Dive Brief:

• McDonald's shared guidance with franchisees last week on how to close dining rooms in regions where COVID-19 cases exceed 250 per 100,000 people on a rolling three-week average, Reuters reported Monday. 
• The company expects fewer dining room closures than what the chain experienced last spring, but McDonald's internal materials didn't detail how many restaurants have shuttered indoor dining or plan to do so, per Reuters.
• COVID-19 cases and deaths rose 3% and 11% respectively over the last week in the U.S., and hospitalizations spiked 6% during this period to reach an eight-month high, per the U.S. Centers for Disease Control and Prevention. 

Dive Insight:

Like many major QSRs, McDonald's has been able to weather pandemic disruption with relative ease thanks to its robust drive-thru network and strong diner engagement with its mobile app for digital orders. 

But Golden Arches franchisees told Reuters that reopening indoor dining last year boosted sales beyond what drive-thru, takeout and delivery channels could rake in. 

Corporate's suggestion that operators close off their indoor seating is a pivot from the chain's plans just a month ago. On July 28, McDonald's reported in its Q2 earnings call that 70% of its system had reopened and that it expected to have nearly 100% of units open by Labor Day if there wasn't a spike in COVID-19 cases. 

"In consultation with public health experts and Mayo Clinic, we’ve enhanced over 50 safety policies and procedures in restaurants," McDonald's said in an emailed statement. "We're monitoring the impact of the Delta variant closely and recently convened together with our franchisees to underscore existing safety protocols, reinforce our people first approach and provide updates on the rise in cases in the country."

If a large number of McDonald's units shutter their dining rooms a second time, it could have a domino effect in the QSR space and beyond. When the burger giant shuttered essentially all of its dining rooms in the spring of 2020, rival restaurant chains soon followed suit as the industry scrambled to develop COVID-19 safety protocols for employees and beef up off-premise offerings that complied with local ordinances. 

"We have a much deeper sense of what actions make a difference for the safety of our restaurant teams and crew," McDonald's USA President Joe Erlinger said during a Wednesday meeting, first reported by Reuters and per meeting notes viewed by Restaurant Dive.

McDonald's operation shift comes as U.S. diners are beginning to pump the brakes on eating indoors due to concerns about the delta variant's rapid spread. Nineteen percent of consumers have completely stopped going to restaurants, and 9% have canceled existing plans to visit a restaurant in the past few weeks, according to a survey by the National Restaurant Association. Additionally, 37% of consumers said they have ordered takeout or delivery instead of going out, and 19% said they prefer to eat outdoors than inside restaurant dining rooms — which could suggest that McDonald's plan could be in step with actual diner behavior. 

"As we've seen over the last 18 months, McDonald's successfully served customers however they wanted to enjoy McDonald’s through digital, delivery, drive-thru and dine-in. Should we see further changes in customer behavior, we are well positioned to adapt while maintaining high standards for safety," McDonald's said.