As restaurants have struggled to accommodate the need for meal delivery during the pandemic, a number of cities have stepped up to limit the steep fees third-party delivery providers can charge. Restaurant Business reported in late July that Philadelphia – which had just joined the effort alongside cities including New York, Los Angeles, San Francisco, Oakland, Portland, Ore., and Washington, D.C. – would immediately cap total fees on delivery orders at 15 percent. The report said delivery commissions could not exceed 10 percent of the order total, and separate nondelivery fees could not surpass 5 percent – until 90 days after the end of the current public health emergency. As for what happens in other cities, and, for that matter, across the country after the threat of this pandemic passes, restaurants need to dissect their data and understand their customer base so they can negotiate the best terms of third-party contracts. Even with the major providers, there is room for small restaurant brands to bargain – particularly as provider consolidation remains likely. This Fast Casual report (https://bit.ly/33vocmi) provides some tips about the best ways to secure a fair deal with third-party companies – including what you should know about your profits, customer habits and existing ordering channels to get the best leverage when negotiating an agreement. If you think in-house delivery might work for your restaurant with a little guidance, you can also check out the Native Delivery Best Practices Work Group, an effort launched by the Restaurant Technology Network.
As the easing of restaurant dining restrictions in states across the U.S. has given restaurants a bit of a reprieve from the plethora of economic challenges COVID-19 has caused, it may be difficult to even stop for a moment and ponder the challenges ahead. But as temperatures cool around many parts of the U.S., potentially making outdoor dining less appealing, restaurants will need an airtight off-premise sales structure to sustain business. Many are struggling with that. In new survey research released by Upserve, 47 percent of restaurant operators who responded said their biggest challenge of the past several months has been shifting to a new business model such as online ordering and delivery. Meanwhile, between February and April, Upserve found that online ordering grew 3,868 percent. As winter approaches, how can you fortify your online business and ensure you’re not losing delivery fees to third-party providers? Is your website (and if applicable, your app) easy to navigate for people looking to place an order? Do you make dishes easy to customize due to customer preference or health requirements? Is your menu efficient to prepare and stocked with items that are just as tasty upon delivery as they are served in your dining room? If you offer delivery via third-party provider, are you communicating to customers how much it helps you if they pick up their order instead? Can you entice customers to pick up their order in exchange for a discount or other benefit? People will still crave restaurant food as the virus persists into the cooler months, so how can you streamline the process of connecting them with yours?
At a time when food delivery providers can charge commissions on the order of 30 percent, restaurant delivery is facing pressure to evolve – and fast. The good news is that new models are appearing all the time – and they are building on the community spirit that has been on the rise since the start of the pandemic. Fare is a new commission-free food delivery service that CaterCow just launched in New York City. Instead of delivering small, individual orders, it offers a select menu of foods that must be ordered in advance and are then delivered in bulk to a person’s door within a specific building or neighborhood. While it requires some planning and coordination across households, the only charge is to the recipient, who pays a delivery fee (which starts at $3 and climbs based on the size of the order, according to Restaurant Dive). The restaurant keeps the rest. As restaurants have had to close in recent months, or even in the best cases, adapt their models to the current environment, consumers have become increasingly aware that restaurants need patrons to meet them halfway. That may translate into a willingness to forgo some convenience for the sake of ensuring a restaurant’s profits. Can you entice your customers to adapt to picking up meals themselves if you offer a discount or a free item in exchange? Could you mine your tech to identify pockets of customers, then offer a deal to cost-effectively deliver meals in bulk to apartment buildings yourself? Could you partner with nearby restaurants to share a delivery team? Now is the time to think creatively about how to get food to customers – and to tell them how they can best support you.
Everyone needs to eat – but the experience of eating at a restaurant or enjoying restaurant food is something that will keep consumers coming back to your business, particularly if they have had to cook for themselves for several weeks on end. Recent Toast research found that 78 percent of Millennials would rather spend money on an experience such a restaurant or activity than on an item at a store. Whether guests are dining at your restaurant right now or opting for delivery, you can fine-tune the experience you offer. First, focus on making your brand come through effectively via delivery. Ensure your menu of delivery items travels well and represents the best of what you can offer off-premise – and take care to update it online, particularly if you have introduced new items recently. When you send out an order, help customers connect with your business – Deliverect suggests small acts like a handwritten note or a smiley face on a receipt can go a long way, or you can enclose a small photo of your team to introduce customers to the people who are working hard for them behind the scenes right now. Provide vouchers or other promotions to increase future deliveries and in-house orders. Think about how you can get people back to your restaurant once people are ready to dine out again: Stay in touch with other business owners in your community to plan potential events together, and keep your conversations with guests going on social media (share some photos too) so you’re front of mind for them when they are ready to dine out.
