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How pizza brands can get their slice of post-Amazon Effect action

The so-called "Amazon Effect" has changed the game for restaurateurs and pizza brands are no exception. What can be done to stay competitive in a faster, at-your-fingertips retail world? Read on for ways to meet the needs of the off-premise customer.

April 24, 2019 by Ray Reddy — CEO and Co-Founder, Ritual

Editor's Note: According to Investopedia, the Amazon Effect is a reference to the impact of online, e-commerce or the digital marketplace — including online retailer and prominent cloud services provider, Amazon — on the more traditional brick-and-mortar business model, from changes in shopping patterns, customer expectations and the new competitive landscape.

As the Amazon effect results in cheaper, easier more accessible consumer experiences, some restaurants are losing big in trying to emulate this model. Why? Delivery isn't replicating Amazon's level of service in the restaurant industry. Instead, forward-thinking QSRs are creating peer-to-peer networks to take better advantage of the new on-demand environment.

As a recent Wall Street Journal article put it, "Food delivery is proving to be a thorny, expensive and crucial puzzle for restaurants, grocers and investors. Billions of dollars have been spent in a quest to build services that reliably move fresh food from one place to another, yet many in the business wonder if they will ever get the economics right. Most delivery orders remain unprofitable." 

Comfort food mainstays like French fries and coffee don't travel well, for instance, but instead end up soggy and cold in well under 15 minutes required by most delivery channels. As a result, items that are typically inexpensive for pizza operators to produce, like side dishes, add-ons or even beverages are no longer a reliable means for increased profits due to quality issues.

At the same time, drivers report the gig economy pays badly, even though restaurant brands are paying exorbitant fees to partner with delivery startups, and customers are balking at delivery costs that nearly equal the cost of the food ordered. To put it simply: The industry can't sustain restaurant delivery as it now exists. 

Pickup and partnerships provide pizza brand options 

One approach is through better "pickup" service, which could even be considered the new "delivery." As consumer demand for delivery and mobile pickup has increased, many pizza brands have created slightly different and more cost-effective ways to meet their consumer expectations. 

Among the approaches are brands that offer everything from curbside pickup and kiosks, to drive-thru channels and the like to expedite the retrieval of orders at the store. These approaches cut out the delivery middlemen, but still give consumers the convenience they seek. 

Other restaurants have found success by establishing partnerships to further mobile pickup. In fact, limited-service behemoths like Starbucks are running their own programs. And while not every pizzeria can compete on that level, some are partnering with third-party services to create better-than-delivery services that let pickup function like delivery without jeopardizing foodservice quality. 

When partnering with restaurants through Ritual's food ordering app, we've learned quite a bit about what creates repeat customers and boosts sales for restaurant operators, like "piggyback" functionality that allows customers to let friends or coworkers join an order, as well as being able to pay with their own cards and have their colleague bring the meal back to them. 

The feature functions as delivery, in a way, allowing even co-workers "stuck in-between meetings" and unable to leave their desks, an option for the morning coffee break or lunch. With this kind of option, there are no delivery fees, but food still comes to the person who ordered it quickly, under the care of a co-worker.  

In fact, this piggyback function is particularly good for items that often get left out of the delivery equation, like coffee or fries, or those offered by ubiquitous chains, like Starbucks that because of their overall prevalence can deliver virtually everywhere with speed. 

These types of partnerships are the kinds that allow progressive restaurateurs to use peer-to-peer networks to win in an on-demand environment where traditional delivery doesn't really give brands seeking to scale or improve operations any good answers. In these situations, delivery becomes more of a burden and less of an answer to the customers' demands for convenience. 

But, by creating consumer-friendly opportunities for pick-up, building loyalty programs and vendor partnerships, and using restaurant technology to bring tough-to-deliver items to consumers quickly,  pizza brands are remaking the delivery experience for customers without the prohibitive costs.
 

Photo: iStock

About Ray Reddy

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Ray Reddy is a repeat entrepreneur and now the CEO & Co-Founder of Ritual- an order ahead app connecting local restaurants with customers and data analytics to help them compete in the digital restaurant age.On the platform, restaurants have seen 3-4x growth in repeat customer visits & size orders due to speed, convenience, social features and a clear pricing structure.

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