There’s no doubt that third-party delivery allows restaurants to gain exposure to new guests and fast-track a business looking to provide a turnkey delivery option. But once a business has a foothold in delivery, transitioning to a first-party alternative provides far more benefits, including larger tickets and tips, improved service management, and access to guest data that empowers the business to craft targeted offers and build its loyalty program. (And as for loyalty, you have a far better chance to build it once you move more guests to first-party delivery: Paytronix found that first-party ordering has a loyalty attachment rate of 41 percent, compared to just 3 percent for third-party ordering.) If you want to convert more guests to your first-party delivery platform, there are steps you can take to encourage them in that direction. Online Ordering 2024 Trends, a new study from Paytronix, suggests using your third-party packaging materials to drive people to your website or mobile app – you might try printing a QR code or link on your bags, cups, boxes and napkins to help direct traffic where you want it most. In your store, email campaigns and social media, you can do something similar, building awareness of your first-party platform with signage and outreach. Once you get people to your app, make that the place to be, with a wider selection of menu items than are offered through the third-party app, items that are exclusive to your loyalty program members, and additional promotion about the benefits of joining your loyalty program. It’s a question more restaurant operators are asking this year, as the cost of third-party delivery has increased beyond consumers’ and operators’ comfort zones. According to the National Restaurant Association’s annual State of the Industry report, an average of 13 percent of restaurants have stopped using third-party delivery services – even though delivery continues to be in demand by consumers. The trend was especially apparent outside of the quick-service category. While only 7 percent of quick-service restaurants severed their ties with third-party delivery companies, 17 percent of fine dining and coffee and snack businesses did so. The research found that instead of forgoing delivery altogether, most restaurants are taking the function in-house. The move can give operators greater control over food quality and safety, speed of delivery, as well as a larger share of profits. But it does require some planning and resource management. If you’re considering it, determine what geographic areas you want to serve and during what hours, how many staff you will need to support the effort, how they must be trained on everything from technology to off-premise food safety, and how you will mitigate your business liability if problems were to arise in the course of a delivery. What technology and tools could support you? Could a delivery management platform help? Test your service over a set period and track what went well and what needs to be improved. Also think about if and how you will promote this offering to guests – and if and how you want to use it to convert more orders to carry-out. In any case, collect data on how your delivery is going – both with regard to delivery times and reactions from customers. Winter weather can make it that much more difficult to entice people out of the house and into your dining room. But takeout and delivery could be an easier sell – if you make it worth their while. Is your menu up to the task? Your restaurant might take some cues from the surprise success of Rick Bayless’s Tortas Frontera restaurants at O’Hare Airport. While airports aren’t necessarily known as great destinations for a quality meal, Bayless has managed to make his restaurants such a draw that, according to a recent article in the Washington Post, business travelers are known to purposely schedule connections and layovers at O’Hare just so they can pick up a meal at Tortas Frontera. It gives new meaning to motivating guests to go out of their way to come to your restaurant. The Post article shares how Bayless has ensured his restaurant delivers the kind of quality that keeps guests coming back – and thinking about his restaurant even if they live across the country from it: He knew that his guests would likely be picking up their food, then boarding their plane, then waiting for takeoff and the beverage cart, before digging into their food – a process that would likely take about an hour. So when testing his menu, Bayless placed finished dishes in to-go boxes and let them sit at room temperature for an hour before tasting them, then adjusted the recipe as needed. It’s a formula that restaurant operators looking to grow their delivery business could use too. Taking the time to understand the typical journey of a takeout meal, the habits of those eating it, and how long it generally takes between a meal’s preparation and consumption – can help you make the incremental adjustments a recipe needs to turn casual customers into loyal guests. While restaurant delivery surged during the worst parts of the pandemic, momentum has slowed as consumers have returned to in-person dining and takeout orders. In fact, a recent study from Paytronix found that takeout now accounts for a majority of all digital orders. In the background, restaurant tech companies have been stumbling amid layoffs and profitability challenges. This has led some to question the long-term viability of delivery, which was difficult for restaurants to make work financially even in more stable economic times. On the surface, a rise in takeout business sounds like good news. But it may be just a blip before tech-driven delivery rebounds, according to a new book, Delivering the Digital Restaurant by Meredith Sandland and Carl Orsbourn. They say restaurant tech is still in its infancy and it can be difficult to imagine a different way of operating, but “there are places in the world where delivered food is actually cheaper than eating at a restaurant, even without drones and sidewalk robots and automated food trucks cooking en route.” Delivered food at a lower cost is possible, they say. However, front-of-house staff, dedicated dine-in space, prime real estate, and a third-party companies making deliveries aren’t part of the picture in those cases. As much as restaurant businesses have winnowed down their operating models, there is likely much more change to come. If delivery is a critical pillar to your business, how might you further transform your model to make it work? Inflation is a worry for nine out of 10 adults, according to a survey taken recently by the online research firm Momentive for The New York Times. As guests scrutinize more of their expenses, discretionary restaurant spending is a natural place for them to cut back. But on the plus side, demand persists for restaurant food – it may just look different for a while. As John Church, co-head of HSBC Bank’s food and beverage unit, told The Food Institute, “Consumers are likely to trade down during inflationary times as they will want to continue to enjoy some level of out-of-home dining experience.” Restaurant operators may just have to double down on strategies to get guests in the door. Right now, focusing on providing value can help. Offer combo meals that emphasize cost savings – like a family meal deal that may even provide some leftovers for lunch the next day. Create a sense of urgency with guests by creating a rolling line-up of limited-time offers. Give people a reason to return by asking them if they want to receive special offers, then