The do’s and don’ts of adding delivery services to your restaurant.
By Nancy Wood
To-Go or not To-Go? For most restaurateurs, this is no longer the question. Delivery service has been around for a long time – think Chinese and pizza – and what was once a trend is now a need to have service.
But the digital explosion has taken ordering online and delivery service into another realm – and created a new set of challenges for restaurateurs. How do you figure out what’s right for your restaurant?
“Delivery has been around for ages,” says Jay Bandy, president of Goliath Consulting Group. “It seems like it’s new, but we’ve been looking at if for decades as a way to grow sales.”
Despite overall flat growth in the industry as a whole, food delivery sales have seen a 20 percent increase over the last five years, according to a report from The NPD Group – and 10 percent of that was due in large part to the uptick in digital ordering.
“A lot of owners and operators are still focused on folks who come in and sit down,” says Bandy, “but there’s a whole opportunity to take food to where people are, and when done properly, you can mitigate a good amount of the expense and have another revenue generator.”
Despite some of the challenges of incorporating delivery services into a business model, Joe Guith, president of McAlister’s Deli, still encourages operators to get into it “100 percent,” he says. “All the data we see indicates it’s here to stay. It may cannibalize some of your business, but it will, by and large, give you more business.”
While some studies indicate that the increase in sales is incremental, Guith says that he’s definitely seen an uptick in sales. “Delivery not only increases the reach of your brand,” he says, “but it also allows your existing guests to engage in the brand when they might otherwise not do so.”
“If you read the trends, if that’s how people are ordering, we have to do it,” says Archna Becker, chef/owner of Bhojanic in Atlanta. “It’s a very big part of the business.”
Many owners and operators may feel they have to jump on the bandwagon when it comes to delivery services, but there are some important questions to ask before taking the leap: ‘Does it make sense for my establishment?’ and ‘Does it work for my business model?’
As a restaurant consultant, Jay Bandy starts the decision-making process with his clients by discussing building business verticals and filling a sales gap.
“If you’ve got dine-in and take-out, the next thing we look at is catering. Take-out and catering is a natural bridge to delivery,” he says, “and catering is much more profitable.” Catering means delivery services are already in place, including staff familiar with delivering the food with care, and as Bandy points out, “you’re already dealing with the packaging.”
If your operation is large enough to have an in-house delivery team, that option offers an additional level of customer service and quality control. “There’s security in the chain from the food being taken from the restaurant to the customer,” says Bandy. “And if the person delivering the food is in a uniform that has the branding of the restaurant, it makes the customer feel better.”
If an in-house delivery team isn’t an option, third-party delivery services abound – in fact, it’s often difficult to determine which ones are right for which restaurant. In Atlanta alone, there’s nearly a dozen options, including Zifty, UberEats, DoorDash and PostMates.
Some considerations in selecting the best third-party delivery services include where your location or locations are based (suburbs vs. metro areas), reliability, driver knowledge of safe food handling, use of GPS tracking, marketing add-ons and service fees, as well as insurance and liability for drivers. Minimizing your risk means making sure as an owner/operator, every partnership with a delivery service is in writing.
“Look at your coverage model and penetration of whatever service you sign up for,” advises McAlister’s Guith. “The services largely dictate their service area – because they’re trying to make sure they’re making customers happy.”
As he puts it, “speed does matter.” Speed can affect the restaurant’s reputation as well. The amount of time it takes to get the order ready, picked up and delivered can impact not only the consistency of the food, but pleasing your customer on the other end of the chain.
“Depending on where the service is, their penetration and your speed will dictate whether this is going to be a real success for you or not,” says Guith.
Packing for the Journey
Two key factors that owners/ operators can control include making sure the food travels well and investing in the proper packaging for transport. By all accounts, for example, delivery is not the best option for fine dining establishments.
“I don’t think all food travels that well,” says Bhojanic’s Becker. Since Indian food holds and travels well, she hasn’t had to adjust any menu offerings but encourages owners/operators to make sure their menu items do travel well.
According to Jay Bandy, there is a trend to build menus that include food that transports more easily. “Take French fries, for example,” he says. “Fries from scratch don’t transfer that well from location to someone’s home or office. If you use a coated French fry, those hold up longer.”
