“We could go out for dinner, spend money on cabs, drink marked up bottles of cheap red, still wearing itchy scratchy polyester work apparel, or we could stay home in sweats, watch Black Mirror, the Bachelorette, or Stranger Things, drink as much as we want and still eat restaurant quality food. Hmmmm…” – Average Restaurant-Goer
It’s not that patrons don’t have fun going to restaurants, in fact, 65 percent of restaurant delivery users surveyed agree that it’s more fun to go to a restaurant than it is to order in.
With that said, it’s no surprise that delivery apps have become the new food fallback plan, and there’s no stopping the innovative developers creating them. From Eat24, to Seamless, to UBEReats, to Feast, the instant lunch game has turned into instant breakfast, coffee break, snacks, and dinner game. No matter how you slice it, delivery has long transcended it's Chinese food/pizza roots.
So what are the lasting effects of the trend towards delivery? In this article, we’ll look at exactly how new delivery options are affecting the restaurant industry.
The Need to be Technologically Agile
With the advent of delivery apps, all of a sudden, Domino's wasn’t a pizza company anymore, it became a tech company that happens to sell pizza. On-demand wasn’t just for TV anymore, it was for steak and potatoes, spaghetti and meatballs, Bánh mì, and Pad Thai. As RRE Venture’s Steve Schlafman put it: “Welcome to the Uberification of our service economy.” While recent reports stipulate that investments in new delivery and food tech might be slowing now that the big players have revealed themselves, one thing is certain: the consumer taste for delivery has been whetted and isn’t going to wane any time soon. For the restaurant industry, this means restaurant owners should be ready to adopt even more tech.
Business Insider Intelligence predicts that smartphone orders will make up more than 10% of all quick-service restaurant sales by 2020. The U.S. Census Bureau’s American Community Survey found that over 22.4 million consumers partake in on-demand services, with food and grocery delivery raking in some 5.5 million monthly consumers. With projections like these, it’s no wonder delivery apps are popping up as quickly as hot dog stands on a sunny day. For those who want to make a mark in the demand economy, the question isn’t whether or not they should incorporate delivery into their strategy, but rather, which platforms to use. As TechCrunch wrote, “Restaurants will not want to integrate ten different services into their workflow, and will naturally congregate towards the one or two dominant platforms, who drive the most significant volume of daily orders.”
Flexible, Scalable, Creative Kitchens and Business Plans
The majority of urban millennials (74 percent), said they would order delivery from a table-service restaurant if available. So, of course, restaurants are looking to get a piece of the pie. But customers’ expectation of delivery food has changed; they’re no longer satisfied only by greasy, cheesy, salty, carb-y fare. They want chef quality food at home. And while this is great news for restaurants who want to reach more customers, many kitchens are feeling the stress as they wrangle resources to fill the demand. Restaurants are faced with toeing a fine line; they must meet in-house diner’s needs and take out diner’s needs, without sacrificing food quality or service on either end.
But adapting isn’t as easy as downloading an app and magicking food to customer’s doors. It means restaurants have to come up with creative, innovative solutions in order to keep up with new demands on the kitchen.
What strategies are some restaurants using?
Some restaurant chefs are partnering with delivery apps and developing purpose-built menus so that they’re not overwhelming their kitchen, or delivering food that doesn’t transit well. Fries don’t last long, nor does saucy, soggy bread.
Others are devoting a portion of their kitchen line for delivery prep alone, depending on the demand they’re contending with.
Many restaurants are choosing to limit the timeframes in which they’ll deliver.
Of course, some restaurateurs aren’t so hot on tangling the logistics of delivery with their nightly dinner rush, so they're opting to choose an entirely different business strategy.
The Advent of Ghost Restaurants
For those tech savvy shops who understand the advantage of tech, but don’t want the stress of juggling service with delivery, behold the ghost restaurant. No, not a haunted restaurant like Toronto’s The Keg Mansion or New York’s One if by Land, Two if by Sea.
The newest phenomenon hitting city centers is the advent of restaurants which, while they have branding, a menu, Yelp reviews, and chefs, don’t truly have a brick and mortar existence. Instead, the Ghost Restaurant appears on delivery apps and the internet, sharing a kitchen with other phantom eateries. Ghost restaurants have seemed to naturally emerge as the delivery movement advances. From an operational perspective, they’re cheaper, more adaptable, and less risky to operate.
New York City’s Green Summit Group is probably the most well known curator of “cuisine concepts.” While the company itself doesn’t have an online presence, to Google them reveals a series of articles reactions to the lack of web prescence, and a series of job postings on LinkedIn and Indeed. And yet, the company has fifty chefs, eight restaurants, two kitchens, and delivers over 7,500 meals a week. Using delivery apps like Seamless, the meals are ordered and delivered without the complications of managing a seating or take-out or both.
While there are still flaws in the formula, such as food is delivered cold, orders take a long time to be delivered, or after all that waiting, the order is wrong, for restaurateurs, the ghost restaurant poses significantly less risk. As one article reported, “A Mediterranean-food idea that the partners scrapped totalled about $25,000 in sunk costs, as opposed to the $100,000 to $500,000-plus that a small midtown retail operation would absorb, by Zagor’s estimate.”
Although the future of ghost restaurants is yet to be seen, with Green Summit Group’s early successes in mind – their revenue grossed $10 million in 2015, and while the numbers aren’t in yet, anticipate some $30 million in 2016 – we’d be surprised if the ghost restaurant trend didn’t take off.
No matter what, restaurants with a successful pickup and delivery strategy are the ones making the most of technology. The key to making a tech-based delivery strategy happen? A POS that integrates with delivery apps so that no order or metric gets left behind. With the combined power of these technologies, managers are equipped to make sense out of sales numbers, develop accurate forecasts, and reign in inventory based on reports. This way, their delivery operation runs with without waste, with fewer errors, and with more foresight.
About the AuthorMore Content by Jackie Prange