Today’s restaurant operators can now use several channels to reach their guests, including:
- bricks-and-mortar seating
Among them, online delivery — particularly, via third-party providers— is garnering the most attention because it holds the biggest promise of boosting sales. Last year, the research firm NPD reported a 20% increase in delivery sales and 10% gain in delivery foodservice visits, many them prompted via digital ordering. A Technomic restaurant operator report showed delivery generated incremental sales for 60% of those surveyed.
By all accounts, the delivery runway remains long. This year, for example, a Wells Fargo survey of nearly 500 consumers who ordered restaurant delivery at least once during the surveyed month found that respondents ordered delivery fewer than five times a month. The survey also noted 28% ordered delivery just once in the past month.
This channel is immature and has a long way to go to become economically viable on a long term basis. The marketplace is evolving and will change until it normalizes.
So if you’re among operators ready to leap on the bandwagon yet smart enough to grasp the pros and cons of online delivery, consider these five issues before signing a contract with a third-party delivery service. Or, more likely, services.
- Footprint. Is there enough front-of-the-house space to accommodate both delivery drivers arriving with large sacks and dining-room guests waiting to be seated? If not, can the space be expanded to accommodate guests — and at what cost? Or will you have to devise rules for when and where drivers arrive and hang out while waiting for orders?
- Seamlessness. The issue of seamlessly integrating third-party delivery technology into a restaurants’ point-of-sale system is improving. But that doesn’t mean your delivery service of choice will make it happen for you. Yet it shouldn’t be a dealbreaker if the delivery service hands you their tablet. But be aware that technology (via third-party integrators) does exist to flow orders directly into your POS. Companies that supply it include Ordermark, Omnivore, Chowly, and ItsaCheckmate.
- Visibility. Images of your food will appear on a third-party’s website. Make sure the photos you supply not only make your dishes look inviting but fairly represent what is supposed to arrive at the customer’s door. Also, a good idea is to first “test drive” menu items yourself by putting them in a car and driving around to determine which hold up best after, say, an hour’s drive-time.
- Data. Today’s big issue is, Who owns sales and customer-behavior data — you the operator or the delivery service? For now, delivery services claim it, because in their mind they “own” the customer. But here’s the twist: If the delivery driver arrives late with cold food, guess who gets blamed? You do. And without customer details, how do you reach out and solve the problem? Worse: Ordering off of a third-party platform bypasses a restaurant’s loyalty program, depriving guests of a possible deal and operators of customer data.
- Fees & pricing. There’s no such thing as “free delivery” — at least not for you, the operator. Third-party service fees may run as high as 30% of individual menu items, depending on an operator’s ability to negotiate a fair percentage. The bigger you are in terms of sales or number of units, the better your chances of negotiating a lower fee. One way to make up for high fees is to raise menu prices on delivered items. Yet check first with your third-party delivery firm. Some are known to frown it.
Blog written by Former restaurant CEO Fred LeFranc is the Founder/Chaos Strategist at Results Thru Strategy, the Charlotte, N.C.-based consulting firm he co-founded in 2009. This blog can be found in the Florida Restaurant and Lodging Magazine – Fall Edition.