Restaurant Delivery Services – Bad for Business?

With the recent huge increase in the restaurant delivery market in Seattle (and elsewhere) it got me wondering what the effect would be on the restaurant’s business.   On one hand, you can certainly make an argument that any orders are incremental revenue for the restaurants that they can obtain with no operational overhead except the cost of food and prep.   However, I suspect that the restaurant might actually suffer in the long run.

With a restaurant delivery service the restaurant gives up many of the traditional differentiators that it could use to distinguish itself from competitors.   In a world where customers come into the restaurant, the restaurant needs to rely on a mix of quality, service, price, and convenience to get customers – and to keep them coming back.   But when an order comes in from a restaurant delivery service these attributes go out the window.

  • Quality – Food is perishable and most often tastes less good the longer it takes between being ready and being consumed. While the restaurant can still prepare a quality product, they now have a dependency on the delivery service to get it to the customer before it doesn’t taste as good.   Regardless of how speedy the delivery is, it is certain that 100% of the time a delivery service will introduce extra time into the equation.
  • Service – There is no service component at all from the restaurant when providing meals through a delivery service.
  • Price – While not all consumers are incredibly price sensitive, it is a factor for many. With added fees for delivery, any price-sensitive consumer is less served by a delivery model using a delivery service vs. a model where extra delivery fees are not added in.
  • Convenience – Here the delivery service certainly adds convenience to the end customer. However, the restaurant is on par with every other restaurant that the delivery service offers.  So while important to end customers, it is no longer a way that a restaurant can differentiate itself.

What does this leave the restaurant who hopes to create long term relationships (in the form of repeat business) when they use a delivery service?   They are left with the hope that their food, by the time it gets to the customer, is still tasting good – or at least better than the other restaurants the delivery service offers.   But as discussed above, this is somewhat out of their control.  Plus, what kind of standard is it to try to be “at least better than the other restaurants”?   I would argue that the above shows that the restaurant’s that do best with a restaurant deliver service are those with food that ages well and where the prices are low.   Consumers already don’t have high quality expectations when ordering from a delivery service – so not sucking too bad, and providing dishes at a reasonable/low price become the bar at which restaurants must compete in the delivery service model.

Don’t get me wrong.  If customers are using a restaurant delivery service, the need is probably there for the restaurant to have their menu in these services as well.   My point though is that the restaurants need to be also looking at ways to make sure that they drive business within their establishments.   When a customer comes in the door how can the restaurant best meet that customer’s need using the traditional ways in which a restaurant can compete?   How can they best meet the customer’s needs (Quality), at a high level of Service, at a reasonable Price, in a way that is Convenient for the customer?

We believe that Chompadoodle can help with at least three of these things.  We can make sure that a picky customer’s needs are met; that the customer feels like the restaurant is looking after their needs and therefore improving providing a high level of service; and finally giving these same customers a quick way to conveniently find what on the menu is tailored to them.

Jon Clemens
CEO, Chompadoodle

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