Convenience and the Difficulties with Delivery (Restaurant Franchises)

Convenience and the Difficulties with Delivery (Restaurant Franchises)

by | Mar 29, 2019 | Blog, For Franchisees

These days, restaurant consumers have come to expect convenience and are increasing their demand for delivery options. More and more, they are demanding speed and reliability. For restaurants in the business of food service, the issue of delivery can no longer remain on the back burner. As discussed, in an article by Ron Ruggles in Nation’s Restaurant News, delivery “remains the Rubik’s Cube of service for most big restaurant brands outside of the pizza segment.” For many years, when restaurants offered delivery services, the restaurant itself was the provider. Now, with consumers seeking “on-demand service,” companies are going to have to consider whether they can provide delivery services and if so, whether they are going to engage a third party company to supply those services.

For some restaurant concepts and in some locations, offering delivery makes sense. For instance, according to Ron Ruggles’ article, the CEO of New York based Just Salad, with more than 30 locations, believes that delivery “remains a growing part” of the business. And this may be the case where delivery services in New York are well established. But what about other locations? Will consumers be willing to bear the costs associated with delivery services? According to Jeff Lawrence, Chief Financial officer at Domino’s Inc., “the economics of delivery will rule the day, particularly outside of dense urban areas such as New York and San Francisco.”

With third party delivery services costing as much as 20 or 30 percent of the check amount, it may simply be too burdensome for restaurants to use such service providers. Instead, they may have to up their in-house delivery operations.

And, questions remain as to which food segments may travel the best and what containers may help maintain quality.  According to Gus Lopez, general manager of Amazon Restaurants, “speed and reliability determine customer attitudes towards brands.” Says Lopez, “one of the biggest commitments Amazon Restaurants has, is focusing on the customer experience.”  According to data collected by Amazon, “customers who get orders within 30 minutes from click time to delivery time, when the food is still piping hot, vs. 50 minutes, report extremely positive feedback.”
It will be interesting to see what the future holds for restaurant delivery service.

Got questions? Feel free to email them to me, Julie Lusthaus at jl@lusthauslawpc.com  and let’s talk.

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