Fast-food chains engage in extreme makeovers

McDonald’s has spent nearly $34 million in 4 years rebuilding and renovating

National fast-food chains are spending millions of dollars across the Miami Valley renovating, relocating, razing and rebuilding their restaurants.

The reasons behind the restaurant makeovers vary. Some of the buildings targeted for rehab — or, in some cases, demolition followed by new construction — are three or four decades old or older. They’re not energy efficient, and their layouts hinder effective customer service, especially in the increasingly important drive-throughs. In other cases, fast-food chains are seeking to enhance customers’ dining-room experience or update their brands with new logos and signage.

The investments are considerable. McDonald’s alone has spent about $34 million just in the last four years relocating, rebuilding and refurbishing 21 of its franchise restaurants in the region. Some of the most ambitious projects included razing an existing outdated restaurant and building a new one from the ground up, as it has done in Huber Heights, Kettering and Troy, or purchasing or leasing a larger tract of land near an existing restaurant and building a brand new eatery, as franchise owners have done in Centerville, Riverside and Dayton. All of the fast-food giant’s locations in greater Springfield have undergone some type of renovation in recent years.

Benjamin Scott Jr., a franchise owner who operates 14 McDonald’s restaurants from Beavercreek to Sidney, said it sometimes makes more sense, both financially and operationally, to start from scratch rather than to try to renovate an aging eatery. The multi-million-dollar projects create construction jobs and often result in at least a slight increase in the number of people each newly opened restaurant employs, to accommodate an uptick in business.

The investments suggest that fast-food chains are bullish on the future — and analysts who study the industry agree. In its 2014 industry report entitled “Fast Food Restaurants in the U.S.,” IBISWorld, a Los Angeles-based independent industry research firm, projected that fast-food revenues will grow 2 percent a year over the next five years, to $219.3 billion in 2019. The firms projects the fast-food industry will make $7.2 billion in profits on $199 million in total revenue in 2014.

“As plenty of opportunities remain for new fast-food concepts and products, the industry’s long era of growth is far from over,” the IBIBWorld report concluded.

Store renovations such as those ongoing in southwest Ohio will likely help fuel that growth through higher sales.

Wendy’s chief executive Emil Brolick said last year that its re-designed restaurants were selling more food, with higher check averages and customer counts. A Wendy’s restaurant at 220 S. Heincke Road in Miamisburg received a similar makeover late last year — a Wendy’s spokeswoman said last week the project was completed in January 2014 — as part of a broader “brand transformation” to a new logo and signage.

Wendy’s prototype stores feature digital menu boards, flat-screen TVs, fireplaces and Wi-Fi. The company has seen an increase of up to 25 percent in the average unit sales volumes of store prototypes, according to Nation’s Restaurant News. Wendy’s is moving forward with remodels for 100 company-owned restaurants and 100 franchised locations, although no other Miami Valley restaurants are currently undergoing the renovations beyond the completed Miamisburg project, a company spokeswoman said.

Other fast-food companies are making similar moves. Taco Bell has gotten preliminary approval from the city of Dayton for a demolish-and-rebuild project for its restaurant at the corner of Brown Street and Wyoming Street near Miami Valley Hospital and the University of Dayton. And earlier this year, the Mexican-food chain also renovated a former Keybank building and moved one of its restaurants to larger quarters on Kettering Boulevard near West Dorothy Lane in Moraine. And Arby’s is applying the finishing touches to a $200,000 renovation to a Huber Heights store at 5561 Merily Way in Huber Heights.

McDonald’s, however, is the clear leader in the Miami Valley in rebuilds and renovations. The nation’s largest burger chain — which employs more than 6,000 at its 86 restaurants across the region — spent nearly $15 million on 11 projects in 2012 alone. It is completing three projects this year totaling more than $6 million, including the McDonald’s eatery on at the same Huber Heights intersection as the Arby’s undergoing renovation.

The Huber Heights project was among the chain’s most ambitious: a $2.3 million replacement of an existing McDonald’s. Benjamin Scott Jr. — head of Scott Family McDonald’s, the 14-unit franchisee — oversaw that project, and said it’s a complex process to decide which stores to refurbish or replace.

“We try to look at which stores need it most,” Scott said. “We consider drive-through issues, kitchen issues. But we can’t do them all at once. We have to balance things out, and stretch the projects out.”

The need is there. “Stores that were built 30 years ago just weren’t built to accommodate the level of business” that a McDonald’s unit does today, Scott said.

The Huber Heights store that was demolished had a separate, less-than-efficient refrigeration unit — and a basement. Those drawbacks made it a prime candidate for a rebuild, Scott said.

Nearly all of the McDonald’s projects include adding a second drive-through lane, and some also include a pull-forward window for more complex orders, all designed to serve more people faster in the drive-through convenience that accounts for up to 70 percent of business.

“We know that customers come to us for convenience,” Scott said. “Families are on the go, and they need it now.”

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