McAlister’s Joe Guith says they continue to look at their menu, and while transporting hot sandwiches is somewhat challeng- ing, the rest of their menu travels well. “Beverages are probably the next frontier in terms of a challenge – we’re aware of bever- age quality and degradation with the ice.”
Packaging food for transport is another primary consideration for any restaurant – the type and the cost. Gone are the days of poking holes in the top of a Styrofoam box with a fork. Today, environmentally friendly packaging is more important to consumers, and owner/operators have to take that expense into account. “It’s a big cost to absorb because the eco-friendly packaging is not cheap,” says Becker.
“Technology in packaging has come a long way in the last five years,” says Bandy. “Now, packaging has been designed and engineered to vent steam out but still keep the food warm.”
Additionally, it’s important to consider packaging that can be reheated when it gets to the end-user. Guith also advises using tamper-proof packaging. “We’ve been sensitive to that,” he says, “so we’re putting special stickers on deliveries. We want to make sure that things are arriving to people untampered.”
Even though delivery service technology is available to any size restaurant, not every establishment can handle the operational challenges.
“Capacity is always a concern,” says Bandy. “Delivery is not typically this stream of business that comes into a restaurant.” For example, Bandy points out that “people order delivery in a big way on Fridays. It’s a challenge because most restaurants are not built to do double the sales in a two-hour time period.” Bhojanic’s Becker agrees. “We can’t change the restaurant’s world because of the to-go,” she says. “If it’s busy, it’s busy for everybody. The kitchen can’t do anything to change that.” Then, owners and operators need to consider staffing. If you choose several delivery services to begin with, do you have enough staff to take the orders and input them into your POS? Add in the fact that each delivery service is going to offer some method of getting the order to you – via tablet most likely – then counter space may become an issue. And what if four or five different drivers show up simultaneously to pick up delivery orders? Can your restaurant accommodate them?
For his clients, Joe Bandy recommends no more than three delivery services “just to alleviate the headache of having all those different people in the restaurant.” When it gets past two or three, he says, “it’s time to cut the low performer unless it’s cheap. Typically, if you’ve got five, that’s too many. It’s a fiscal decision.”
For restaurants that do use multiple delivery services, there are now some companies offering aggregator software, like Chowly, that can gather all the information into one central point based on the POS restaurateurs have in place.
In a move designed to meet some of these operational challenges head-on, McAlister’s Deli opened their first rebranded prototype restaurant in West Midtown Atlanta in September. The new design incorporates a shift to off-premise dining with a pick-up window, an on-the- go pick-up station as well as a reduction in the size of the dining room.
“It’s about 15 percent smaller than what we have historically done,” Guith says. “Off-premise was definitely one of the considerations as we looked at the new prototype and brand evolution.” While McAlister’s has always had a community focus, he says the digital element was a consideration as well as enhancing the guest experience when they do come in-store. “This design reflects more of the communities we serve.”
Choosing the Right Delivery Services
Where do you start when it comes to choosing a partner for delivery service? The big brands are front and center with their own online ordering sites that even interface with Facebook and now Twitter. But smaller players can still impact the bottom line with mobile ordering apps as well as third-party delivery apps. Regardless of which delivery service an operator chooses, check the fees first.
“Be prepared for the bill,” says McAlister’s Guith. “They’re going to take a pretty big chunk per ticket.”
“There’s usually a minimal startup fee for hardware and maybe a set-up charge,” Bandy says, “but those are generally pretty negligible. It’s the fees that you pay either weekly or monthly that add up.”
In general, those fees start in the mid- to high teens and can go up to 35 percent, which is coming out of the retail sales price. “At that threshold, operators have to do a lot of sales to have that make sense,” says Bandy.
“I would encourage people to think about getting that average ticket up to offset the cost,” says Guith.
When checking out the third-party delivery apps, get the details on any marketing and promotions they offer. “Typically, when you turn on the switch with a delivery service, you see an increase in sales,” says Bandy. “The restaurant is the new kid on the block in terms of the app, so the delivery service promotes them and they go to the top of the list.”
Additionally, owners and operators have to let their guests know they’re on a certain platform through their own marketing efforts. “The ability to get on the platform is actually the easiest part,” says Guith.
Ultimately, if you do your homework and prepare your staff and space for the increase in orders, adding a delivery option could boost your sales and broaden your reach to customers new and old.