following up with deals related to foods they have enjoyed from you in the past. Take a page from your pandemic playbook and package up an experience – a cooking class or wine tasting, for example – that makes restaurant food or drink feel like a worthwhile outing or a go-to choice for someone looking to give a special gift. When you offer those experiences, talk them up on social media to inspire guests looking for memorable ways to gather with friends and family. What if your customers could be anywhere in the country – or even the world? It’s an appealing thought at a time when operators are struggling to manage high inflation, supply chain fluctuations and general uncertainty in the market. But the creative solutions that have come out of the industry in the past two years have the potential to transform the industry into one of greater opportunity for all. In a recent segment on CNBC, Joe Ariel, the CEO of Goldbelly, discussed how the Omicron variant and inflation concerns have triggered a surge in food e-commerce. He expects more companies – his among them – to take an omnichannel approach to food sales going forward. Imagine if a family was craving a wide selection of regional specialities – Philly cheesesteak, New York cheesecake, Chicago pizza – and they could enjoy authentic versions of them at the same meal? Or perhaps your restaurant gets a lot of summer traffic and guests who have been coming to you for years want to be able to enjoy your food year-round. Are there stars on your menu – memorable entrées, secret sauces, special desserts – that you could serve to a worldwide audience with the right marketing and packaging? How can you take what you do best and get it out to your best customers? Even before the pandemic, the shift from on-premise to off-premise dining was happening. But the pandemic truly accelerated it, and even as people return to restaurant dining rooms now, there is still a way to go before things look the way they did a couple of years ago. To be sure, the trend is especially stark for full-service restaurants – new data from FSR Magazine indicates that in September of 2019, 80 percent of traffic at full-service restaurants was on-premise (compared to 20 percent for carryout), whereas the mix in September of 2021 was 56 percent on-premise, 44 percent carryout. Still, across restaurant categories, an operator needs to make a clear-eyed assessment of their business model in light of current market conditions, then take steps to protect the business for the long term. That means expanding, not limiting, opportunities to serve guests – and resisting the urge to revert back to how you were operating pre-pandemic. Consider new opportunities for catering, particularly as businesses are looking for ways to maintain connections between hybrid workers and clients. Keep communication open with neighboring restaurants and complementary businesses that may be able to pool resources, share staff, or collaborate with you on promotions. Think about how to make it easier and faster for your food to reach guests who want to eat it off-premise, whether that means assessing third-party delivery providers to find the best-possible arrangement, starting an in-house delivery service or using a ghost kitchen. Restaurants and consumers alike have experienced the effects of the current supply-chain crisis, whether in the form of product shortages, delayed shipments, or changes in store hours due to reduced labor availability. (According to a recent National Restaurant Association survey, 75 percent of restaurants have been forced to change menu items due to supply chain issues.) While the challenges are widespread, many of them can be minimized. Consider these actions: Where possible, shrink the number of links in your supply chain between a food item and your guest: Pre-pandemic, this was about helping the climate and cutting waste, whereas now it’s also become a necessity for any restaurant that wants to be more certain of the items it will be able to offer on its menu. Plan farther down the line. According to FSR Magazine the casual dining brand Twin Peaks now places orders 12 weeks in advance when four to six weeks used to provide ample time. Focus on your relationships. In addition to communicating effectively with suppliers and paying bills on time, lean into existing and new collective agreements that enhance your purchasing power. Consider your branding. As operators focusing on chicken wings have learned in the past 18 months, it’s important to give yourself some leeway to broaden your offerings – perhaps to include new cuts of meat, or plant-based alternatives, or different presentations. FSR Magazine also suggests restaurants might consider building up a just-in-case inventory buffer – depending on the perishability and size of items that must be stored. Restaurant delivery continues to climb: In 2023, the online food delivery market is expected to balloon to $154 billion from $111 billion in 2020, according to Statista. Are you doing all you can to make sure that as many delivery orders as possible are coming to you from customers directly instead of through third-party delivery apps? Your patrons aren’t necessarily seeking out the DoorDashes and GrubHubs of the world – they are simply ordering via the channel that’s most convenient to them. You can make direct orders more convenient (or at least more enticing) for them when they’re ready to place an order. First, make sure your customers know they can find the best food selection and deals if they order directly from you. Limit the menu options you offer via third-party providers to your highest-margin items – and make it clear on your website, search engine listings and social media posts that people can find a wider variety of food options, lower prices and access to limited-time offers by coming directly to you. When they do visit your website, they shouldn’t have to navigate far to where they place an order. Modern Restaurant Management suggests using a pop-up banner with a link (and perhaps a QR code) that directs them to your online ordering page. On that page, encourage them to join your loyalty program so you can continue to reach them with direct and increasingly targeted offers. Finally, make sure your customers know that they can best support you and your staff in challenging times – and help ensure they can keep their favorite dishes coming – if they order from you directly. Include language on your menu, website and on notes placed in third-party delivery bags that says just that. Restaurant brands are more reliant than ever on third parties responsible for the last mile between a consumer and the takeout food they ordered. Yet even when food arrives cold or soggy due to a third-party delivery vendor who took too long to reach an end customer, the restaurant – not the delivery provider – is far more often the one to receive the negative review or angry phone call. The handoff is critical and both the restaurant and third-party delivery provider need to be in sync about the importance of protecting the restaurant’s brand in off-premise environments – through accuracy, speed and service. As Geoff Alexander, President & CEO of Wao Bao, said at The Spoon’s recent Restaurant Tech Summit: the “brand transfer has to be the most guarded and respected piece by the brand itself and by the operator to work together.” If your restaurant offers delivery, what do you do to ensure your brand doesn’t lose value when you hand an order to a third-party delivery provider? |
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