Nicholas Upton
As consumer patterns (somewhat) normalize, delivery and other off-premises channels continue to grow. But there’s a big mismatch between usage and quality. It seems many, many brands still aren’t taking delivery seriously enough to keep up.
As we slip into 2023, delivery hovers at 8 to 9 percent of U.S. restaurant sales in recent examinations—double what it was prior to the pandemic. Even as some people return to work in offices and morning habits around breakfast push the daypart to pre-pandemic levels, delivery continues to grow in users and frequency. Delivery fees, meanwhile have increased to $13 per order on average amid an inflationary climate. And yet, the channel grows.
For DoorDash, the delivery leader by far in order volume, total orders in the quarter ending in September were up 27 percent, to 439 million, and gross order value was up 30 percent, to $13.53 billion. About 15 percent of that is the company taking market share from competitors, namely Grubhub. Still, sales grew about 13 to 15 percent—incredible growth. Of course, DoorDash’s net loss widened to $295 million, but that’s another story.
Getting delivery has become a true habit. A new survey from Deliverect, an order integration company, showed 42 percent of adults order delivery three times a week. I’m old enough to remember maybe a single family pizza night or perhaps ordering Chinese food once during any given week—and I’m not that old.
There are a lot of factors that keep delivery growing, probably one for every consumer. There is certainly value erosion when it comes to going out. The industry, somehow, accelerates pricing into sinking traffic for another year and declares a comps victory.
Prices are up, traffic is consistently down. According to Black Box Intelligence, year-over-year restaurant traffic dropped 3.2 percent in October; it was down 3.6 percent in September, though only down 1.9 percent in August. Relative sales were up 5.2 percent in October and September, and 5.3 percent in August. Sales were buoyed almost exclusively by ongoing price increases.
Satisfaction is eroding, too. Black Box reported reviews from those who are going to restaurants are … not great. In the third quarter, consumers complained about dirty bathrooms and dining rooms much more than prior quarters. So those few diners that try to break their pandemic habits by going out are paying more and they’re met with unkempt stalls and mediocre service. I know I’ve been there: Waiting for a forgotten side item, looking at a nearby table covered in dining detritus and thinking, “I got a baby sitter, took a shower and put on uncomfortable pants for this?”
Few things reinforce the benefit of ultra-convenient carryout and delivery than going to a restaurant that can’t figure out how to actually serve the people who made the effort to show up.
But somehow, delivery sentiment is even worse. Even with all this time to figure it out—and with consumers paying as much as 50 percent more to engage with a brand—the delivery experience still kind of sucks. In recent surveying, value sentiment for delivery meals was a full 50 percent lower than dine-in meals at full-service restaurants. Fees influence that value equation somewhat, but bad operations are rampant as is clear in a jump in reviews stating missing items or otherwise messed-up food.
Real process required
Funny enough, full-service restaurants are doing delivery better than quick- and limited-service, which make up so much more off-premises business already. Dine-in heavy brands, it seems, were forced to set up a real delivery process during the pandemic if they hoped for any sales whatsoever.
Much of the industry is faring poorly in execution of delivery channels, though a handful of brands continue to innovate and push consumer expectations further. But for every five-star Chipotle order, there are a lot of three-star reviews peppered with the words “cold,” “long wait” and “missing item.”
Competitive brands that take delivery seriously are pushing the envelope and consumer expectations forward. A quarter of delivery consumers expect their food delivered in 10 to 20 minutes, a third expect it in 30 minutes and another quarter are willing to wait, but only 40 minutes. Way back in 2020, a hearty portion of diners were willing to wait an hour—not anymore.
Between the order volume growth and the mediocrity there is potential for dangerous brand damage. Consumers who try out a new restaurant for delivery remember those bad experiences. According to that Deliverect survey, more than one-third of customers don’t order again after a bad delivery experience, and a quarter of those tell their family and friends to beware.
A tech-ops combo
So if you’re still waiting for some romanticized return to yesteryear, or maybe ditching that smaller prototype update, think again. It’s time to redouble those efforts to figure out delivery because unless your restaurant has an exceptionally compelling reason for customers to show up in person (and follows through with a strong experience), delivery will remain a growing part of the business.
It’s not all technology. Passable operations need to get good, and good operations need to get better. But there is some technology to help, and it’s not all that complex.
To tackle those missing orders, another kitchen display can do wonders. Of course, someone needs to watch it and pay attention. Cold food? That can be helped with a timer or a little logic. If delivery drivers routinely don’t show up for 10 minutes, don’t start the order when it hits, but wait five minutes. Putting a delay on delivery orders is doable in many points of sale.
None of this is hard, and it wasn’t hard two years ago. But for some reason, scores of brands and operators seem fine with taking a sales hit. That can’t last.
Nicholas Upton has reported on retail and restaurant technology for more than a decade. His Tech Stack column aims to distill complex ideas into actionable insights. Send interesting tech topics to [email protected].