The rise of digital technology is reshaping the retail industry. Over the last decade, consumers have grown accustom to the convenience of online shopping (via apps and websites) and getting things delivered directly to their doorsteps. When it comes to food and dining, customers are also demanding the same experience and restaurants are quickly adapting to meet these preferences. While I worried about the impacts of Amazon Restaurants two years back, I’ve come to learn that having food delivery services is now critical to the bottom line of a lot of restaurants.
Now imagine you’re sitting on your couch after a long day of work. You’re too tired to fix something up for dinner so you think about getting some food delivered to you. But have you thought about the ins-and-outs of how the food actually gets to your front doorstep? There are really two main ways that happens:
Either you order directly from restaurants by phone or through the business’ individual website….
If you’re ordering directly from a business, chances are they have their own delivery guys and they paid for a proprietary delivery tracking system. The disadvantage here is that setting up a delivery infrastructure requires a substantial amount of working capital. The benefits, however, are that the business avoids paying exorbitant amounts of commission typically charged by third party providers.
…Or you order on an aggregator’s website/app.
Aggregators take orders from customers and direct them to the restaurants, which then either handles the delivery or relies on the aggregator’s built-in logistics networks to provide delivery. GrubHub (or Seamless) is probably the most popular example in NYC today.
Growth of food delivery
Regardless of how you get your food delivered, know you are not alone. According to the Nation’s Restaurant News, between 2012 and 2016, restaurant delivery traffic (excluding deliveries for pizza) rose by 33 percent. And, much like online retail purchases, this growth is not expected to slow anytime soon. According to recent surveys, 26% of Americans order takeout or delivery at least once a week. These behaviors show little sign of slowing: digital ordering and delivery have been growing 300% faster than dine-in traffic since 2014. In fact, food delivery is projected to grow 12% year-on year over the next half decade.
In 2017, a share of 37.1% of restaurant delivery users is 25-34 years old.
And yes, Millennials (myself included) are driving this growth and will likely continue to drive this growth as they enter their child-bearing years. By 2026, over 80% of Millennials are expected to become parents with limited time to do anything much less cook every meal for a family of three.
According to a study by investment bank UBS titled ‘Is the Kitchen Dead?’, Millennials are three times as likely to order in than their parents
Instead of ignoring this growth, restaurants (whether big or small, low price point or high price point) should leverage this opportunity however much they are able to. Over 60% of businesses that already offer food delivery cite that by offering such service, they have generated incremental sales.
Knowing that the highest delivery volume days are weekends (Fri-Sun) – 74% of orders were placed on those days – restaurants should be staffed appropriately during these times with more cooks in the kitchens and more delivery guys on hand (that is, if they’re handling the deliveries themselves). Remember, customers are ordering online because of the convenience and if you’re giving estimated delivery times in access of 60 minutes, chances are consumers are going to pass on your restaurant and go to the next available one on an aggregator website. And if they’ve already placed the order and are waiting longer than 60 minutes then they’re less likely to repeat a purchase given the unsatisfactory experience.
Our streets and sidewalks too will need to be better designed to accommodate the growth in micromobility vehicles powered by humans (bikes, ebikes, escooters,scooters/mopeds). After all, these vehicle types are currently handling the bulk of food deliveries in dense, urban downtowns and commercial districts. (Earlier this week, we talked about how e-scooters are also being used amongst customers travelling to or from entertainment venues/dining establishments). Some districts today are already experiencing bike parking problems on sidewalks, pedestrian safety issues caused by motorized bikes travelling on sidewalks, and even congested sidewalks on busy dining nights where there are just as many customers poking their heads into businesses as there are delivery guys coming in and out. In order to continue reaping the benefits of food deliveries without impacting the experience of customers who are still visiting storefronts, it’s vital we redesign our commercial streets to accommodate all users traveling in and out of the area. Think multi-modal streets!
- Accessible drop-off/loading bays for larger retail delivery trucks and dedicated parking spaces for super short-term food delivery pick-ups
- Wider sidewalks for pedestrians to walk comfortably on, with enough space for delivery bikes to be parked, and dedicated ‘lingering’/’rest’ zones for those waiting for take-out orders and packages to be delivered
- Protected lanes that accommodate vehicles going 6-18 miles per hour like escooters, bikes, ebikes etc.