Anybody fancy ordering-in? Five years ago that meant pizza, Chinese or curry but the options available to most stay-at-home diners have become more varied, and of immeasurably better quality, as a more diverse and better class of restaurants move into the sector.
There are two main drivers behind this increased interest in a space that is, traditionally at least, viewed as unprofitable and downmarket by restaurateurs. The first is technology and the huge number of third parties that have sprung up to give restaurants fuss-free access to it (see below).
The second – and perhaps most important – is the gradual realisation that restaurants, particularly those that are branded, can operate more profitably by incrementally increasing food orders. Kitchens carry with them many fixed costs and not utilising excess capacity is tantamount to throwing cash down the drain.
As such, new businesses are being conceived with a strong takeaway and/or delivery element entwined in their DNA while established restaurants are tweaking formats to introduce an off-site sales element. Importantly, selling food to be eaten off premises is no longer considered downmarket, although the word ‘takeaway’ still carries with it some negative connotations.
“The problem in the UK is that takeaway became both how you got the food as well as the class of food,” says Evan Graj, the US-born founder of DineIn. “We don’t call ourselves a takeaway company, we facilitate the delivery of great food.”
Along with its main competitor Deliveroo, DineIn offers restaurants a completely outsourced delivery service. They simply sign up, set up a tablet in the kitchen and start taking orders. When complete, a scooter driver will come and pick it up and take it to the customer.
Having dipped their toes in the water via a trial, many of the larger restaurant groups are now signed up to such services and more look set to follow.
Chicken giant Nando’s is now working with Deliveroo, and Yo! Sushi recently started working with DineIn.
Both Deliveroo and DineIn are positioned at the more premium end of the market and are therefore selective when choosing with whom to work.
“We want to work with good-quality businesses to give us a clear point of difference in the marketplace. We want to partner with national chains because, outside of London, they make up quite a lot of the market, but we’re just as willing to work with quality independents,” says Justin Landsberger, commercial director at Deliveroo.
Do restaurants need to adjust their pricing to compete with their delivery-focused counterparts? Not really, it seems. DineIn’s average price per head is between £15 and £20, which suggests that the demographic it targets is happy to spend a comparable amount of money on eating at home as they
would on eating out.
Both fast-growing logistics specialists operate in the central areas of busy cities that house a disproportionate number of time-short people with cash to burn, which iskey to their business model.
Restaurants can also accept orders via food aggregation sites such as Just Eat and Hungry House. These huge players won’t undertake to get the food to the customer but they do facilitate orders for both collection and delivery, assuming the restaurant has a delivery infrastructure in place. As with third-party bookings agents, it is usually possible to be signed up to multiple takeaway and delivery services. The equipment tends to be quite small – usually a single tablet – so if the capacity and demand is there, restaurants tend to use more than one.
One of the main issues eat-in restaurants face with delivery is that the bulk of takeaway orders come through when the restaurant is – hopefully, at least – full of customers anyway.
While some takeaway orders will arrive in the early evening, the majority will be made during the busiest part of the evening service. What’s more, online takeaway and delivery orders can become unmanageable quickly because restaurants can’t rely on the safety net of limited seating capacity.
Handily, both the logistic companies and food aggregators have features that help restaurants control the volume of delivery and take-out business that comes through the kitchen.
The person in charge of the system can stop people ordering items that are trickier to make or stop orders coming in altogether. They can also increase the projected wait time to manage customers' expectations, but a delay of 45 minutes or more is likely to dissuade many customers from ordering.
“It’s clearly an important feature, but it’s also important to have a consistent presence on the platform,” says Graj. “Repeat custom is key in this space. Customers may get frustrated if their preferred option is not available, which could impact negatively on your brand.”
Another area that could impact even more negatively on a brand is food quality, or rather the lack of it. Not all food travels well, so most restaurants will want to abridge menus or even consider redeveloping certain dishes. Fried foods aren’t particularly well-suited to delivery (chips especially) and the same goes for dressed salads and pizzas that haven’t been developed with a 20-minute journey in mind.
The likes of Domino’s and Pizza Hut have carefully engineered their pizzas for delivery – an authentic Neapolitan number topped with delicate ingredients won’t fare nearly as well.
Generally speaking, thermal mass is a good thing – curries and stews travel well – but bear in mind that some foods need to breathe. For example, fish and chips, burgers and kebabs will arrived in a poor state if they aren’t sent out in the correct packaging.
While eat-in restaurants have quickly developed smart ways to keep the quality up, there is still a lot they can learn from businesses that solely offer takeaway and delivery, particularly the really big players. Businesses such as Domino’s are obsessed with using technology and data to increase efficiencies and drive extreme levels of profitability. Metrics are closely studied to ensure processes are as streamlined as possible and nowhere more so than labour, which is one of the food industry’s more easily controllable costs.
