Third-party food delivery models evolve as demand accelerates

Nov. 13, 2017 | by Elliot Maras
Third-party food delivery models evolve as demand accelerates

Photo courtesy of iStock.

Given that third-party restaurant delivery services are springing up everywhere, it was no surprise that a panel discussion on the topic was one of the best attended sessions at October's Fast Casual Executive Summit at the Nashville Omni.

Kevin Lee notes that Papa John's Pizza and Jimmy John's are actually delivery companies, not restaurants.

Kevin Lee, CEO of Sushiyaa and Menooing, began the session by observing that Jimmy John's and Papa John's Pizza are not sandwich and pizza companies, but delivery companies. This statement encapsulated the important role that delivery has taken in today's foodservice industry.

Moderator Kent Savage, founder and CEO of Apex Supply Chain Technology, followed up by text polling the audience with some questions on restaurant delivery. The polling demonstrated the importance many restaurants currently place on delivery. 
Asked what delivery experience is most important to customers – restaurants' own drivers, third-party delivery, in-store order pickup or "other" – third-party delivery and in-store order pickup tied for number one.

Asked to name the most significant challenge posed by providing delivery with your own company's drivers — maintaining food quality, managing staffing/operational issues, meeting customer delivery expectations and "other" — managing staffing/operational issues was far and away the top answer.

Asked to name the greatest challenge third party delivery poses to restaurants — maintaining food quality, incorrect order information, congestion/confusion during order pickup or "other," maintaining food quality was the top challenge.

Moderator Kent Savage polls the audience on foodservice delivery.

Another question gauged audience concern about the immediacy of third party delivery's impact on their business. 

Asked if delivery to fast casual restaurant customers will increase substantially, increase slightly, stay the same or decrease substantially in the next 12 months, most attendees answered "increase substantially."

When the same question was asked regarding in-store pickup for fast casual restaurants, the answer was the same — it will increase substantially.

Savage, whose company supplies pickup lockers, said the Cincinnati Reds tested pickup lockers for mobile food orders. This past season, fans ordered and paid for food using the official MLB Ballpark app. The stadium food was placed inside self-serve lockers, which alerted the customer when the food is ready. 

Savage also showed clips of some Little Caesars' commercials demonstrating a pickup portal for call-in orders at Little Caesars' restaurants.

Stephen Dutton, consumer foodservice associate at Euromonitor International, gave some statistical perspective to food delivery service.

Stephen Dutton cites several examples of foodservice delivery experimentation.

He said foodservice delivery will increase by 9 percent annually for the next five years, outpacing the growth of non-delivery foodservice. He pointed to three factors behind this trend: technology (mostly mobile ordering), convenience and competition.

Experimentation continues

Dutton also gave examples of the type of third-party experimentation taking place.

He pointed to Green Summit Group LLC, an online food delivery company offering 14 internally curated food brands, as example of a new crop of restaurants being built for the purpose of delivery. Calling Green Summit a "virtual restaurant," Dutton noted the service operates strictly on Grubhub.

Dutton also pointed to Deliveroo, a U.K.-based food delivery service, which launched Deliveroo Editions this year, hubs that host hand-picked restaurants that rent space in a facility that is designed for delivery. 

According to its website, Deliveroo partners with restaurateurs who design their kitchens hosted in a Deliveroo Edition. Deliveroo Editions are made up of hundreds of people looking at everything from the packaging the food arrives in to the way the kitchen is built and run for delivery.

In Stockholm, Sweden, a company called Foodie Bag provides a delivery service for restaurants on a subscription basis, similar to Blue Apron, Dutton said. The restaurants provide the ingredients and the recipes.

"There appears to be a demand for that kind of service," Dutton told Fast Casual.

 

Jennelle Brown notes delivery service allows brands to maximize the use of their real estate.

Maximize real estate

Panelist Jennelle Brown, vice president of operations, training and human resources at Uncle Maddio's Pizza, said brands are realizing that offering delivery allows them to maximize the use of their real estate. She said larger brands will be active in both onsite foodservice and delivery.

"They can feed off each other where they can feed off each other while reducing costs," she said.

People today still want to go out to eat, Brown said, but they also want to eat meals at home.

Brown also said third-party delivery can create bottlenecks in a restaurant.

If there isn't a separate space for preparing orders for delivery, customers in the restaurant mistakenly think the delivery orders being prepared are actually their own orders – being improperly prepared.

"You've got to figure out a way to deliver where it doesn't interrupt consumers who are already there," Brown said.

The panel conveyed the rising importance of foodservice delivery, and the fact that the industry is currently in the process of developing viable business models.

Photos by Matt Tilbury.

Registration is now open for the 2018 Fast Casual Executive Summit in Seattle. 


Topics: Customer Service / Experience, Fast Casual Executive Summit, Operations Management

Companies: Apex Supply Chain Technologies



Elliot Maras
Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.

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