In 2013, $46 million was invested in food ordering companies. In 2014, $600 million was invested. Math doesn’t have to be your strong suit to see that jump. So why does this matter? In 2016, we as consumers have created the perfect environment for online ordering. We all carry around a computer in our pockets (i.e. our cell phones) that give us instant information to basically anything. Our culture has also evolved. For the first time in our nation’s history, as of March 2015, American’s spend more money on eating out than buying groceries. This is a key factor of consumer behavior, creating a sweet spot for the food delivery market to thrive.
When restaurants prepare meals for their patrons and deliver it to their homes, this is what we call a win-win.
But, delivery isn’t new?
This is true. You remember getting home from school and begging your mom to pick up the phone and order Domino’s Pizza. Now, this market includes everything, from breakfast, to mediterranean foods, to sushi, to full on Italian dishes. Additionally, all of your customers have something different than just a decade ago, a smartphone. Today, food delivery can all be done with minimal human contact. Consumers can download an app such as Foodler or Grubhub, search for your restaurant, find your menu, and purchase meals, all with the tap of a screen.
Who is using these types of apps?
I’m sure you’re familiar with a prominent majority of our population, Millennials; they are set to overtake the Boomers this year. This generation thinks of their smartphone as a body extremity. They use it throughout the day and don’t think twice when using it to order food. According to the National Restaurant Association, “74% of Millennials said they would order delivery from a table-service restaurant if available, while 56% of adults would.”This shows that there is a massive demand for delivery, and restaurants are striving to accommodate these guest trends.
Okay… Sign me up! Not so fast. Just like anything, there are positives and negatives to adding a delivery service to your restaurant’s business plan.
This is a way for your loyal guests to eat your delicious food in the comfort of their own homes; making it more convenient for them and keeping your restaurant top of mind. This means more engagement and gets them thinking about you more often. Starting a delivery service also gets you into a completely new market with hungry new customers. Instead of thinking “what can I do to get more guests in my doors,” you can now literally walk up to their doors with your goods. This will make you more competitive to the restaurant chain up the street who doesn’t offer food delivery.
The not so good.
Just like anything, there are caveats to any type of expansion or new technology. Some of these third party ordering apps mark up your menu prices, without your knowledge to make extra profit on each sale.There is also the risk that you could lose valued customers over poor delivery experience. Maybe this problem was out of your control, such as slow delivery times, or the food arriving cold and soggy. Another issue is your guests not getting to meet you! Many restaurateurs center their business around personal connections. With delivery, you lose this aspect of your business model. The delivery company basically “owns” the customer, meaning that they have all the information on them. You have no way to build a relationship, or connect with the customer to get them to come back.
Make the most of delivery.
1) Hire local: If you can’t afford to have your own delivery team, get a local crew that focuses on delivery in your area.
2)You don’t need to offer your full menu (and your guests will thank you). Some foods just need to be eaten right away. You don’t want to ruin one of your culinary masterpieces just because it was in the back of a van for 25 minutes.
It’s proven the demand for food delivery is at an all time high, and rising. What will you do about this growing trend in the hospitality space?