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Stop and Go: Delivery Foodservice Trend Clears Bumps in the Road

post 226As delivery continues to drive sales for restaurant operations across the country, the third-party bandwagon keeps chugging along, with more and more chains jumping aboard.

With over $10.2 billion spent on third-party delivery services last year,1 there doesn’t seem to be any turning back—and the revenue engine may just be revving up. According to Swiss investment bank UBS, delivery sales could be worth $365 billion by 2030.2

These days, even the third-party holdouts seem to be counting themselves in. Take Panera, for example. Though the fast casual giant opted for its own delivery program after taking a taste of third-party aggregators, Panera has come back to the outsourcing table.

Delivering Higher Margins and a Higher Check Average

Panera sought to serve up a better customer experience with its own delivery service,1 which enables the chain to control delivery from start to finish and avoid the commission fees that have become a roadblock for other restaurants struggling to maintain favorable margins.

Panera’s EVP Chief Growth and Strategy Officer Dan Wegiel explained why the chain is shifting gears: “We initially landed on our [in-house delivery] model because it allowed us the fastest geographic reach and seamless experience that matches Panera quality. But in the interim, I think the business has evolved for both Panera and the third-party players. Delivery became our primary growth driver and continues to grow in parallel with third-party.”3

Wegiel cited huge popular demand on the GrubHub and DoorDash apps as a driving factor in Panera’s decision to turn toward third-party integration. Though not available through them, Panera found that it was the number-one brand searched on those apps.3

While in-house delivery may seem more efficient and cost-effective, third-party apps can expand market reach exponentially, allowing restaurant operations to deliver to more customers and driving sales in untapped areas.

In Panera’s case, customers will be able to order from DoorDash, GrubHub and Uber Eats, but the in-house service will retain responsibility for delivering the food. By maintaining its own fleet of delivery drivers, Panera can more closely monitor quality control and mitigate costs for third-party delivery drivers. For orders that come through third-party apps, Panera will apply the same charge as it does for internal orders, without an additional service fee.3

“We wanted our drivers to represent the last mile so we can match the quality we want,” Wegiel said. “Your order flows directly into our central system and it shows up like any other Panera order—no tablets or manual intervention—nothing that would create friction. It won’t slow down or create issues.”3

Starbucks Brews Up More Robust Delivery 

Starbucks is another major foodservice brand to turn to delivery to drive the bottom line. The coffee juggernaut is expanding its delivery capacity as part of a strategy to offset a pattern of decreasing in-store traffic. Along with adding more drive-through windows and making its app available to all customers and not just rewards members, Starbucks is partnering with Uber Eats to bring delivery to seven major U.S. cities.2

The coffee chain’s deal with Uber Eats augments a partnership with Postmates to make inroads into new markets, where customers will be able to order from 95% of menu items.2 But like Panera, Starbucks faces bumps in the road that need to be bypassed in order for delivery to fuel as much revenue as possible. The logistics of quality control of coffee, which is time and temperature sensitive, presents a critical delivery challenge. 

As Melissa Wilson, principal at the food industry research firm Technomic, said: “Starbucks is already extremely busy. They had some challenges when they rolled out mobile ordering because it strained their prep time, and most places do see a business bump when they introduce third party delivery, so that will be something they have to manage.”2

To learn how Mondelēz International Foodservice can help your operation overcome the challenges and capitalize on the opportunities of delivery, reach out below. Tap our culinary and logistical expertise to help ensure off-premises foodservice delivers the best ROI.

 

1 Lucas, Amelia, Panera partners with UberEats, DoorDash and GrubHub to expand its in-house delivery, CNBC, Aug. 27, 2019

2 Telford, Taylor, “Starbucks isn’t as popular as it used to be. So it’s trying out delivery,” The Washington Post, Jan. 22, 2019

3 Fantozzi, Joanna, "After holding out on third-party delivery, Panera Bread dives in with DoorDash, GrubHub and Uber Eats partnerships,"  Nation’s Restaurant News, Aug. 27, 2019 

 

Topics: Technology, Millennials, Restaurant Operations, Trends

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