Roll on: 3rd-party delivery challenges draw a crowd
It's widely accepted that for many pizza restaurateurs, the quality of delivery makes the pizza business go 'round. That is even more the case today when consumers' passions for home delivery in all restaurant categories has not only widened the field of competitors, but also helped the third-party delivery service business establish itself so well so quickly.
It comes as no surprise, then, that at this year's Fast Casual Executive Summit in Nashville last month, the topic of third-party delivery reeled in some of the biggest numbers of attendees of all sessions offered over the three-day event. This article — originally appearing in Pizza Marketplace's sister publication, Fast Casual — recaps the highlights.
The packed-house session kicked off with Sushiyaa and Menooing CEO Kevin Lee sharing his observations that Papa John's and it's non-pizza competitor, Jimmy John's, aren't really pizza and sandwich businesses, but delivery companies. Moderator and Apex Supply Chain Technology CEO Kent Savage followed up that observation with a text-poll of audience members around some questions on restaurant delivery. The polling demonstrated the importance many restaurants now place on delivery:
- Asked which delivery experience is most important to customers — either restaurants' own drivers, third-party delivery, in-store order pickup or "other" — third-party delivery and in-store order pickup tied for number one.
- Asked to what challenge posed the biggest hurdlefrom either "maintaining food quality," "managing staffing/operational issues," "meeting customer delivery expectations" and "other," the top answer of "managing staffing/operational issues" scored well above the other choices.
- Asked to name the greatest challenge third-party delivery poses to restaurants from the four choices of either maintaining food quality, (getting) incorrect order information, congestion/confusion during order pickup or any other unnamed problem, the top challenge selected was that of "maintaining food quality."
Another question gauged audience concern about the immediacy of third party delivery's impact on their business.
Asked if delivery to fast casual restaurant customers will increase substantially, increase slightly, stay the same or decrease substantially in the next 12 months, most attendees answered "increase substantially."
When the same question was asked regarding in-store pickup for fast casual restaurants, the answer was the same — it will increase substantially.
Savage, whose company supplies pickup lockers, said the Cincinnati Reds tested pickup lockers for mobile food orders. This past season, fans ordered and paid for food using the official MLB Ballpark app. The stadium food was placed inside self-serve lockers, which alerted the customer when the food is ready.
Savage also showed clips of some Little Caesars' commercials demonstrating a pickup portal for call-in orders at Little Caesars' restaurants.
Stephen Dutton, consumer foodservice associate at Euromonitor International, gave some statistical perspective to food delivery service, citing several examples of foodservice delivery experimentation. He said foodservice delivery will increase by 9 percent annually for the next five years, outpacing the growth of non-delivery foodservice. He pointed to three factors behind this trend: technology (mostly mobile ordering), convenience and competition.
Dutton also gave examples of the type of third-party experimentation taking place.
He pointed to Green Summit Group LLC, an online food delivery company offering 14 internally curated food brands, as example of a new crop of restaurants being built for the purpose of delivery. Calling Green Summit a "virtual restaurant," Dutton noted the service operates strictly on Grubhub.
Dutton also pointed to Deliveroo, a U.K.-based food delivery service, which launched Deliveroo Editions this year, hubs that host hand-picked restaurants that rent space in a facility that is designed for delivery.
According to its website, Deliveroo partners with restaurateurs who design their kitchens hosted in a Deliveroo Edition. Deliveroo Editions are made up of hundreds of people looking at everything from the packaging the food arrives in to the way the kitchen is built and run for delivery.
In Stockholm, Sweden, a company called Foodie Bag provides a delivery service for restaurants on a subscription basis, similar to Blue Apron, Dutton said. The restaurants provide the ingredients and the recipes.
"There appears to be a demand for that kind of service," Dutton told Fast Casual.
Maximize real estate
Panelist Jennelle Brown, vice president of operations, training and human resources at Uncle Maddio's Pizza, said brands are realizing that offering delivery allows them to maximize the use of their real estate. She said larger brands will be active in both onsite foodservice and delivery.
"They can feed off each other where they can feed off each other while reducing costs," she said.
People today still want to go out to eat, Brown said, but they also want to eat meals at home. She added that third-party delivery can create bottlenecks in a restaurant if there is not a separate space for preparing orders for delivery, customers in the restaurant mistakenly think the delivery orders being prepared are actually their own orders – being improperly prepared.
"You've got to figure out a way to deliver where it doesn't interrupt consumers who are already there," Brown said.
The panel conveyed the rising importance of foodservice delivery, and the fact that the industry is currently in the process of developing viable business models.
Registration is now open for the 2018 Fast Casual Executive Summit in Seattle.