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Food Delivery Services Are Booming

Consumers are watching their dollars. Diners are changing their social habits considerably, opting for off-premise dining, and relying on digital delivery channels to place their orders and manage the process.
3/20/2023
a person preparing food in a restaurant
About 60% of consumers order takeout or delivery at least once a week, with online ordering growing 300% faster than in-house dining.
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It has been a difficult few years for the restaurant and hospitality sectors. The COVID-19 pandemic wreaked havoc on the industry and just when we thought we were coming out the other side, a whole new set of difficulties were thrown into the mix. Supply chain issues, labor shortages, and of course the threat of a global recession, have put pressure on all industries.  While times have been challenging for restaurants across the United States, the obstacles have also encouraged business owners to get creative and to embrace new technology.

Food delivery services have dramatically increased in popularity in recent years, and have become a crucial revenue stream for restaurants in the midst of inflation. For businesses, improved technology has meant that any restaurant can offer home delivery, with customers opting to save money by sidestepping the additional costs of a night on the town. Instead of spending their hard-earned cash on big nights out, customers are changing their social habits considerably, opting for off-premise dining, and relying on digital delivery channels to place their orders and manage the process.

A Weekly Habit

According to a recent Fundera report on food delivery and online ordering statistics, 60% of American consumers order takeout or delivery at least once a week, with online ordering growing 300% faster than in-house dining. The report goes on to note that since 2014, online ordering has increased at an astonishing pace. Of course, the numbers are somewhat skewed by the restaurant shutdowns due to COVID-19, but it is no secret that demand for digital ordering and delivery is trending in the opposite direction to the demand for in-house dining. 

Figures released by Statista predict that the online food delivery market in the United States will reach $231.3 billion in 2023, and will be on track to hit a value of $384.7 billion by 2027. The growth, thanks in no small part to the modernization of technology, has resulted in substantial demand for eateries to provide customers with the most efficient service possible. A separate report from Statista notes that the share of consumer spending on delivery and takeout in the US is currently sitting at 63 percent of the industry income. 

But, it’s not as simple as offering home delivery and expecting everything to fall into place. In today’s digital world, customers are always looking for more. They want convenience, value and added extras when it comes to ordering online, and restaurants that offer that little bit more will invariably come out on top. It is imperative that software solutions can help restaurants to operate efficient delivery at scale, and if that can be done while providing end customers with a branded delivery tracking experience from kitchen to home, then it’s a win-win. For businesses, it’s all about staying on top of the competition and if you can provide an improved experience and outcome for both the restaurant and the customer, then you’ve definitely hit the jackpot. 

Of course, in addition to embracing new technology to enhance food delivery services, restaurant brands are always searching for new ways to maximize profits and one of the hot topics at present is dynamic pricing. Across the US, restaurant owners are examining ways in which they can optimize profitability, and adjusting prices at various times of the day or week, based on customer demand, is very much in focus at present. While it might be a relatively new concept in the restaurant sector, dynamic pricing has been around for years and has worked across many different industries. It seems likely that we will begin to see more examples of this across the restaurant industry in the months ahead, and in most cases, it will probably be a case of trial and error. Communication with customers will be crucial for the success of dynamic pricing however, to ensure they retain control over the price that they pay.

A Creative Tip

An interesting twist on both food delivery and customer satisfaction, last year, saw one of America’s most popular pizza restaurants introduce a novel approach to tipping. Domino’s Pizza, at the time, had seen a decline in sales – the first in a decade – and was having difficulty finding enough drivers to meet delivery demand, having always operated with just in-house drivers. The company attributed the shrinking sales to the nationwide worker shortage, which they said had largely led to insufficient delivery drivers for the company. In a novel approach, they decided they would give customers a ‘tip’ for picking up their own pizza. The chain offered customers $3 to use on their next carryout order, with customers claiming more than 17 million carryout tips during the first campaign in early 2022. It was so successful, in fact, that they reintroduced the offer in December. 

While Domino’s used this marketing strategy to its advantage, the story also highlights the labor difficulties in the restaurant industry, and the importance of ensuring customers are not left waiting. It’s true that off-premise dining has rocketed in popularity, and capitalizing on this opportunity has never been so important. There is huge demand, at present, for automated dispatch and smart driver selection. Some restaurants use their own delivery drivers, while others rely solely on third party fleets. The sweet spot, surely, is somewhere in the middle, guaranteeing that fulfillment levels are never compromised and ensuring the customer will be coming back for more.

 

About the Author

Brian Hickey is Chief Executive Officer and Co-founder at VROMO. Born and raised in Ireland, he studied Business in Dublin Institute of Technology, specializing in Finance and Marketing. A serial entrepreneur, Brian has extensive global experience in the food and beverage markets, having worked at C-suite level with a number of major international food brands and delivery companies such as Procter and Gamble, Danone, Innocent Drinks and Just Eat. In 2018, he invested in and became a board member at delivery firm, WeBringg. The following year, having acquired a software solution company that supported hot food delivery, the business pivoted to a SaaS model and rebranded as VROMO. Brian became CEO of VROMO in 2021 and has been overseeing the company's growth in the North American market ever since.

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