The Delivery Experience
The whole delivery model continues to fascinate me – how do operators handle it well, grow incremental sales and make money from it? If they choose not to participate are they leaving the door open for competitors, including Deliveroo’s own dark kitchen operations? If they drive delivery occasions do they lose dine-in visits?
Operators are increasingly using their kitchens to serve their own brands front of house and an invented “delivery only” brand from back of house. A chef can make a burger under his or her own company’s brand name and serve it to their sit-down customers and then make exactly the same burger under another brand name to send out on a delivery bike. I know this isn’t new news but it’s fascinating how it works all the same.
This is a ghost product and ghost products are often outselling the food they match. A delivery-only burger for an invented delivery brand can sell more than a branded burger even though they are exactly the same product, made in the same kitchen, with the same ingredients and same spec by the same people. What price brand then?
If a delivery customer’s choice of where they order from is largely based on speed, how much does a brand count for? Is this the beginning of the end for bricks-and-mortar casual dining brands? What is a brand name actually worth? One can argue absolutely nothing if it can’t deliver what delivery customers want, need and expect from delivered food.
As delivery-only operators know, putting kitchens on the ground and increasing distribution points is key. Of course having good-quality, hot food delivered quickly is just the price of competing and a necessity. However once an operator has cracked that, the more kitchens they have the more profitable they can become. They can use Deliveroo’s own marketing systems to turn off promotions on a minute-by-minute basis so if they want more traffic, are happy to compromise on margins and have teams on the ground, they can really drive sales.
That makes me wonder whether it could be an option for those pub operators with large managed or even large tenanted estates. Could their kitchens be used as dark kitchens and distribution points? It would give tenants who already serve food an opportunity to drive incremental sales and, of course, they can also add drink to the mix. It might drive more traffic to the pub but that’s not the point – it’s about making their business more profitable per se. That’s increasingly difficult for many tenants in many areas.
Of course it’s not as simple as putting food up on a delivery site and hoping it all works – there are front of house and back of house logistics to consider, including balancing the needs of dine-in and dine-out customers. If operators can’t offer quality food, speed, punctuality and value for money they shouldn’t even try delivery. The hope would be, though, that they are already offering those elements to dine-in customers.
Delivery isn’t a phenomenon – as I think some people hope it is – it’s here to stay. When I hear of two teenagers ordering bacon sandwiches on a Sunday morning because they can’t be bothered to visit a garage to buy bread and bacon it’s obvious this has become a way of life for some.
I can’t get delivery in my village – perhaps that’s an opportunity for my local tenancy? – but I know of many people using it six or seven times a week in more urban locations. These customers are using delivery to create the experience they want in their own home. They aren’t reliant on going out and hoping an operator can create it for them – it’s bespoke to their own personal circumstances.
This is a dynamic, innovative and customer-driven market place and I see many parallels between delivery/dine in and retail/online. Operators can choose to participate or not but the risks are there if they don’t and, perhaps, if they do.
Written by Ann Elliott