How Food Delivery is Changing the Restaurant Landscape

The delivery craze is getting your food into the hands of more people. But are the compromised brand experience and revenue worth it?

We’ve all been there, you’re stuck at the office and it’s past 7PM and you’re hungry – there’s no time to run out so you cue up the UberEats app and get to work. In a world that used to be limited to pizza delivery to satisfy our late night cravings without heading out into the world, we now have choices at our fingertips and it doesn’t show any sign of stopping.

We know that the restaurant industry is always evolving, whether it is a new style of restaurant, a new way to manage POS or a disruption like food delivery. With millennials working more than ever and spending less time cooking at home, services like UberEats, Postmates and Doordash are making waves in the way consumers make purchase decisions.

In today’s on-demand economy, we want things when we want them and the expectation of quick delivery grows day by day. The food delivery industry is no different. In fact, the disruption being made by food delivery services is paving the way for other on-demand services to throw their hat in the ring.

When you think of a service like UberEats, it seems simple: You click on what you want, pay in the app and get it delivered to you ASAP. This is exactly why the service has become so appealing to restaurants. When a restaurant has a delivery driver on staff, they have to send them out and then wait for them to return, losing time and money in the process. With services like UberEats, the driver picks up the delivery and takes it where it needs to go – no need to return to the restaurant or wait around.

In today’s on-demand economy, we want things when we want them and the expectation of quick delivery grows day by day.

With the growing millennial population and their need to have everything right now, the on-demand trend shows no signs of stopping. Just recently, Amazon introduced their own brand of food delivery with Amazon Restaurants and Amazon Fresh – answering not only the restaurant delivery question, but bringing groceries along for the ride. By eliminating the need to leave home and freeing up more time for millennials to do the things they enjoy without having to worry about a grocery trip, Amazon has set themselves up for years of future success.

Downsides?

Of course, everything that glitters is not gold. There are downsides to these types of services that restaurants must address. The main concern is handing the hospitality that you have cultivated in your restaurant over to a third party. Once food is prepared, packaged and handed to the delivery driver, the restaurant loses control of the product and customer service.

Additionally, delivery apps are taking 20-30% off the top of each order which can spell trouble for a restaurant that is not booming with delivery orders. Restaurants who use these services are realizing that although the additional orders are coming in because of these delivery apps, the commission that is being taken off the top is counterproductive to the additional sales.

With the pros and cons of these delivery services, it is easy to see why deciding to utilize one as a restaurant brand is such a tough decision. The on-demand culture that we are building lends itself to wanting more and more of these services by the day. Without an end in sight, restaurants need to take a look at the value added versus the revenue lost and determine if this is a trend worth taking a risk on.

As a society, we continue to side with convenience and ease when it comes to dining decisions and restaurants have an opportunity here to make things easier than ever for customers – but at what cost?

What do we make of these new brands in Fast Casual?

Sit down at Holler and Dash in Tuscaloosa, Alabama and take in the scenery around you; you’ll notice the smell of fresh baked biscuits, mason jars full of cold brewed coffee and an interior boasting bare brick walls and concrete floors. What you’re experiencing has been carefully concocted to attract a specific crowd – a millennial-centric crowd.

You might think that this is a hot new restaurant concept from an up and coming southern chef – you’d be wrong. Holler and Dash is the creation of well loved family brand Cracker Barrel. That’s right – the one and only. An invention out of necessity, Holler and Dash comes after Cracker Barrel exec’s discovered that the beloved Cracker Barrel brand was missing the mark with younger generations. Holler and Dash still features those homemade classics but with updates like a Red Eye Aioli and Tomato Jam topping their signature biscuits. You can tell that they’re catering to a different crowd! New brands like these aim for a crowd more focused on modern design and hip ingredients.

Cracker Barrel is not alone in this endeavor. Many aging restaurant concepts are developing new brands to capture an audience that their core offering is missing. Tony Roma’s opened TR’s Fire Grill to booming success in late 2015 and has been serving up locally sourced smoked meat, craft cocktails and an ambiance that attracts the ideal crowd. Don’t remember Tony Roma’s? (Hint: It’s the place for ribs.) You aren’t alone – not many people recall this once well loved establishment that started in the 70’s and that’s okay with them. “Most people don’t know,” says Tony Roma’s CMO Jim Rogers. And while Rogers is adamant that “We are comfortable with it being known that this is a concept developed by Tony Roma’s,” he stresses that “it’s a completely different concept,” and “we want it to live on its own.”

