffic patterns resulting from the COVID-19 pandemic created new dayparts for the business: while the morning daypart experienced a slowdown due to fewer commuters, afternoons, evenings, and weekends saw a significant increase in foot traffic.

"We had numerous large orders and a surge in transactions," Anderson remarks. "Fortunately, we had already implemented handheld devices, and while we made a few technological adjustments in the drive-thru, we mainly focused on optimizing what was already in place without compromising guest interaction.

The Human Bean is not primarily concerned with the speed of service, but rather focuses on the aspects of the drive-thru experience that require a personal touch. The goal is to encourage positive interactions and what the company refers to as "an authentic human connection."

According to Anderson, our systems, technology, processes, and equipment prioritize speed and efficiency, but they are not the driving force. If you were purchasing a 50-cent drip coffee from a gas station, speed might be the main concern. However, when you go out of your way for a specialty coffee, both guests and employees deserve more than just speed. A sole focus on efficiency puts a lot of pressure on teams and can lead to indifferent treatment of customers.

Scooter’s measures the number of cars served in 30 minutes as "smiles per half hour" to ensure that excellent customer service is not overshadowed by a focus on increasing throughput. The goal is to reach 60 smiles per half hour during the 6 to 10 a.m. time frame at every store. With the average ticket increasing by more than 16 percent from 2019 to 2022 and still growing, making just five extra smiles per half hour can generate over $500 in additional sales during that four-hour period, says Jaime Denney, the vice president of franchise operations.

"We have fully embraced and made fun of this goal," she says. "I have stores that achieve a 45-second window time or even a 30-second window time. We always provide the calculations to our franchisees, demonstrating how driving speed and increasing smiles per half hour can benefit their business. We take pride in our friendly service and want our customers to have a great experience while also ensuring a smooth and efficient process."

The company has an innovation lab at its headquarters in Omaha, Nebraska, that replicates the drive-thru kiosk. It utilizes cameras and AI-developed simulations to thoroughly analyze every aspect of order preparation and identify areas for improvement. While Scooter’s is exploring technological advancements that could further enhance efficiency in the future, Denney emphasizes that everything they have done so far has been organic.

One successful initiative is the implementation of "Acceleration Days." Denney and her team give operators three to four weeks to develop a plan to serve more cars on a designated Friday. They then track the performance of each store and share significant achievements with the rest of the system. In some cases, Acceleration Days have resulted in over 40 stores celebrating new records for smiles per half hour.

"Our approach to this is not driven by marketing strategies," Denney explains. "It is truly a local effort. Some stores invite customers to join them in setting a new record, while others showcase how fast they can be. It's a fun and organic way to achieve our goals, and our franchisees absolutely love it.