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Taking pies far n' wide: Delivery picks up in small, remote towns

Even the tiniest towns typically have at least a couple of "pizza places" and you had better believe people there want delivery just like their larger metro area neighbors. Problem is third-party delivery providers have been slower to launch in these areas. But restaurateurs in these smaller hamlets say that might be to their detriment.

May 15, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

Delivery and pizza. Pizza and delivery. The two are perpetual partners. And pizza lovers don't lose their longing for a hot delivered pie just because they happen to live in less populous or more remote areas, even though many third-party delivery providers aren't in town to give it to them. Instead, the big food delivery concerns tend to flock to larger metro areas and their seemingly greater returns.

But that could be changing because the demand for delivered food of all varieties, including pizza, is also taking hold in smaller towns. Minot, North Dakota, for example, is large as North Dakota cities go but has only 50,000 residents. The agricultural community near the Canadian border has a delivery market dwarfed by most large cities. Los Angeles and Chicago, for example, have more than 4 million and 2.7 million, respectively, but that's not stopping restaurants from rolling out delivery.

"Minot itself is very remote from other big towns or cities, but we do have a lot of smaller surrounding towns that come to Minot to shop or eat. ..." said Krista Marshall, whose Schatz Crossroads Diner is open there around-the-clock and provides delivery via a third-party delivery platform, Bite Squad.

"Before Bite Squad, only pizza was available for delivery in our area. I think there is very much a demand for home- or office-delivered food," Marshall said. "Right now, we are seeing a decent amount of revenue coming in from Bite Squad — it has increased our sales/revenue by almost 3% since starting in November. That 3% in sales we otherwise wouldn't have had," Marshall said. "I think that customers in our area are warming up to it. I think change is difficult in rural areas, like ours, but I think they are enjoying the benefit of having their local favorite foods delivered to them!"

That's not unusual, said Sonny Mayugba, CMO of Waitr, which owns Bite Squad. The  company has built its business around addressing the delivery needs of the nation's small and medium cities.

But it's not just the small rural areas that are soaking up the attention of companies like Bite Squad. For instance, thousands of miles and degrees Fahrenheit south of Minot, the mid-sized metro area of St. Petersburg, Florida, has fallen hard for delivery.

Eric Bialik, owner of Pacific Counter, wanted a piece of the action. The quick-service downtown concept on Florida's Gulf Coast serves mostly a suburban market on the fringes of the Tampa Bay metro area. Bialik said after delivery started there about eight years ago through a local service —FoodNow — the major third-party delivery operators came in to the market and bought it.

Today, Pacific Counter is working with Bite Squad, and delivery comprises up to 20 percent of daily sales. 

"We are considering adding in additional services now that we have six months under our belt and have become streamlined in our operations," Bialik said in an interview. "We love the additional revenue and new customers these services provide, without us having to shift focus from what we are doing in-house. ... Some guests who love our restaurant, simply can't make it in, or don't want to fight for downtown parking so they order delivery to get their fix." 

In fact, Bialik said the service is drawing customers to dine in after they first order food through delivery. Taken jointly, he said delivery is adding thousands of dollars a month to the restaurant's coffers.

The challenges in small-town delivery

Delivery is still missing in many less populous areas, however. Mayugba said there is still opportunity in the smaller cities and suburbs where delivery service penetration is less prevalent by the so-called Big 4 — Grubhub, UberEats, DoorDash and Postmates. In fact, he said 88 percent of the U.S. population lives in the small and medium cities in which Bite Squad focuses.

"Rural areas in the U.S. are largely underserved when it comes to food delivery," Mayugba said. "We know there's a great opportunity to reach people in smaller markets, both on the coasts and in middle America. We're not just talking about 'last mile' here. This is about reaching millions of people in an increasingly on-demand economy."

These are the Evansville, Indianas, and Aiken, Georgias, of the world, with populations in the 50,000 to 750,000 range, he said, including the 600 cities Waitr and Bite Squad served at the end of 2018, via the menus of some 18,000 restaurants nationally. 

"We love the additional revenue and new customers these services provide, without us having to shift focus from what we are doing in-house. ... Some guests who love our restaurant, simply can't make it in, or don't want to fight for downtown parking so they order delivery to get their fix."                          -Eric Bialik, Pacific Counter

A challenge to offering delivery in these smaller towns is that customers often live far from one another, which means more miles traveled for the delivery service provider, along with its inherent costs.  

"Secondary markets with smaller populations can often be quite large geographically," Mayugba said. "Covering more miles requires us to carefully coordinate drivers and orders through our apps so that food is delivered in a speedy manner with great quality. We're able to do this effectively because we employ our drivers, which allows us to staff and schedule accordingly. ...

"We look at population density, as well as the number of restaurants within a geographic area. The ideal neighborhood set-up allows us to get food from the restaurant to the customer in about 10 minutes."

Packaging is another challenge as its harder to ensure temperature and quality on longer distances.

It's unclear whether smaller cities and towns always have a greater number of smaller or independent restaurant brands, as some have speculated. For instance, Mayugba said Waitr and Bite Squad clients run the gamut from single-unit operators, like Schatz Crossroads in Minot or small-chain operators, like The Purple Cow in Arkansas, to larger national brands with a healthy presence in rural markets. 

One of those larger brands is Huddle House, a 400-unit brand spanning small towns across 24 states. It's moving closer to a system-wide delivery equation, according to Huddle House Vice President of Franchising Christina Chambers.

Chambers.   (Photo - Huddle House)

"We're also rolling out a plan to make it extremely convenient for guests to enjoy Huddle House through the expansion of some digital initiatives, especially online ordering and delivery," Chambers said in a recent QSRweb podcast interview. "A lot of people think of online ordering and delivery as being more in urban and suburban play. ... But you know what? Folks in rural towns and small areas in the U.S., they want those same things.

Mayugba said there were key differences between the needs of brands that choose to do business in less-populous areas and those in busier metro centers, however.

"Proximity and volume are the main differences. ..." he said. "The challenge lies in providing restaurant-quality meals in less dense geographies."

But he believes the opportunity will only grow, particularly as those living in these areas come to expect delivery in their "neck of the woods."

"People inherently adapt to things that make life simple and convenient, no matter their location. We see consumers from all walks of life engaging with delivery. ..." Mayugba said. "We even service many older consumers who may not be mobile enough to leave their homes. 

"I would add that millennials, the generation practically born with a cell phone in-hand, are increasingly moving to smaller towns and cities in secondary markets for a better cost of living and job opportunities. This is a huge consumer market opportunity for all DSPs."

Feature photo: iStock

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.