Pizza and delivery have always been joined at the hip. But when a study earlier this week showed that foodservice delivery will grow an eye-popping 51 percent by 2021, it became increasingly clear that this is not "pizza only" game anymore.
Daily, new players enter this service category, which is already well-populated by existing traditional third-party and in-house delivery services. And meanwhile, huge chains, like Domino's, partner with with equally huge automakers, like Ford, to essentially "put the pedal to the metal" on self-driving car deployment, with delivery top of mind.
The message is clear: Pizza delivery has a whole new world of intense competition coming its way. The rest of the foodservice world has finally gotten the message that most pizza restaurateurs knew all along: Customers love delivery and today's customer absolutely demands it.
So we took some question recently to Euclid Analytics CEO Brent Franson to learn what this soaring increase in on-demand food delivery means for restaurateurs. We wondered whether this increasingly competitive field of service meant that automation is the best answer for delivery — something many pizza brands are perhaps thinking about these days.
We learned that the data indicates that convenience and experience — underpinned by solid "numbers don't lie" data — must be one of the major priorities for any brand in the rough-and-tumble day-to-day competition of the current and future on-demand economy.
But, Franson made it clear that simply buying into technology to meet the demand in this service area (think robots, drones and computer-based delivery and ordering service add-ons) is not the answer. In Franson's experience, the increasingly complex game of delivery still boils down to the same thing: Operators must know their diners intimately in order to create and expand delivery services — and then they must keep those diners satisfied.
Q: Let's look at the pizza brand's newest area of competition, quick-service brands in all food categories. What are you hearing right now from your QSR clients regarding delivery and current market demand?
A: Our QSR clients are clear: Technology has become a major disruptor for the quick-serve industry. Their customers are mobile-first and expect convenience and efficiency to be at the forefront of their consumption experiences.
On-demand delivery has fulfilled this expectation and, with just the click of a button, customers have access to a variety of restaurant options with delivery straight to their door. Customers no longer expect to travel to a location, stand in line and wait for their food to be prepared.
As a result, QSR chains are aware that they need to stay ahead of the technology curve and ensure that they provide a convenient and seamless experience in order to satisfy these changing expectations and appeal to millennial and Gen Z diners.
Q: What services are being considered to either expand or introduce delivery for brands across restaurant categories in the delivery game?
A: Companies such as Postmates, GrubHub, UberEATS and Caviar are attractive because they can extend the existing reach ... while alleviating operational pressure to staff-up to handle food delivery and on-demand ordering.
The downside, however, is the addition of a middle man between restaurants and their diners — they lose that touchpoint and ability to build a one-on-one relationship that pays off over the long term.
Q: But it's probably safe to say that a lot of automated delivery methods are now looking better and better — especially to pizza operators who face a whole new expanded world of competition on the delivery front. Are we in for a boom in the use of robots, drones and self-driving cars for delivery, especially for pizza operators?
A: [In whatever ways] technology revolutionizes delivery, it will no doubt be centered on what brings the greatest convenience and speed to patrons in the most cost-effective way possible. ... Right now, that’s cars and that’s likely to be the case for some time. We’re in the very early days of alternative delivery.
[Beyond that], scaling up while reducing operational complexity and the need for staffing order intake through your own app or service or through third-party delivery services are the obvious benefits. ...
Automating delivery also puts [a restaurant] on the map of new customers who otherwise would not be able to travel to their locations because they are not as conveniently located near one of their restaurants. UberEATS is a great example of creating a marketplace that exposes people to what you offer even if they’re not nearby.
Q: So for operators considering automation for delivery, what challenges exist, aside from expense?
A: [Operators] need to evaluate the importance of building direct and long-lasting relationships with their customers and if they are willing to sacrifice some of that connection by embracing automation. This really merits consideration on a case-by-case basis.
Q: What kinds of numbers do operators need to see to make intelligent decisions about the options and their profitability for their brand?
A: It’s much more profitable to keep a customer than acquire a new one. [Operators] should think about how much they can grow their database from these services, either through building an audience for digital advertising or driving app downloads. [They must also consider] how their relationship could encourage additional visits and interactions. If the marketplace helps you acquire, but not bring customers back, then that’s a problem.
Consider the state of your customer base and whether days between visits are increasing or not. Do you have a huge lunch crowd but aren’t capturing the dinner diners? Truly understanding customer demographics and behavior ensures brands are leading with customer-centric thinking.
Secondly, evaluate your operational capacity: What’s the throughput of the kitchen relative to when people come in? Can you afford to take on more orders during some times versus others?
Q: What if a restaurateur simply feels he or she innately "knows" what the customer wants and installs an automated system without much evaluation of the brand's numbers and customer characteristics?
A: There are several serious downsides. For example, lost customer relationships, higher average days between visits, noticeable deterioration of quality from maxing out kitchen capacity. In particular, a decline in quality can be a punch to the gut when it comes to a brand’s reputation.
Q: What costs does a brand face to acquire the kinds of data needed to make informed decisions on how to handle delivery?
A: We always recommend to start with what you have — ideally minimal capital investment. Building one-on-one relationships with customers doesn’t have to be overly cumbersome or expensive.
Consider becoming the face of the order intake to gain immediate access to ... customer data. Although the cost of getting the data is higher, this fosters immediate relationships with customers. And those direct relationships encourage loyalty and valuable repeat business.
Companies: Euclid Analytics
Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.