The drawbacks of using third-party delivery services are prompting a number of chains to try a new way of exploiting the off-premise boom. Call it Delivery 2.0, a drift toward restaurants transporting more orders themselves as volumes grow and ordering patterns change.
Big-name proponents like Red Robin, Outback Steakhouse, Carrabba’s Italian Grill and Zoes Kitchen aren’t abandoning their collaborations with dedicated deliverers such as Uber Eats, DoorDash and Amazon. But each is tempering that reliance with a self-delivery/third-party hybrid.
At Red Robin’s new delivery-only unit, Red Robin Express, who carts the food is determined by how the order is placed. “If ... you use your DoorDash app, the order comes into our system and one of their drivers delivers it,” says Jason Rusk, VP of business innovation for the full-service burger chain. The customer expects DoorDash to ring the doorbell, since that’s the brand they’re dealing with. That holds true for orders from the unit’s other partners, Uber Eats and Grubhub.
But “if you go to Red Robin’s website and you want to order delivery, the nearest Red Robin restaurant will show up as a pinpoint, you plug in your order, and we bring the food to you.” The experience is wholly a Red Robin interaction. “It gives us total control of the experience. It gives us total control of the data,” says Rusk. (For more on the unit, see Page 27.)
Operationally, self-delivery is easier for Red Robin Express because of its location, Rusk noted. It’s in the middle of downtown Chicago, enabling employees to make most deliveries on foot. If a car is needed, they use Uber.
Yet even if there weren’t any of the usual challenges with self-delivery—hiring drivers, accessing cars, tweaking operations—the store would still have worked with third parties because of the marketing advantages they provide.
“If you ask the customer, overwhelmingly they want Red Robin to deliver to them,” says Rusk. “But that’s a Red Robin consumer. We know there are people who are loyal to their platforms.”
Even a brand with the recognition of McDonald’s needs a listing on a third-party app to snag consumers’ attention, the franchisor’s CFO, Kevin Ozan, recently told investors. “You’re getting pushed up farther on the app and people will see that more often,” he said. “The biggest opportunity for us on delivery is awareness.”
The lost exposure opportunities are the real yellow light on self-delivery, not the costs, says Rusk. “Are the economics better if you do self-delivery vs. third party? The answer is ‘Yes,’” he says.
From a pure cost standpoint, the challenge is building volume, says Rusk. As a delivery-only operation, 100% of the Express’ sales will factor into that. But there’s still the matter of exposure on third-party apps.
The chain will be closely monitoring the Express store to see if the arrangement could work elsewhere.