In 2019 the total value of food deliveries worldwide is estimated to be $107 billion (ref: Statistica) and around half of that will be delivered by third-party delivery apps. Some of these third-party platforms are showing astronomical YoY growth rates such as DoodDash in the USA which recently expanded revenues by a mind-blowing 216% year-over-year. They are two staggering statistics that point to a future where many restaurants will do more revenue on delivery orders than on dine-in orders. That is something few would have envisioned only a few years ago and, unless you’ve always run pizzerias or Chinese takeaways, is the biggest change the restaurant industry has seen for decades.
When restaurant owners are considering putting their business on one or more of these apps there are some obvious questions they need to ask themselves:
- Is it economically viable?
- Do we have capacity in the kitchen to meet the extra demand?
- What will the Customer Experience (CX) be when our food arrives at someone’s door rather than a table in our restaurant?
- What, if any, impact will delivery have on our dine-in customers’ experience?
It is these final two questions that I am going to cover in more detail here but I will touch on the others in the process.
Customer Experience Factors to Consider when using Delivery Apps
If you’ve used a delivery app to place an order you might expect to see customer feedback on the business-facing app because they routinely ask for reviews and ratings. However, that is not the case. Most, if not all (are there any exceptions?) delivery apps do not pass this feedback onto the restaurant. Normally the only way to access it is to log into the app as a consumer and have a look at your reviews from the customer’s perspective. Delivery apps closely guard their user data because they know the value of it. That means it’s up to you the restaurateur to figure out what works in a delivery context and/or find your own way to get feedback. The following questions will help you get there.
What food should you offer for delivery?
This is the first question any restaurateur should ask before getting started on GrubHub, Deliveroo or Doordash etc. Many restaurants feel obliged to offer their full menu for delivery but this is not a necessity and can be a costly mistake. Different dishes will be more or less suited to delivery for a variety of reasons, such as:
- They do or don’t travel well
- They do or don’t have the margin to cover the delivery commission
- Packaging considerations (see next section)
I would recommend testing what travels well and what doesn’t. Put the food through a dummy delivery process (i.e. box it up, put it in an insulated bag and then bounce it around for 15–20 minutes) and then serve it like someone would in their own home. Then assess what dishes look and taste like. Doing this kind of test upfront can add a lot of value in terms of brand reputation and repeat orders.
Working out the financials should be relatively straightforward, though it is much more complicated than simply deducting the delivery app margin. You need to take into account the lack of beverage orders in a delivery context and most importantly the extra packaging costs you incur, which can even add to labour costs, in the same way transcribing orders from a tablet to your POS can.
What packaging should you use for delivery?
When you serve a dish in-house you’re typically serving it on reusable plates and bowls while the food is piping hot. That is not the case with delivery and the choice of packaging can make or break the delivery side of your business on both a financial basis and a reputation basis.
Some businesses have taken the packaging impact on CX to a whole new level. For example, Zume Pizza has re-engineered the pizza box to stop it bouncing around in transit and also reduce the sogginess of the pizza base when delivered (the surface on which the pizza sits is uneven). This is very important should the delivery driver decide to pull a wheelie en route to your home (that does happen), which will result in your pizza becoming a whole lot less appetising. The fact that customers tend to blame the restaurant for problems rather than the delivery company should sharpen the mind even more.
Other factors might relate to the number of pieces of packaging required to deliver a particular dish (particularly relevant where items need to be added to another dish such as croutons for example) and of course, sustainability should always be considered. Do you really want to be a restaurant where a customer orders a meal and then fills up a bin with disposable plastic containers?
If you don’t get the packaging right your food might arrive at the customer’s table looking extremely unpalatable. No matter how good something tastes, appearances will have a big impact on what people say about your food. Instagram is a double-edged sword!
How does delivery impact on dine-in customers?
There are two separate issues to consider here.
1. Does delivery demand impact on restaurant service timings?
Few, if any, restaurateurs would tell their staff to prioritise delivery drivers over the people sitting in their restaurant. The dine-in customer is generally going to spend more and there is no commission to be paid. However, if your kitchen gets a spike in delivery orders and is not equipped to deal with it, your dine-in customers are going to suffer on some level and this is a very real danger of delivery apps (think Valentines Day or similar). The option is there to simply stop taking orders but the ideal scenario is to have flexibility built into your operation both in people and space/equipment terms. Modern restaurant kitchen design is taking this into account.
2. Do you have an appropriate waiting area for delivery drivers?
It’s not just the kitchen that needs to be looked at when it comes to delivery capacity. Most restaurants are laid out to accommodate as many tables as possible with a small area for walk-ins and/or customers waiting for their table to be cleared. If you have a strong demand for delivery you could have four or five delivery riders waiting at any one time. The customer experience of your dine-in customers could be badly affected by a procession of sweaty riders lingering beside them during a romantic meal. In some cases, it may make sense to lose a table to accommodate delivery riders but that would be another line in your financial analysis of the profitability of the delivery side of your business.
Tracking the Impact of Delivery Apps on Customer Experience
The only way you can be sure that the customer experience of your delivery operation is good and is not damaging the dine-in experience is to track it in both contexts.
You could rely on a combination of the consumer side reviews in the delivery app and TripAdvisor reviews of the restaurant. However, due to the small sample size (few feel the need to post public reviews) and difficulty managing the data across multiple locations, this is not a very reliable method and could lead to poor decisions being made.
There are lots of ways to capture feedback in a restaurant and we have previously outlined 5 of the best here. Delivery is a little more challenging but our clients are seeing good engagement using a survey bot over popular messaging apps like Facebook Messenger.
An added benefit of capturing feedback from delivery customers is it gives you an opportunity to capture marketing emails and permissions. Delivery apps do not identify who the customer is so you have no idea if order 12345 is from a new customer or your oldest and most loyal customer. Once you have their details you can then attempt to convert them to your own app/delivery service or entice them to visit your premises next time, thereby reducing the revenue lost to commissions in the future.
There is no doubt that delivery apps will play a major role in the foodservice industry for the foreseeable future, so most restaurants should at least consider using them as a channel. But they are definitely not a good fit for every restaurant or even every dish, so be sure to do your research before jumping in.
Some might think that there is no downside to listing on these apps for a short period to “test the water” but that’s not entirely true. When you list on one of these apps you are doing two things that could have a lasting negative impact on your brand if you subsequently delist:
You have handed over a lot of data to the app so, if your Vietnamese food was popular, the app is likely to seek to replace your offering with a similar one to fill the void (in some cases that might be an own-brand offering controlled by the app itself). That could result in permanently lost market share.
There is also a good chance a few (or many) of your core customers will have used the app to order food from your restaurant during your test. Unwittingly, you may have opened their eyes to a whole new world of options which reduces the frequency with which they order from you. This is a good reason to think twice about putting that sticker on your door.
Hopefully, this post does not come across as anti-delivery app because that is not the intention. Lots of food service businesses will be much more profitable due to their presence on these apps. However, this will not be the case for some restaurants and in such cases, it is probably better not to get involved in the first place.