Why are so many aging brands opening new millennial-centric concepts? With the initial rise in Fast Casual, aging legacy brands like Cracker Barrel, Tony Roma’s, Texas Roadhouse and even Denny’s are looking for a way to redefine their portfolio and keep up with the shift in trends. In addition, the creation of new Fast Casual dining concepts with updated menu’s and modern executions allow legacy brands to try something new without having to interfere with their core business offerings.

Is this the fix for all legacy brands? No way. We have known for years that new offerings drive traffic. What we can understand from this kind of step into the creation of new restaurants by legacy brands is that the restaurant industry is always changing and that we will continue to see brands trying to find ways to stay relevant or expand their offerings. New brands can create buzz if executed correctly. If a restaurant concept like Texas Roadhouse can replicate their hospitality in a fast casual environment slinging burgers instead of steaks like they have with their concept called Jaggers, why wouldn’t they take the leap?

As a millennial who dines at legacy brand restaurants, these new offerings from restaurant chains I already know and love are not only exciting to me from a foodie perspective, but also give me a glimpse into what the future of restaurants could look like and how brands will stay relevant to their guests. I think the outlook is pretty great!

Here more about this approach on the F&RM Podcast.

How do social reviews affect your brand?

Ever travel to a small town on business and try to find a place for dinner? Where did you turn? For 88 percent of consumers, online reviews and comments drive their decisions.* When you’re running a restaurant it is hard to determine exactly how much weight you should give to comments and reviews that come in from social media. However, with growing generations of individuals who trust content from their peers over content from brands, it is important to recognize the ways that social media reviews drive dining decisions.**

What we know about social media is that a review – good, bad or indifferent can circulate faster now than ever before. Not only that, but many restaurants have cited a direct correlation between their ratings and reviews on social media and their sales.*** When reviews are positive, people are more likely to visit your establishment. A wall post like the one below from pizza brand Peter Piper Pizza can be a positive push for someone looking at their Facebook to visit the restaurant themselves. Additionally, a strong response from the brand shows patrons that your caring goes beyond when they are in your restaurant.

reviews, experience, restaurant, brand
Reviews can go a long way to build or bring down a restaurant brand.

Conversely, if you receive poor reviews on your social pages, patrons will be less likely to visit after seeing what other guests had to say about the establishment. When negative reviews and comments come through on social media they tend to come in waves – as the saying goes where there is smoke, there is usually fire. For example, when you make a decision as a brand to close restaurant locations without alerting your staff, people will take to social media to discuss it. As a brand, not responding to these types of comments causes even more trouble, even a simple acknowledgement of the comment is better than silence.

reviews, restaurant, brand
Make a mistake and get punished with reviews.

As a consumer, searching for reviews on social media for a brand that is established nationwide is navigated a bit differently than reading reviews for a single unit restaurant. When you see reviews for a restaurant with 50-100 locations it is easier to dismiss negative reviews for locations that exist in other places because you are counting on the fact that a particular location may have poor service but the one near you may not. These reviews are taken with a grain of salt by a consumer who may try the location closest to them despite negative reviews elsewhere.

If your restaurant has only a handful or a single location reviews on social media could hold a larger impact for the way people perceive your restaurant.

If your restaurant has only a handful or a single location reviews on social media could hold a larger impact for the way people perceive your restaurant. Chances are consumers will be more forgiving to a national chain because not all locations can be the same right? Smaller restaurants and chains have a bigger battle to fight against negative attention on social media. By keeping up with comments and recognizing that you hear your consumer you can shed a positive light not only on changes being made due to feedback but also on the way you interact with guests. Potential clients will be more likely to give you their patronage if they see positive reviews and conversation happening around your restaurant.

When you are running a restaurant, reviews mean a great deal to the potential patrons of your business. Keep an eye on reviews and comments and be an active participant in the community that is talking about your business. The fans that you build online can translate into lifelong brand advocates that will give your restaurant patronage for years to come. Though comments on social media may seem small, they add up in the end.

*http://sproutsocial.com/insights/infographics/social-media-trends/
**http://www.adweek.com/socialtimes/millennials-trust-user-generated-content-50-traditional-media-infographic/147545
***https://www.brandwatch.com/blog/socialmediaintherestaurant-industry/