Considering delivery? Why it pays to do this first
Earlier this week, a study showed that foodservice delivery will grow an eye-popping 51 percent by 2021. Daily, new players enter this category, which is already well-populated by existing traditional third-party and in-house delivery services.
Meanwhile, huge chains, like Domino's, partner with with equally huge automakers, like Ford, to essentially "put the pedal to the metal" on self-driving car deployment, with delivery top of mind.
The message is clear and QSRs are receiving it: Delivery makes the future world of foodservice go 'round. That's one reason why we recently pose questions to Euclid Analytics CEO Brent Franson on what this soaring increase in on-demand food delivery means for the future of fast food chains.
We learned that research indicates that convenience and experience — underpinned by solid "numbers don't lie" data — must be one of the major priorities for quick-service restaurants in the rough-and-tumble day-to-day competition of the on-demand economy.
But, Franson made it clear that simply employing technology, like specific digital services or even robots and drones, is not the answer. Quick-service operators must first know their diners intimately in order to effectively create and expand delivery services — and then they must keep those diners satisfied.
Q: What are you hearing right now from your QSR clients regarding delivery and current market demand?
A: Our QSR clients are clear: Technology has become a major disruptor for the quick-serve industry. Their customers are mobile-first and expect convenience and efficiency to be at the forefront of their consumption experiences.
On-demand delivery has fulfilled this expectation and, with just the click of a button, customers have access to a variety of restaurant options with delivery straight to their door. Customers no longer expect to travel to a location, stand in line and wait for their food to be prepared.
As a result, QSR chains are aware that they need to stay ahead of the technology curve and ensure that they provide a convenient and seamless experience in order to satisfy these changing expectations and appeal to millennial and Gen Z diners.
"Imagine being able to service more diners — obviously very good for revenue — and increase brand awareness in the process. Hard to say no to that, especially when you may reach folks who might not have visited their locations in person. "
Q: What of services are QSRs you work with considering for delivery, and what kinds of cautions should they take into consideration?
A: Companies such as Postmates, GrubHub, UberEATS and Caviar are attractive because they can extend the existing reach of QSRs, while alleviating operational pressure to staff up to handle food delivery and on-demand ordering.
The downside, however, is the addition of a middleman between restaurants and their diners — they lose that touchpoint and ability to build a one-on-one relationship that pays off over the long term.
Brands also need to ensure that food quality remains consistent throughout the delivery experience, to avoid alienating customers and tarnishing the brand’s reputation.
Q: Robots, drones and self-driving cars are all being eyed as potential delivery services, but where are QSRs focusing most of their interest in at present?
A:[In whatever ways] technology revolutionizes delivery, it will no doubt be centered on what brings the greatest convenience and speed to patrons in the most cost-effective way possible. Right now, that’s cars and that’s likely to be the case for some time. We’re in the very early days of alternative delivery.
Q: There is a lot of news surrounding automated delivery — for the novelty if nothing else. What do QSRs you work with see as the benefits of automating delivery?
A:Scaling up while reducing operational complexity and the need for staffing order intake through your own app or service or through third-party delivery services are the obvious benefits.
Imagine being able to service more diners — obviously very good for revenue — and increase brand awareness in the process. Hard to say no to that, especially when you may reach folks who might not have visited their locations in person.
Automating delivery also puts QSRs on the map of new customers who otherwise would not be able to travel to their locations because they are not as conveniently located near one of their restaurants. UberEATS is a great example of creating a marketplace that exposes people to what you offer even if they’re not nearby.
Q: What challenges do restaurateurs need to think about before heading down the automation path?
A: QSRs need to evaluate the importance of building direct and long-lasting relationships with their customers and if they are willing to sacrifice some of that connection by embracing automation. This really merits consideration on a case-by-case basis. QSRs need to ask themselves, will this align with our brand?
Q: What kinds of numbers do they need to see to make intelligent decisions about these options and their profitability?
A: Any QSR will tell you it’s much more profitable to keep a customer than acquire a new one. QSRs should think about how much they can grow their database from these services, either through building an audience for digital advertising or driving app downloads. [They must also consider] how their relationship could encourage additional visits and interactions. If the marketplace helps you acquire, but not bring customers back, then that’s a problem.
Consider the state of your customer base and whether days between visits are increasing or not. Do you have a huge lunch crowd but aren’t capturing the dinner diners? Truly understanding customer demographics and behavior ensures brands are leading with customer-centric thinking.
Secondly, evaluate your operational capacity: What’s the throughput of the kitchen relative to when people come in? Can you afford to take on more orders during some times versus others?
Q: What if a restaurateur simply feels he or she innately "knows" what the customer wants and installs a system without doing too much evaluation of the brand's numbers and customer characteristics?
A: There are several serious downsides. For example, lost customer relationships, higher average days between visits, noticeable deterioration of quality from maxing out kitchen capacity. In particular, a decline in quality can be a punch to the gut when it comes to a brand’s reputation.
QSRs should think about what they can do to build direct customer relationships, which may not be sustainable if they’re primarily gaining business from a third-party marketplace.
Q: What kinds of costs does a brand face to acquire the data needed to make informed decisions on how to handle delivery?
A: We always recommend to start with what you have — ideally minimal capital investment. Building one-on-one relationships with customers doesn’t have to be overly cumbersome or expensive.
QSRs might also consider becoming the face of the order intake to gain immediate access to their customer data. Although the cost of getting the data is higher, this fosters immediate relationships with customers. And those direct relationships encourage loyalty and valuable repeat business.
Companies: Euclid Analytics
Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.