Experts predict that the online food delivery market will reach $24 billion by 2023 and that it will make up 40% of total restaurant sales by 2020. As your guests increasingly demand the convenience of delivery, it is imperative to decide how to offer delivery in your restaurant. There are two options to choose from – you could partner with one of the leading third-party delivery services or tackle delivery on your own with an in-house fleet. Depending on the size and scale of your operations, either choice could be the right one to allow your brand to compete in a shifting industry.
There are several reasons why you would choose to use a leading aggregate delivery service like GrubHub, DoorDash, UberEats, or Postmates:
- Exposure: For small brands, being listed alongside industry leaders makes their cuisine more visible to prospective delivery customers who have never heard of their restaurant before. For large brands, it also creates awareness about the availability of delivery service. Getting the food they crave without having to change out of their pajamas will thrill your guests and strengthen their relationship with your brand.
- Convenience: Not only is it convenient for guests, but it’s also convenient for the restaurant operators using these third parties. Partnering with brands that are the best in their field lets you focus on what you do well without stretching your team too thin.
- Expense: Launching an in-house fleet won’t come cheaply if you have many locations for which to provide vehicles and delivery drivers. Employees could be designated for a delivery role, but that can be a drain on resources during times when orders aren’t coming in.
On the other hand, there are also reasons to keep delivery in-house as part of overseeing the entire guest journey from start to finish:
- Guest Experience: When guests order delivery and something goes wrong, 44% blame the restaurant – as compared to the 25% who blame the delivery company. Once it leaves your restaurant doors, the food also leaves your control. Making sure branded cars and uniformed employees deliver meals to customers is a priority for some brands that want to leave a positive impression.
- Control of Data: Your customer ordering data is one of your most valuable assets. When using third-party delivery, you are prevented from making important connections between how guests behave when ordering delivery versus when visiting your brick-and-mortar locations because their data sits with the third parties and doesn’t link back to your loyalty programs.
- Margins and Commission Fees: Profit margins in the industry are already slim, so giving a percentage of each order as commission to a delivery company might be unpopular among managers and franchisees. While there’s a larger upfront expense to finance an in-house fleet, keeping more of each purchase may prove advantageous in the long run.
What does the future hold for restaurant delivery? It’s clear that diners want to be able to enjoy their favorite cuisine at home in the most convenient manner possible. To learn more about these two delivery options, check out a webinar on this topic, “Delivery Wars: Third Party vs. In-House.”
Guest engagement programs allow you to learn about and engage with the customers who participate. But what about the guests you don’t know – the ones who haven’t yet enrolled? Even with a loyalty program that has reached a 30-40% penetration rate, over half of your guests are still unknown to your restaurant. How can you communicate with those guests to offer them promotions, drive visits, and gain insight into their purchasing behavior?
One way is through coupons. By using coupons to complement your existing one-to-one loyalty program, you can improve your ability to market to all of your guests.
Here are three key benefits of introducing coupons into your restaurant’s marketing strategy:
- Engage with unknown guests through offers. People are more willing to try new restaurants when they can receive a discount, so posting coupon codes on your website or on social media gives you a way to acquire new customers. Once you get them through the door the first time, you can rely on your existing guest engagement strategy to motivate repeat visits.
- Drive enrollment into your restaurant loyalty program. Another way to use coupons is to promote enrollment and transition guests from unknown to known. For example, coffee sleeves or tabletop signage could carry a message encouraging guests to sign up and enter a code like “WELCOME” to receive a future discount.
- Measure engagement across channels. With coupons, you have the ability to issue distinct codes for each channel and then evaluate how each code performs based on redemption. This can inform future decisions on where to focus marketing efforts for maximum effectiveness. You may not know all of your guests as individuals yet, but you are able to assess which coupons drive visits, as well as the purchase behavior of the guests who redeem them.
You can also use insights from your loyalty program to enhance your coupon strategy. If you know that certain messaging or promotions have been successful with the segments that visit less frequently, those same promotions are likely to work on your unknown customers as well.
Coupons can be a powerful tool when used correctly.
To learn more about how to make coupons part of your marketing strategy, check out our on-demand webinar, “Not Your Grandma’s Coupons – Using Coupons to Reach More Guests.”
More than ever before, customers are driven by convenience; they want what they want when they want it, and where. And, so, to keep up with consumer demand, restaurants and convenience stores need to begin serving up their offerings outside of their own walls.
The term “off-premises” refers to delivery, takeout, and catering experiences. An off-premises interaction is one in which a customer is receiving and consuming food or goods outside of the restaurant or c-store.
The challenge for c-stores, and for restaurants especially, is to maintain the positive brand experience—and collect the essential customer data—when the entire interaction is taking place outside of their walls.
For the most part, the guest engagement drops to just two critical touch points: the point of order (whether online or over the phone) and the time of distribution (either pick-up or delivery). […]
Consider all of the conveniences that are available to modern consumers. They can wake up, make coffee with beans that were delivered in one day through Amazon Prime, shave with a razor from Dollar Shave Club, and get dressed in an outfit that was delivered in this month’s Stitch Fix box. As they ride to work in a prepaid Uber, they can browse articles on their phone courtesy of an online subscription to their favorite newspaper. After returning home, they can make dinner from a Blue Apron kit while listening to commercial-free music via a Spotify premium account, and then take a spin class as part of their ClassPass subscription.
As consumers, we’ve become used to subscription-based services in every aspect of our daily lives. The subscription business model has grown rapidly, increasing sales from $57 million in 2011 to $2.6 billion in 2016. Throughout the restaurant industry, several brands have successfully introduced subscription-based meals, with Olive Garden’s Never Ending Pasta Pass being a prime example. A limited number of guests could spend $100 for an eight-week pass or $300 for a full year, entitling them to unlimited servings of pasta, soup, salad, and breadsticks.
Since customers are accustomed to paying for subscriptions, more restaurants are offering subscription-styled packages. While some emulate Olive Garden in requiring guests to pay a lump sum for unlimited benefits, others, such as HuHot Mongolian Grill, have given guests the option to buy meal passes in quantities of 5, 10, or 20. There has also been an emergence of third parties like MealPal, a service that allows customers in major metropolitan areas to buy 12 or 20 prepaid lunches and redeem them at any of its participating locations.
Here are the three primary reasons why you should consider a subscription plan for your restaurant:
- Repeat Customers: When guests purchase a package of prepaid meals, it guarantees return visits to your restaurant instead of the competition. Guests who buy their meals in advance are going to make sure their money doesn’t go to waste.
- Sales: When you sell a 10-meal package, the profit is realized immediately rather than over the course of someone’s next several visits. When these guests return, they can often be enticed to buy add-on items because they tend to forget about the initial cost and will be spending very little on that day.
- Loyalty: These multi-meal passes can be integrated with your restaurant loyalty program, letting guests continue to earn points and allowing you to gain valuable insights from changes in behavior.
Introducing a subscription meal plan is just one way to boost return visits and build strong relationships with your guests. For more information on making a subscription part of your restaurant’s strategy, check out our webinar, “How Restaurants Can Take Advantage of the Subscription Business Model”