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2019 Fast Casual Executive Summit

Integrating delivery services: a disruption that can't be ignored

| by Elliot Maras
Integrating delivery services: a disruption that can't be ignored

Sterling Douglass, Desi Saran, Dawn Nielsen and Scott Goodrich discuss delivery services. Photo by Willie Lawless.

For many restaurants, delivery sales are the fastest growing part of the business. Some go as far as calling it an industry disruption.

And while change is never easy, restaurant operators are finding managing delivery orders and working with the third party delivery services that dominate this space to be especially unnerving, as evidenced by a panel talk during the recent Fast Casual Executive Summit in Austin, "Freeing your restaurant from tablet hell."

Meeting this off-premise challenge, which is driven by the growth of e-commerce, requires a thorough assessment of how the organization manages its delivery orders.

Restaurants, in general, are in the early stage of this disruption, observed session moderator Sterling Douglass, co-founder and CEO of Chowly, a technology company that integrates third-party orders with restaurant POS systems.

Horror stories

The panelists began by sharing third-party delivery horror stories.

Not long ago, panelist Desi Saran, founder and CEO Sweetberry Bowls, a New Jersey based chain, had a delivery order from a restaurant that never arrived. When he called the restaurant to find out what happened, the manager had no idea. Saran couldn't help but wonder if the same thing is happening to his own customers.

Panelist Dawn Nielsen, COO of Kolache Factory, based in Katy, Texas, recalled similar scenarios that have been happening with alarming frequency. "By the time you reach the driver, they're not even responding," she said. 

"Someone has to leave our store now to fulfill that order," Nielsen said. "Then you're left with the issue, are you going to get credit back from the third party? At the end of the day, they (the customers) don't care that they ordered from DoorDash; it's your fault."

Delivery problems also distract staff in the store from their regular activities, she said.

Problems beyond delivery

Non-deliveries were not the only horror stories the panelists shared.

Restaurants are already struggling with customer service issues when they add a new platform  delivery — for employees to have to pay attention to, Nielsen said. "Your front liners are under so much pressure already," she said, noting that Kolache Factory is a QSR and in-store customers receive their orders in under two minutes.

Panelist Scott Goodrich, COO of Greek from Greece, was managing a bar when he noticed the bartender ignoring customers at the bar so he could focus on the delivery service tablets near the entrance. "It's shocking to see a bartender not make eye contact with someone that wanted a beer," Goodrich said.

That scenario alerted Goodrich to the need to integrate the delivery orders with the kitchen.

Nielsen also suspected a lot of the third-party orders were not being reported among her company's franchisees.

An accounting nightmare

Accounting presents another set of problems, since delivery service providers have different policies for charging for taxes. Saran said it can be difficult to understand all the fees being charged and reconciling them on the P&L statement. For instance, he did not realize until recently that one of his third party delivery services was charging him sales tax.

"Make sure you are reconciling and you're looking at you statements," Saran said.

Some states don't require sales taxes on off-premise sales, Douglass said.

The new reality

As bad as these experiences have been, the panelists can not deny the important role that off-premise deliveries are playing in their establishments.

"You have to embrace third-party delivery," Goodrich said, noting that the average check has increased while the level of traffic has declined. "It is interesting that sales are up and traffic is down." 

Saran, for his part, said when he launched delivery service, he noticed a 10% top line contribution to half of the restaurant's sales. Off-premise sales now account for 22% of sales, and are evenly split between DoorDash, GrubHub and Uber Eats.

Integration issues

Integrating the different delivery services is also proving a challenge, the panelists agreed, but an imperative one. By not integrating delivery orders with the POS, restaurants run the risk of not prioritizing the orders efficiently.

"I don't want drivers waiting on food standing in my restaurant," Goodrich said.

"They won't wait, by the way," Nielsen added. "If that order is not packed and ready, they're gone. Now your customer is upset. Now you've made the food. Now there's no one to take it. Now you're left with, 'is that customer going to be mad and never order from me again.'"

Companies like Chowly are helpful because they streamline different delivery services and remove the need to have different tablets in the stores for each delivery service, Goodrich said.

Surcharges needed, and more

One of the few bright spots of delivery is customer willingness to pay a premium for the convenience, the panelists agreed.

Saran said he increased prices by 25% on delivery orders and customers accepted it. "I would encourage everybody in the room to play around with the pricing and see how far you can test it," he said, admitting that he himself is not sure how much higher he could go.

The panelists agreed restaurants have to come up with procedures for what to do when orders don't get delivered. In many cases, there is no support from the delivery companies in addressing these unfortunate scenarios.

"You have to have a relationship with that delivery company in some way," Goodrich said. 

Nielsen suggested ranking drivers based on their attentiveness, including rewarding the good ones with freebies and "blacklisting" poor ones. "It's really important to take care of those people who take care of you," she said.

How many delivery partners?

The panelists also agreed that the quality of the delivery services varies by region. The question of how many third party services to use, however, was the subject of some debate.

Where Saran has expanded from two to four delivery services, Nielsen suggested restaurants select the two market leaders in their particular market. "You don't have to pick them all. Pick the ones that are prevalent in your area that are easy to work with," she said.

One reason Nielsen likes to limit the number of services is the accounting headaches delivery brings. 

Chowly has noticed that restaurants typically start working with one or two delivery services, then expand to a few more, Douglass said.

What does the future hold?

The panelists agreed the delivery companies are trying to improve their services, but they did not think there has been much progress in the last year.

A dashboard that would make it easy for restaurant managers to find things would be a big help, the panelists agreed.

"They did not design these dashboards for restaurants," Nielsen said.

The panelists also want the delivery services to provide more customer information.

"I do think there is an opportunity to provide a better experience that will also be off premise," Goodrich said. 
 


Topics: Customer Service / Experience, Online Ordering, Operations Management, Systems / Technology

Companies: Chowly Inc.



Elliot Maras

Elliot Maras is the editor of KioskMarketplace.com and VendingTimes.com.




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