In recent months, your business may have offered more bulk meals or meal kits to customers looking to enjoy restaurant-quality food during the lockdown. Are these options worth carrying over as people begin to return to dining at restaurants and gathering with more people? Simon-Kucher & Partners, a global strategy and marketing consulting firm that works with a range of major restaurant brands, addressed this question in a recent study they conducted about consumer behavior after COVID-19. The findings, as reported by QSR Magazine, indicate that the answer is a probable yes. Prior to the pandemic, it found that 33 percent of consumers favored home-cooked meals, while 67 preferred food prepared away from home. Contrast that with preferences during the pandemic (55 percent vs. 45 percent) and preferences projected between six and 12 months post-lockdown (37 percent to 63 percent). In many areas, it will likely take a number of months before consumer routines return to what they were like prior to the pandemic. Providing some core menu items that can be offered as family-style meals, or packaging up ingredients that can be combined and cooked at home, can offer some additional freedom to guests – and perhaps tip the scales in your favor when consumers are considering where to order their next meal.
The pandemic has made the need (and demand) for efficient restaurant food delivery even clearer. If you operated a dining room before but don’t see it being a practical business move going forward due to physical distancing and capacity requirements, you may be considering going the virtual route, with a focus on driving off-premise sales. This doesn’t necessarily require moving to a new location. Depending on your leasing status and the flexibility of your landlord, you may be able to transform your current business and space into a ghost kitchen. If you need help to convert your existing business into a digital business call Team Four Foodservice.
The experience of sitting down at a restaurant, ordering a favorite meal and enjoying the service is something so many people are craving right now. But for a lot of operators looking to reopen, the math doesn’t look workable – at least right now. The need to create extra space between tables, significantly reduce overall capacity and limit the kinds of in-person interactions that once helped define service will lead to a further reduction in previously slim margins. So what are operators – particularly those relying on full-service business – to do? Take the creativity you used to develop your business, menu, brand and service and channel it into reinvention. With so many small businesses trying to keep sales flowing, it’s a time when experimentation is needed and missteps are more easily forgiven. Depending on the flexibility of your space, whether you own or lease your property, what extent you can adjust your restaurant’s layout and hours, and the limits of your imagination, you may be able to make sweeping changes. Do you serve a popular seasoning, sauce, wine or other item that can be packaged and sold in a corner of the space you once used for seating? Can you open a small greenhouse in your parking lot and grow foods for sale – or even for your business use at a time when staples like lettuce can be difficult to source? If off-premise dining becomes the norm in the long term, can you restructure your space to accommodate a deli case full of sandwiches and salads to go or expanded catering options? At a minimum, take a close look at your menu to ensure you are maximizing your revenue while seating capacity is limited. People who enter the restaurant industry tend to have vision, learn on their feet, and carry on in the face of risk. It’s time to use all of those traits to your advantage.
In March, restaurant traffic dropped by 22 percent compared to same period last year, NPD reports, but on the other hand, digital restaurant orders increased by 63 percent and delivery by 67 percent during the month. While operators have long struggled to make delivery work financially, particularly when using third-party providers, the uncertainty of the past couple of months has made the need for delivery ever clearer. So how can operators make the numbers work? In some parts of the U.S., restaurant co-ops are popping up that are providing delivery. While they were developed as a means of helping community restaurants survive the economic challenges of the pandemic, creative solutions like this may be needed on a more permanent basis going forward. Perhaps they are an option for you.
A recent Forbes article pointed out that before the pandemic, the average person visited a store to buy food 2.2 times per week but, according to Zagat, went out for lunch or dinner 4.9 times per week. Pre-pandemic, were restaurants missing opportunities to create new business streams with customers via packaged foods and products – whether those products were directly related to the restaurant or not? As many restaurants are currently offering specialty food items, housewares, branded products and even everyday household goods like flour to bring in business during the pandemic, these changes are ones that could well be worth making permanent if they can help you build closer connections with your customers. As many people are getting into a cooking rut during the pandemic, could you provide a recipe along with specialty olive oil, sauce, cheese, wine or bread could help them recreate a part of your restaurant experience at home? Partnering with other local businesses to find opportunities to cross-sell products or plan future events can bolster your public perception too. Brand perfection isn’t necessarily critical right now either – your ability to be human and understand people’s needs is most important. Are there hidden revenue streams – or opportunities for community support – that you can uncover right now?
Sure, having your customers contact you directly for food is best. But if you are delivering food to customers right now or wishing you could, the pandemic is putting some pressure on aspects of delivery that have been pain points for the industry. One possible example of this is Toast Delivery Services, which just launched a platform aimed at helping operators during the pandemic and beyond. It allows restaurants of all sizes to tap into a local delivery network and pay a flat, per-order service fee under $8 to deliver food within a five-mile radius. No purchase of Toast POS systems or hardware is required.