Ordering takeout used to only be reserved for Chinese food and pizza. However, times they are a changin’. If you own a food or beverage operation or have ever thought of opening one, you’d better start thinking about how you’ll meet the increasing demand for digital-powered delivery.
Experts are forecasting that over the next five to 10 years, digital-powered delivery will do to restaurants what Amazon has done to retail: Goodbye, malls and big-box chains; hello, e-commerce. Even the recently retired CEO of Dunkin’ Brands Group Inc. is calling delivery “the biggest change in the quick-service restaurant industry since drive-thru.”
Brian Warrener teaches food service management at both the Johnson & Wales University Providence Campus and the JWU College of Online Education. “Food delivery hits the demographic sweet spot for millennials,” he said. “This generation is characterized by a preference for having what they want, how they want it, and when they want it—and they want it fast because that is what they have become used to. Food delivery, and especially new food delivery services, provide a nearly limitless variety of cuisine on demand and that’s an irresistible combination for young people.”
To make his point, Professor Warrener shared a humorous anecdote from class: “One day a young woman got up and left the classroom—not an unusual occurrence. What was unusual is that she came back a minute later with four smoothies. ‘Where did you get those?’ I asked. ‘Delivery,’ she replied. ‘How much?’ I asked. ‘$5.50 each plus $1.25 delivery each,’ she replied. ‘Why would you do that?’ I asked. She answered, ‘We wanted smoothies.’
To put it succinctly, he said, “Delivery is a trend and not a fad and you should make arrangements to take advantage. I’m convinced.”
Here are three questions restaurateurs should ask themselves to prepare for success:
1. Should I hire my own delivery staff or partner up with a third-party delivery service?
If you let another company handle your marketing and discovery, order placement, and delivery fulfillment, you lose the one-on-one relationship with your customer along with the valuable data. Is it worth it? So far, large restaurant brands seem to be saying “yes.”
- White Castle has teamed up with Grubhub, as did Yum Brands, owner of Taco Bell and KFC restaurants.
- About 20 percent of U.S. Wendy’s locations offer delivery through DoorDash.
- McDonald’s forged an exclusive partnership with Uber Eats.
In fact, in just one year McDonald’s has increased the number of restaurants offering Uber Eats from 7,800 locations to 13,000—that’s a 60 percent jump! Not only does delivery account for about 10 percent of food sales in the McDonald’s locations that offer it, but also the average check in these locations is about 50 percent higher than the in-store purchase total!
Overseas Starbucks sees food delivery as a way reverse declining sales in China, the world’s second-biggest economy. With the help of Alibaba Group Holding Ltd.’s Ele.me on-demand food delivery service, Starbucks will soon begin offering delivery in 150 stores in Beijing and Shanghai, with hopes of expanding the program to more than 2,000 locations by the end of the year.
2. How will the explosive growth in food delivery affect your restaurant’s kitchen and dining room design?
Chipotle Mexican Grill Inc. is outfitting its kitchens with second “make lines” to handle additional demand from online orders, which represented 8.8 percent of sales in a recent quarter. Now is the time to consider the increase in volume due to delivery will impact how you allocate staff and resources to remain efficient.
3. How well does your product travel?
You may need to take a close look at your delivery menu to ensure they’ll make the trek. In addition, you may also want to order to-go packaging to showcase your delivered menu items with the same appetizing presentation they have straight off your line.
Interested in becoming a food entrepreneur? If your goal is to open your own business or partner in a food or beverage startup, set yourself up for success with a Bachelor of Science in Food & Beverage Entrepreneurship from Johnson & Wales University. Complete the “Request Info” form on this page or contact 855-JWU-1881 or email [email protected].