Actionable Insights From APT's Retail Practice

Restaurants Score Points with Takeout and Delivery Options

February 10th, 2017 | Posted by APT in Restaurants

Super Bowl Sunday is a major occasion not just for the two teams going head-to-head, but also for restaurants, particularly on the takeout and delivery front. This year, about 48 million people were expected to place some type of food order, presenting an opportunity for restaurants to score a touchdown.

Domino’s says the Super Bowl is the company’s third-busiest delivery day of the year, second only to Halloween and New Year’s Eve. The chain sells more than 11 million slices on game day – which is a 350 percent increase from a typical Sunday. Pizza Hut announced plans to hire 11,000 new employees ahead of the game. Delivery drivers nationwide were projected to clock about four million miles delivering Super Bowl orders.

As pizza players pour resources into programs like Facebook Messenger ordering capabilities and advertising pushes on social media, delivery strategies are increasingly top of mind across the industry at large. While the Super Bowl festivities have died down, how can brands refine their delivery programs for everyday wins?

To keep up with increasing guest demand for maximum convenience, many restaurants have been evaluating and expanding their delivery options. While drone delivery, a new initiative from Domino’s Australia, may not be a fit for all chains, many restaurants face the common challenge of determining optimal delivery scope and structure. For example, what is the right delivery radius? Should we only offer delivery during certain time frames? What is the ideal fee, or minimum spend threshold for free delivery?

Another question many restaurants seek to answer is whether to build a delivery program in-house, or partner with a delivery company like Postmates, UberEATS, or DoorDash. Investing in any form of delivery will necessitate operational changes, particularly shifts in internal processes and staffing, which may be more pronounced for restaurants that go the in-house route.

As executives weigh whether to build or partner, they must carefully evaluate how different delivery programs impact overall sales. While third-party services may give restaurants, particularly local establishments, increased exposure and guest access, they also claim a portion of revenue. To compensate for steep commission fees, some restaurants are raising prices, which may lead to losing visits or shifting guest spend. On the in-house delivery side, restaurants will likely need to hire additional staff, either as delivery drivers or kitchen support if there is incremental traffic from delivery orders.

Other sales considerations for delivery in general include potential cannibalization of in-person orders, and its impact on average check size and guest satisfaction rate. For example, could overall guest satisfaction drop if delivery food fails to stay fresh? Keeping delivery dishes up to restaurant standards is a major challenge and some companies, like Culver’s, are opting out of delivery altogether rather than risk compromising the quality of their offerings.

Another key consideration for delivery programs is to ensure menus include offerings that are not just well-suited to travel, but in high demand for home delivery. According to data from GrubHub and DoorDash, the nation’s most popular delivery items include chicken dishes and Asian cuisine. Although the findings exclude data from top pizza delivery chains, which typically host their own in-house delivery systems and data stores, pizza still ranked at the top of the list, highlighting its status as a go-to delivery option.

While some guests may opt for delivery classics like pizza and Chinese, many are looking for increased variety in their delivery options. As guests gain access to more restaurants and different cuisine through third-party delivery services, chains should also consider providing a diverse assortment of offerings to satisfy demand.

While delivery may be a big opportunity for some restaurants to drive new revenue, they must carefully evaluate new concepts or else risk a fumble. The best way for brands to refine their delivery initiatives is by taking a Test & Learn approach, designing in-market experiments to determine whether new programs are successful, in which locations, and with which customers. Using this approach, restaurants can unlock data-driven insights to help them reach the end zone.

Be Sociable, Share!

You can follow any responses to this entry through the RSS 2.0 Both comments and pings are currently closed.