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?

Food trends and brand optimization

Spend some time looking through the time capsule of January’s food trends listicles and something interesting pops up quickly. Most of these food trends don’t apply to your brand. I can write that with confidence despite not knowing for sure which brand you’re from. The problem with endless choice and (endless content for that matter) is that people can chase down niche interests; and each niche interest can become a trend.

Items on your menu should be built to generate interest, for sure. But it’s also important that brands stay in their lane. If your brand is build on fresh, stir-fried flavors, a hamburger might be an awkward addition. Seems easy until burgers show up on a list of top food trends. When we see the burger place next store doing well, we want to add something to our menu to get in on the trend, avoid the veto and compete with the leaders.

What can happen over time is the endless addition of items that build to a trend, but stretch the brand beyond normal range. Especially for brands coming from lower sales, the temptation to add trendy items is huge. But a focus on the core is critical for brands hoping to turn it around.

Inside food trends

Instead of adding items from the latest pile of food trends, understand the reason that each trend is catching on and build an item to capitalize on the ‘why.’ Kombucha and brain stimulants aren’t right for most mass brands, but the trend is about consumers maximizing perceived benefits from their food. Find ways to highlight ingredients that have a positive effect. This might be as simple as Chick-Fil-A’s recent addition of kale salad in place of the higher calorie cole slaw.

Take what works from the trend and apply it to your core customer. Despite the press that a lot of food trends get, most are so niche that there isn’t an audience that will change traffic. But incorporating an element into your menu can earn credit with those aware of the trend.

Improve core items

Sticking with the craveable core items of your brand forces your team to work to make each item as great as it can be. Ever been to a diner? They have a menu 20 pages long and a two-star Yelp! review because they keep adding items but don’t do any of them particularly well. Spend the time to make your menu unique within your category. If the trend is charcuterie, that might be a signal to focus on the cuts of meat on the menu. Look at what Arby’s is doing with their menu.

The goal is to take what the brand is best at and optimize it. For every wild new item added, there is distraction added to the operations which can slow down the kitchen and lead to service lapses.

Just say no

Discipline is easy when things are going well. If it’s not clear how a trend fits with your concept, walk away. Allow the independent shop down the street experiment with fermentation. If your core customer isn’t begging for it, or leaving you to get it elsewhere, be brave enough to pass.

It’s easy to get caught up in the hype of food trends. They tend to get the short-term attention. The key is to ensure that your brand is incorporating the parts of the food trends that work for your brand – and your guests.

The demise or success of Casual Dining.

Is your brand going to just give in to the prognosticators or fight like hell?

Everyday there’s another article about the demise of casual dining. Denny’s CEO stated, “ongoing and pervasive challenges” in the restaurant industry. We recognize that the environment will most likely remain challenged for the foreseeable future and we are committed to delivering profitable system sales growth as the industry and consumer expectations evolve.” No one said success would be easy.

In addition to competing with fast-casual chains, casual-dining chains have to win over consumers who will be increasingly choosing to eat at home in 2017, as grocery prices plummeted in 2016. In 2017, fast- casual restaurants will continue to be seen as trendier places to eat that typically beat casual-dining chains when it comes to convenience and pricing. The head winds are strong and new competitors enter the market daily. But what you have in recognition A locations and traffic coming in daily.

How to create success

The key to success is leveraging those things to your advantage. So if you’re a fighter and believe in your concept and plan to steal share, here are the five fundamentals to success. The competition in casual dining is fierce and brands struggle everyday to drive traffic into store. Never before has marketing been more important to the category. First you must focus on the core items that your customers love and consume regularly. If you’ve gone off trying to match Fast Casual brands and been changing up your menu it creates confusion. The key is to simplify your menu offerings. Use ordering data to create a streamlined menu strategy. We call it focusing on the craveable core offerings. Second, is to leverage limited time offerings on those core items to drive traffic.

It doesn’t mean discounting either. Many brands find success in reminding core guests and lapsed gusts about the items they’ve been enjoying for sometime. It acts as a reminder that you’re here and implies a discount when you show the price as limited time. In addition, LTO’s are great ways to give new customers a reason for trying your brand. Of course if you really want to be aggressive offering your LTO at a discount never hurts and can actually drive considerable traffic. Ok so now you’ve streamlined the menu to focus on your core offering. and put in some near term traffic driver offers, what next.

Now it’s time to think about the long-term success of your marketing program. In this third step to success conduct a media audit of all your spending and it’s efficacy at driving traffic and sales. Are you spending in the right places and getting an effective reach and frequency with your messages? The bottom line is without awareness you can’t build sales. We know through our years of research there is a direct correlation between awareness and trial. Share of voice equal share of stomach, as we like to say.

Analyze and optimize

When examining the digital components of the plan use advanced, precision targeting to grow your audience. What you will be doing is targeting the type of people who have shown a liking to your offering. It’s all about finding lookalike audiences to grow your base of customers. Look at geographic, demographic and interest based data of your core audience to date. Finally, deploy your new plan with a test and optimize mind set. The beauty of today’s media landscape is our ability to continuously analyze the performance of each channel.

As you examine the information make revisions based on the data collected. Within each channel you can optimize for ad types, audiences messaging and so much more. The test and optimize approach gives you flexibility to react not to ad performance but also market conditions. Perhaps you have a weak day part. Perfect opportunity to test and optimize ad units promoting that period.

The fact remains not every casual dining concept can survive these challenging times for the industry. As in all industries the strong survive. But so do those that pivot and change and don’t let the chaotic times control their destiny. Having the right tools and concepts and discipline to deploy them will push to success. Because, success depends more on what we do than what the world does to us.

Listen to the companion episode of the F&RM Podcast for this article.