A lot has changed in the past 9 months. Restaurants that wanted nothing to do with technology suddenly found themselves in desperate need of solutions. Order ahead has become essential for everyone, which means operators have had to learn a lot very quickly. As we close out 2020, here are four things operators should know.
1. Third-Party Delivery is Not a Necessary Evil
Many restaurants have turned to third-party delivery (3PD) throughout the pandemic. Despite the crushing economics, there is a sense amongst operators that they cannot survive without delivery services. As one restaurant owner in Texas put it, “We do it because the customers want it. [It’s] a necessary evil, I suppose.” Customers absolutely want digital ordering & convenience, but a relatively small number need it from third-party delivery.
Restaurants can ditch, or greatly reduce their dependence on third-party delivery by investing in solutions that enable them to directly engage with customers.
- Some brands are adding in-house or native delivery to their services. Here are some recent headlines from HT: in Boston, Spyce relaunched its robotic kitchen concept with an in-house delivery program. And native delivery alongside 3PD is offered at Wing Zone, which posted a 45% YOY sales increase. Original Chop Shop, Beef 'O' Bradys and Portillos launched an in-house delivery program. And Restaurant Technology Network (RTN) launched its Native TCO Calculator, a smart spreadsheet packed with precise formulas for evaluating delivery models.
With the right order ahead, curbside, and contactless payments technology tech restaurants can steer customers away from 3PD. If third-party delivery is a must, though, restaurants should look to reduce commissions by locking in exclusivity with one provider and offering delivery with that provider through their own online ordering platforms.
2. The On-Premise Experience is Changing
Order at the table and similar on-premise mobile ordering use cases were on the verge of breaking out pre-COVID. The pandemic simply accelerated merchant and consumer adoption. The most notable pre-COVID deployment was Chick-fil-a, which put NFC stickers on the tables enabling guests to sit, tap, order from their mobile device, and have food brought to them. The value to the guest was clear: no need to stand in a line waiting to order. The value to Chick-fil-A includes increased customer satisfaction, increased throughput at peak times, ability to upsell in-app, and 1x1 customer data.
3. Capitalizing on High-Margin Beverage Sales
There are strategies to increase beverage attachment with online orders. As it relates to non-alcoholic, consider reaching out to your beverage supplier (Coke rep, e.g.) for best practices. They have entire teams dedicated to figuring out the best ways to get customers to add a drink to their cart.
Alcohol, on the other hand, is less chartered territory. We looked at customer data and spoke to several clients about their approach. First, there is definitely opportunity to drive takeout sales with booze, particularly if restaurants go farther than simply adding beer & wine to their takeout menus. We consistently found that those operators offering drink kits or pre-batched cocktails were significantly outperforming those that did not. In fact, drink kits and pre-batched cocktails accounted for as much as 80% of total takeout alcohol sales for our best performing clients. Takeout cocktails have been successful enough that we are now seeing the emergence of ghost bars such as Gin & Juice, a collaboration between Lettuce Entertain You and Three Dots and a Dash.
4. Contact-Free Solutions are Here to Stay
Whether it’s curbside ordering, order at the table, text-to-pay, or pay at the table, contactless solutions are not a COVID fad. We live in an on-demand world in which digital is inextricably woven into how we experience the world. Restaurants should not assume guests will abandon digital just because they have been vaccinated. To reiterate a previous point, that assumption would ignore that these solutions have way more value to guests and restaurants than just safety. Now is the time to research, deploy, train and test.
About the Author
Alan Paul is a co-founder and Head of Strategy & BD at CARDFREE where he is responsible for direct sales, strategic partnerships, and go-to-market strategy. He has been in the mobile commerce space for the past 10 years working with merchants including Dunkin’ Donuts, Taco Bell, and Red Lobster, amongst others.