COVID-19 has served as an asteroid to our restaurant industry, with one of its largest impacts resulting the rapid acceleration of consumer preference for online ordering and delivery.
While we all hold hope for a resurgence in the popularity of on-premise dining, the restaurant business in the early part of this decade will look much more like this “new normal” than the pre-COVID restaurant world.
If you find yourself on the fence or reluctantly 'sticking your toes in the water' with delivery, here are a couple of eye-popping numbers from earlier this summer:
- 60% of U.S. consumers order delivery or takeout at least once a week.
- 31% now use third-party delivery services at least twice a week.As many in our industry struggle for survival, some concepts - big and small – have acted nimbly to thrive in this unsettled environment. As someone who has helped facilitate healthy sales and profits during this time, here are my top three considerations toward delivery success.
1. Be the Concept You Want To Be
Online ordering and delivery provide an opportunity to expand or contract your concept and menu to a version that attracts the most customers and attains the highest profitability. As evidenced by the ghost kitchen movement, we can even be a totally different concept.
Delivery and ghost kitchens extend freedoms to us to address additional customer need states and operate in additional dayparts than our brick-and-mortar locations may have previously served. If you want to stretch your concept to add revenue, look first for what you can do within your existing labor model, equipment package and ingredient portfolio. This is a great opportunity to test items and ideas. Make sure you’re measuring results promptly and ready to make adjustments.
While stretching is possible, conversely, don’t feel that you must offer your full menu online. If you have items or categories that are unpopular, difficult to execute, lack portability or present an unhealthy profit compared to others, consider not offering them on the menu. When it comes to cooked items, ensure they hold, travel and/or reheat to put your best foot forward. For many consumers, the experience they have with their delivery order may be their only impression of your brand.
2. Be Popular, Unique AND Profitable
There are a massive number of potential online delivery customers every day and a seemingly infinite number of alternatives for them to choose from. Brands that are not widespread or extremely well-known, must achieve three things in order to compete online:
Your listing must inspire customers to visit your menu
Your menu should compel purchase on first sight, and
The ordering and dining experience needs to inspire repeat business and a spot in customer ordering rotation.
Balance items of high consumer demand with your unique take and quality proposition. Many will choose to participate in crowded categories that offer a huge volume of potential customers but bring a large number of competitors as well. In crowded categories, you must find a way to stand out. Highlight your signature items and bring them front and center. Make your burrito, burger or chicken parmesan unique and memorable and ensure your photos are more enticing than those of your competitors.
Alternatively, choosing to stand out in a focused, under-served category can have big upside potential, but comes with the risk of not attracting enough business and revenue. If going this road:
1. Ensure there is enough customer demand to meet your revenue and profit needs, and
2. Make sure you can confidently say your product is fantastic. If you can appeal to enough of the customer base, you are more likely to drive trial and gain repeat business. Customers are less sensitive to item pricing in online meal purchasing. Price your offerings at a competitive level that also reflects the increased costs of delivery. Make sure to include options for customers to personalize their items by adding extras, sides and beverages. You’ll be surprised at how many double burgers with bacon and avocado you’ll sell. Much the same labor goes into preparing each order, so explore elevating check average through things like bundles or combos.
3. Treat Delivery Companies as Partners
Meal delivery companies are often portrayed as parasitic predators taking advantage of the restaurant industry. This is fundamentally false. These companies are focused on the same purpose as most restaurants: offering customers the best options at competitive pricing, while differentiating themselves from competitors to maximize their revenues and profits.
Allowing others to handle the logistics of delivery management enables your team to focus on accurate, fast order fulfillment for delivery orders and providing great experiences to our precious dine-in, takeout and outdoor diners.
The market share and strengths of each of the big four delivery companies (DoorDash, Grubhub, Uber Eats, and Postmates ) vary widely by geography. Choosing the right partner requires understanding your market(s) and doing some alternative modeling. For some brands with strong awareness or heavy regional presence, it may make sense for your brand to focus on one “exclusive” delivery partnership and negotiate better rates or other benefits. For many others, you will want to open the gates for customers to enter your menu from multiple platforms.
When determining the preferred partner(s), there are a lot of variables beyond commissions to be considered. Marketing tiers, enhanced search, prep times and delivery radii and service times are just some factors that can heavily impact your customer exposure and purchase rates.
Now is The Future
While these are certainly turbulent and less than predictable times, we can be sure that the restaurant business model has been forever changed. Succeeding in the online ordering and delivery world requires bringing together the right concept, menu, pricing and presentation, as well as maximizing delivery partner relationships.
Taking a strategic and nimble approach enables companies to not only recover lost revenue, but to also ensure your business is optimized for whatever the future may hold.
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Contact Sean at 4xi to learn more on how we can help you navigate this labyrinth and optimize your approach and presence to online ordering and delivery.
Sean Reiter
Consultant, Online Delivery & Revenue
4xi Global Consulting & Solutions
Sean is a 30+ year restaurant professional hailing from the San Francisco Bay Area. Having held senior positions in well-known restaurant companies, he has spent the last decade helping restaurants solve the conundrum of establishing new areas of profitable revenue through online ordering and delivery platforms, delivering real value and impact to clients.To learn more about how we can help you, visit our website at www.4xiconsulting.com, email us at Hello@4xiconsulting.com or you can contact Sean directly at SeanReiter@4xiconsulting.com
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