While your business is unlikely to become the next Domino’s, preparing meals for eating out and delivery can be nurtured into becoming an
important revenue stream for many operators. Now, where did we put that takeaway menu?
The ordering and payment platforms
Key players: Just Eat, Hungry House
Also known as food aggregators, ordering and payment platforms help restaurants and takeaway businesses market and streamline takeaway and delivery options. Some, including Just Eat and Hungry House, are big brands with real marketing clout. Consumers enter their postcode to view the delivery and collection options in their area and can also browse menus and rate businesses.
Graham Corfield, the UK managing director of Just Eat, claims the average spend on orders placed online is 30 per cent higher than those made on the phone because customers are more relaxed and can properly browse the menu. He also points out that taking orders over the phone, and in person, is time consuming and costly. The company’s research shows it takes two to four minutes to take a telephone order.
Ordering and payment platforms make their cash by charging restaurants a percentage of the order total, typically in the region of 10 per cent. Some platforms also charge an initial set-up cost and others insist on onerously wide delivery radiuses.
The logistics specialists
Key players: Deliveroo, DineIn, Meals.co.uk
Offering your own delivery service is a big undertaking with a number of costs associated to it, including delivery personnel, vehicle maintenance, fuel and insurance.
In light of this, a number of companies have now appeared to offer restaurants a ready-made delivery logistics infrastructure as well as facilitating ordering the payments. Following huge investment, Deliveroo is now the largest of these and currently operates in parts of London, Bristol, Reading, Cambridge, Birmingham, Manchester and Brighton and Hove.
Hot on its heels is DineIn, which has also received significant investment and currently serves parts of London, Kingston-upon-Thames and Brighton and Hove.
Such players tend to have more of a relationship with their customers than their food aggregator counterparts, working with them to create bespoke menus and providing advice on packaging. The majority are
focused on the more premium end of the market with both Deliveroo and DineIn making much of their high-quality credentials.
They have two revenue streams: a delivery charge paid for by the customer and the percentage an operator pays on the gross order value.
The click and collect companies
Key players: Flypay, PayPal, MyCheck
A number of mainly fast-casual operators are making use of the click and collect functionality that some mobile payment companies have bolted-on. Customers can order meals prior to arriving at a venue and can choose to eat either on or off the premises – a particularly good fit for those business pitched at the UK’s burgeoning grab-and-go sector.
Much like the logistics specialists, these payment companies tend to work closely with restaurant groups.
The functionality can either be integrated into a restaurant group’s app or website or showcased within the payment company’s app (or sometimes both). One of the core attractions such services have to fast-casual operators is the greater efficiencies they bring to the ordering process.
“We first launched our Order and Collect service because Burrito Mama [sister brand to Wahaca] wanted to speed up its ordering process,” says Flypay CEO Tom Weaver. “Its staff can make a burrito in 30 seconds but it takes a minute and a half to pay for it, which is problematic from a volume perspective. The system makes a huge difference to throughput.”
Flypay recently started working with Gourmet Burger Kitchen, developing a bespoke app that integrates its Order and Collect service into the national brand’s existing EPoS systems and believes many more operators are likely to follow the same path. Payment companies typically take a small percentage of the gross order value.
The one you may be on but not realise it
Much to the chagrin of some restaurateurs, websites that unofficially deliver food from restaurants have sprung up in several major cities. Some have their own fleets of vehicles while others use taxis to get the
food from the restaurant to the customer.
Delivery prices tend to be quite high as such businesses can’t make a margin off the restaurant unless they inflate the cost of the food.
It’s a bit of a grey area but these websites aren’t breaking the law, although what happens if a customer becomes ill after ordering is somewhat unclear. However, most will de-list a restaurant if the owner
requests it. Such businesses pose a threat to the likes of Deliveroo and DineIn but they do tend to focus on less high-end businesses such as the major fast food players and kebab shops.
The DIY option
Some eat-in-focused operators choose to cut out the middleman and set up their own delivery service. David Roberts is a veteran of the delivery sector having run a successful string of pizza delivery shops in
Kent in the 1990s. He recently opened fish and chips restaurant and takeaway Fish + Liquor, in Brighton, and offers a full delivery service using two bikes and a van. “Delivery is hopefully going to be a big chunk of our business so I wanted to be in control of it. We use the bikes in rush-hour traffic and the van when it’s quieter. Marketing is mainly through word of mouth because we’re only delivering within a small radius.”
Even though Roberts started out before online options shook everything up, he says the game remains much the same. He aims to put printed menus through letterboxes in the early evening to make sure Fish + Liquor’s are at the top of the pile.