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Revving the Revenue Engine: Takeout and Delivery Drive Sales Higher

Takeout and Delivery Sales Soar

75% of consumers say restaurant chains should offer more delivery options.1

Sometimes dubbed the “new fast casual,” delivery has become a reliable revenue engine that continues to pick up speed and fuel a steady increase in sales. While it may only make up a small percentage of off-premise business, delivery is driving the highest growth rate, according to National Restaurant Association Senior Vice President of Research Hudson Riehl. 2

“The off-premise component has been primarily responsible for industry growth over the past decade,” Riehle points out.3 Delivery has assumed such prominence as a profit turbocharger that Nigel Travis, CEO of Dunkin’ Brands, calls it “the Holy Grail in the next few years.”3 And Jeffrey Amoscato, vice president of supply chain and menu innovation for Shake Shack, asserts: “Delivery is the biggest disruptor for our business.”3

While the rapid rise of third-party delivery has grabbed the industry’s attention, with DoorDash, Postmates and UberEats extending their market reach, traditional delivery is also gaining ground. Panera Bread has expanded its in-house delivery service to more than 1,300 locations nationwide and grown its fleet of drivers to 13,000 strong.4

Once a pilot program in a few test markets, the fast casual juggernaut’s delivery service rolled out to 897 cities across the country within a few years.4 “Delivery is fueling our next phase of growth, and the success we have seen so far is exciting,” says CEO Blaine Hurst.4 “The combination of providing clean food options via an entirely digital experience is giving us a real advantage, and the momentum is just beginning.”4

As the key in the ignition of delivery, digital technology seems certain to evolve and further expedite the delivery experience for consumers and expand their range of options. By automating the ordering process, delivery apps also help free up staff to concentrate on other tasks, resulting in increased efficiency and productivity. As labor costs continue to tighten margins, expect operators to increasingly focus attention on integrating technology to improve off-premise business.

Delivery Turns the Corner with Major Restaurant Brands

According to the foodservice market research firm Technomic, traditional delivery outpaces third-party delivery in the quick service category. Thirty-nine percent of consumers surveyed use traditional delivery for quick service orders, versus 21% who choose a third-party service.5

With 44% affirming the importance of the restaurant brand in deciding where to order,5 expect more and more chains to launch or expand in-house delivery and provide a seamless ordering and brand experience.

What’s more, 40% of survey participants say they would like to use restaurants more in their daily lives6—a statistic that underscores the potential for delivery to use its ease and convenience to delve deep into an untapped market. As Riehl explains, “Consumers want to use the industry more, so the off-premise market is a logical extension of that pent-up demand.”6

That said, third-party seems likely to continue to make inroads into the quick service space, especially as a labor cost–saving way to provide delivery. Starbucks has announced it’s expanding its Uber Eats mobile app–driven delivery service to cover nearly one-fourth of its locations nationwide, including such key markets as New York, Los Angeles, Boston, Washington and Chicago.7

As traditional delivery gains momentum with major brands like Panera, it may accelerate the trend of third-party services becoming more flexible and negotiable. “In the early stages, operators weren’t feeling that they could negotiate with third-party providers,” says Melissa Wilson, principal at Technomic. “Brands have a lot of power with their contracts; there is a lot they can negotiate.”5

Whether consumers order food through traditional or third-party delivery or dine on premises, there is a hunger for menu innovation, especially among millennial consumers. Forty-five percent of millennials surveyed prefer restaurants that offer new or innovative flavors and ingredients.8 Distinctive and creative recipes like Iced Cinnamon Rolls Made with OREO Cookies, Double Chocolate Chunk Muffins with NUTTER BUTTER Cookies and S’mores Mini Cupcakes with HONEY MAID Grahams can elevate menus for operators who want to shift on- and off-premise sales into high gear. In 2019 and beyond, a combination of technological and culinary ingenuity can help clear the path to higher profits.

1 AlixPartners, Feeding the Global Consumer (Nov. 2017), p. 2
2 Wirth, Sarah Rush, How Is Delivery Disrupting Business As We Know it? Technomic and Restaurant Business Online (Dec. 2017), p. 1
3 Wirth, p. 2
4 Luna, Nancy, “Panera Bread grows in-house delivery service to 1,300 locations,” Nation’s Restaurant News (May 8, 2018).
5 Wirth, p. 3
6 Wirth, p. 6
7 CNBC Starbucks rolls out a delivery service for coffee drinkers (Jan. 22, 2019).
8 Technomic, Generational Consumer Trend Report (2018), p. 72

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