Several years ago now, the pandemic changed the restaurant delivery game. What was a growing part of the industry, mostly reserved as an urban area convenience, quickly transformed into a norm and an expectation. Restaurants, from QSRs to finer dining, multiples of operators are providing not only to-go services, but the industry continues to navigate with delivery. This is either offered through first party (self-operating) delivery or integrate with the well-known third-party delivery apps such as Door Dash and Seamless.
But even with explosive growth and development, it’s a part of the restaurant business that is still trending toward new ideas and opportunities. Restaurant owner-operators shouldn’t become too comfortable in “the way things are” as normal. Restaurant and technology integrations are here to stay, and those businesses willing to stay on top of trends and guests’ needs and expectations—and especially, as Jason Tober called it, “one of the most important service channels”—are the ones that will thrive in this environment.
Tober, the General Manager of PAR OPS and former CEO of Delaget, writes for Nations Restaurant News (NRN) about how food delivery has changed the face of the restaurant industry, weighing the positives and the challenges about this customer outlet. “It’s convenient, drives higher ticket sizes, and can be a serious revenue booster. But let’s be honest, it also disrupts conventional workflows. And if you choose a third-party platform, you hand over control of customer relationships to someone else. Between clogged kitchens, overwhelmed staff, and commissions that eat into profits, delivery can feel less like an opportunity and more like a necessary evil.”
Despite that sense, Tober believes it is a part of the industry that is worth studying and perfecting. “70% of consumers ordered delivery in the past month, matching the number who picked up takeout and slightly edging out the 68% who dined in at a restaurant,” he shares in his NRN article. Navigating the challenges and working to improve systems and strategies, Tober believes will help restaurants make the most of this lucrative opportunity.
The place to begin is investing in tech. “According to the Future of Automation Report, 54% of restaurant owners plan to increase tech spending in 2024, with 43% automating order tracking and 38% already seeing increased profits from automation.”
Tober predicts that this increased spending will include more restaurants creating their own delivery services rather than relying on third-party apps. “The benefits are huge: higher margins, full access to customer data, and total control over the brand experience,” he writes. “With first-party delivery, restaurants can eliminate hefty commission fees, personalize marketing efforts using customer data, and offer a more consistent and reliable delivery experience.” Those restaurants who can’t take on their own ordering and delivery service should learn to become better negotiators when it comes to the delivery service apps. “Many are adjusting their pricing strategy by charging more for delivery orders to offset commission fees while keeping in-house menu prices competitive. Others are rolling out exclusive deals and loyalty programs for customers who order directly, incentivizing repeat business through first-party channels.”
More importantly, there are new tech trends on the horizon that will directly impact on the user experience, as well as delivery efficiency on the business operations side. From AI-powered delivery optimization and hybrid delivery models, to businesses based around delivery-only options, the restaurant industry is embracing delivery as an evolving channel and harnessing its power for business and customer loyalty.
Richard Weil, owner and principal of National Restaurant Consultants adds, “Operators are often faced with difficult business decisions. Providing the convenience and trends of offering delivery, or to protect their brand as it relates to quality and service. Delivery options are not new to the industry, but since Covid, have become a main stay for thousands of operators and literally millions of consumers. It is important to understand the prime costs in the respective operation. These calculations should analyze the costs associated with delivery as cited in the article, including soft costs need to be carefully considered.”