From Deliveroo to DoorDash, to Uber Eats, Amazon Restaurants, and more recently – food ordering through Facebook, it seems like if you don’t occupy any real estate on third party delivery apps these days, you’re missing out, right?
Societal preferences are changing, with an increasing number of consumers calling for quick, convenient and personalized experiences that take the load off their busy lifestyles. And what could be more convenient than having your favourite meal delivered to the comfort of your own home for a Netflix night in, or directly to your desk when you’re too busy to leave the office?
Delivery marketplaces are monetizing on this shift; there’s hardly a quick-serve or fast casual restaurant in town that isn’t trying to get involved. As such the global food delivery market is booming; worth $115Bn in 2016 with a forecasted growth rate of 8.5% p.a 2016-2021.
But it’s important to note that delivery isn’t a ‘quick win’. Operators should approach thoughtfully before entering or expanding into the delivery marketplace to ensure they maximize the opportunities available to them.
Top three delivery considerations
- Commission Third party delivery platforms (the most accessible and only option for delivery for many independent restaurants) charge a commission rate of up to 30%. With increasing cost of goods and tightening margins being seen across the hospitality sector, this is a wedge many small-to-medium sized businesses can’t afford to give away.
Delivery providers generally do not integrate with point of sale (POS) systems (though we are starting to see signs that this is changing). Typically, each service comes with a tablet that either displays or sends to print the orders for delivery, which then have to be manually entered into the POS, leaving scope for human error. Furthermore, with multiple providers, comes multiple tablets, and more counter space required to host the hardware.
- Brand control
By allowing a third party to represent your brand, you risk creating a disconnect between your customer channels. If the delivery app is not designed with the same look and feel as your own digital channels, you won’t be providing a seamless customer experience from end-to-end. It also means you’ve lost the ability to have any say over the journey entrance point; the first point of contact with the customer and the most important stage when it comes to attracting new guests. There’s also an important point to note with regards to data – some platforms do not give you access to customer information, meaning you have no relationship with your delivery guests. Not only is this a challenge for customer communications (alerting them to a move to a new delivery platform, for example) it also means you can’t include them in your targeted marketing activities.
Benefits of in-store innovation
Although the proportion of guests looking to order for delivery are increasing, just as many want to dine in-store. And customer preferences are changing in-store just as they are off-premise. Indeed, 84% of diners surveyed by SalesForce in 2017 said a quick and efficient service is important in judging dining experiences, while 56% are willing to share data for faster and more convenient service.
Brands are reacting to changing customer preferences by providing self-service channels powered by quick service software that give guests the flexibility to order and pay when they want. Popular self-service channels typically found in-store include Kiosks, Self-Checkouts and Pay at Table or Order & Pay At Table solutions.
At Table technology is becoming increasingly popular amongst table service restaurant operators as it can remove one of the biggest bugbears of eating out (having to wait for the check) without disrupting the quality of service. It can also be run on the consumer’s own device, meaning no hardware costs. By pointing their phone at a QR code on the table, or tapping the device against an NFC tag, customers can simply order and pay for their food themselves whenever they want, without having to flag down wait staff.
As well as reacting to the market push from customers for faster and more seamless experiences, self-service technology comes with a host of secondary benefits for the operator, including but not limited to:
- Average Transaction Value increase of 20%
Through the pushing of cross-sells and upsells, teamed with clever menu design that taps into customer psychology, the average transaction value of every order made through a guest-facing self-service channel increases by 20-30% compared to those made at a manned cashier. And the proof is in the pudding, with Panera Bread making $1 billion in digital sales in 2017 after rolling out self-order kiosks, while McDonald’s stock prices grew by 45% the same year after implementing its Store of the Future Business model, which includes an order ahead and in-store kiosk element.
- Return on Investment – 12 months or less
Self-service technology tends to achieve a remarkably fast ROI, with operators breaking even around the 12-month mark, and even less for channels that don’t involve any hardware outlays, such as Order/Pay At Table apps. Check out this quick 3 minute video with QikServe CFO Sam Peachey for a high level overview of ROI and how it relates to self-service tech.
- One platform to rule them all
By using a platform provider as opposed to working with different suppliers for each of your guest-facing channels (i.e. Kiosk, Mobile, Order & Pay At Table Apps) operators can integrate all touchpoints into a master data exchange service that harnesses the power of POS, CRM systems, payment solutions, loyalty and more to inform a single point of truth for all customer data. Having one partner and one dashboard control not only reduces operating costs, it also makes it easier to extrapolate data and quickly discern what is working for you and where your blockers are.
Blending in-store and delivery: it’s all in the mix
The most successful fast casual and quick-service brands understand that utilizing a mix of self-service channels that engage customers off-premise and on-premise presents the golden opportunity to strengthen the customer bond; boosting loyalty and return visits.
Examples of thoughtful self-service digital strategies include Taco Bell and McDonald’s. McDonald’s new business model incorporates delivery, kiosk and mobile order ahead touchpoints, while Taco Bell focusses on delivery and kiosk. Both were planned after conducting meaningful research and iterative pilot phases. In return, the companies are seeing huge financial benefits. Taco Bell is on track to grow to $15million, while McDonald’s stock prices grew by 45% in 2017 after implementation of its Experience of The Future business model. Today, in FY 2018-19, they are still showing no signs of stopping (increasing 4% in Q1 alone).
For most restaurant brands, delivery represents a growing customer market that simply cannot be ignored. At $115Bn globally (2016) and growing 8.5% p.a it represents a major shift in the hospitality sector. So long as operators act thoughtfully and pick the right delivery platform for their brand – it can and should become a core branch of your digital strategy. However, it’s important to note that there will always be a need for in-store dining experiences and those customers’ preferences are changing just as fast as those ordering from their homes or workplaces. A successful digital self-service strategy listens to what the customer wants then incorporates a mix of digital strategies that looks to meet the guest at every entrance point, ensuring a truly seamless and omnichannel experience. And with a strong self-service strategy should come a host of benefits for operators too – ranging from a boosted bottom line and fast ROI, to integrated data sets and increased operational efficiencies. It’s all about finding the right mix of channels for you.