Delivery appeals to home-entrenched diners and consumers looking for convenience
Customers appear to be enjoying the comfort of their homes a bit too much, surrounded by technological convenience via smartphones, smart TVs and smart home technology. Even refrigerators can alert consumers when it’s time to head to the grocery store to replenish or put in a grocery order with Instacart. Restaurant delivery is a popular option for consumers and last year, it was up a whopping 33 percent in non-pizza restaurants from its 2012 levels, according to NPD, a Chicago-based foodservice consultancy.
The same firm expects restaurant traffic to end up flat this year—a big wake-up call to restaurants to expand convenience options for their customers in the form of restaurant delivery and online ordering.
According to Nation’s Restaurant News, Panera’s online orders now make up a quarter of total sales. Toast POS reports that 33 percent of consumers ages 18 to 54 order online for delivery or take-out making these conveniences an extremely important imperative for restaurant owners. Ordering for take-out, for example, is an easy way to build sales. Partnering with a third-party platform can help market your business to new customers, but setting up an in-house system that is integrated with your point-of-sale (POS) system is also helpful and can provide an easy way for customers to order both take-out and delivery food. Advance POS systems like Toast offer an online ordering platform for customers that is managed in-house by the restaurant.
Key drivers and trends in restaurant delivery
Technology trends aren’t always easily interpreted and the consumer behaviors driving them are not always so clear. Part of knowing what restaurant technology to adopt is knowing your customer. A report by AlixParters dispells the notion that loyalty is a main driver of restaurant tech influencing whether to patronize a restaurant. Instead, 40 percent and 35 percent of consumers say that online ordering and Wi-Fi, respectively, are the main tech-related factors in using a particular restaurant. Consumer behavior isn’t generic, either: 42 percent of Millennials says restaurant tech is influential in restaurant decisions, whereas 18 percent of Baby Boomers see it that way.
The report also indicated that third-party delivery is not popular at all, despite the fact that we see such companies, including Uber Eats and Caviar growing in the Washington, D.C. area. Seventy-two percent want delivery to come directly from the restaurant, and only eight percent of customers want food delivered from a third party. Customers may trust the restaurant more, at least as it relates to restaurant delivery, and may want to interact directly with the restaurant itself. These are important factors that restaurants may want to take into consideration when deciding how to market and execute delivery.
The cost of foodservice delivery borne by restaurants is also a big factor. Some third-party platforms for online ordering can charge upwards of 20 and 30 percent of revenue for a single order. Some experts have noted that in-house order taking can be significantly less expensive. Once a restaurant invests in the technology, that particular in-house platform or tool is then paid for and any online orders that are received have no additional tech or delivery cost outside of those in-house costs directly related to the order. Of course, restaurateurs invest in restaurant tech to build sales and recover multiple times the cost of the investment.
There are a few pricing models out there. There are a variety of pricing structures with some providers passing along fees or surcharges in menu pricing to the customer. For example, ChowNow, a restaurant delivery platform operating in D.C., charges a flat monthly fee, enabling restaurants to leverage that cost over multiple orders taken in a given month with ChowNow. Customers are able to select from monthly, annual and two-year flat-fee pricing plans with no commissions. Participating ChowNow restaurants include Ben’s Chili Bowl, Cava Mezze, Ted’s Bulletin and Rocklands BBQ. ChowNow also has a Discovery marketplace where it can market a restaurants to new customers and charge a finder’s fee for each new restaurant.
Food quality and food price, notes the AlixPartners survey, are the top considerations of customers when ordering delivery; thus, the cost of delivery to the customer is also critical. Some restaurants have complained recently that third-party providers have been marking up their prices without their knowledge. This was widely reported this year and had an impact on the specific company that was mentioned.
Any fees or charges that are paid by customers to a third-party provider should also be plainly understood by restaurant owners before signing up with that provider. It’s important for restaurants to work with third-party platforms that have incredible amount of transparency. Delivery is an extension of the restaurant’s operations and brand reputation—no need put it at risk unnecessarily.
Considerations when implementing restaurant delivery
When it comes to implementing restaurant delivery, access to customer information for marketing, food safety and food presentation & handling are other important considerations. In partnering with third-party providers for online ordering, delivery or both, restaurateurs do well in understanding who will own the customer information and who will have access to them for marketing purposes.
If full customer information is not shared by a provider with a restaurant, then it becomes difficult to market directly to those customers and to engage them to gain their dine-in business in the future.
Food safety is of utmost importance. Some key questions: Who is handling the food that is delivered to customers? How hot is warm food kept and how cold is cold food kept? What is the certification or reputation of those coming in contact with the restaurant food? And how accurately is food allergy and intolerance data being transmitted to restaurants?
In some instances around the country, third-party providers have been taking customer orders without restaurant knowledge or may not have a sufficiently intelligent platform to communicate food allergies. There have been cases of serious illness when this type of information has not been documented and received by the restaurant, putting restaurant reputation and assets at risk.
The ChowNow team says it avoids these types of issues through the ChowNow Menu Builder giving restaurants more control over the information that customers are sending them. Customers are presented with the information up front and they can select any modifiers and note other preferences with a comment.
“Online ordering is the best way to make sure these needs are clear and fulfilled, as everyone involved gets the same info—think no sloppy notes jotted down in a hurry from a phone order,” says Emily Neudorf, ChowNow director of product marketing. “These requests are recorded for the customer in their digital receipt, for the restaurant staff on the ChowNow Tablet, for the kitchen on the print ticket, and then kept on record in the restaurant’s ChowNow Dashboard.”
For restaurants that deliver the food themselves to customers, an important consideration is packaging. It’s important to choose packaging that fits the brand image and keeps food secure from spilling and maintains food at the correct temperatures. There’s a numerous choices in foodservice delivery bags, totes and wrappers that can keep restaurant food at the right temperatures and avoid spillage.
The food that is delivered at the customer’s door and experienced by the customer when unpacked is a direct reflection of the restaurant and its management. Restaurateurs should work closely with their vendors, do the proper research and invest wisely in packaging options.
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