One of the prevailing sentiments during this week’s Restaurant Leadership Conference in Phoenix was restaurant operators’ need to face the unstoppable tsunami that is off-premise.
“Every restaurant has to look at their marketplace and talk to their customers,” said Darren Tristano—chief insights officer for Winsight, RB's parent company—during the researcher’s State of the Industry kickoff session. “Today it’s important because not as many restaurants are doing it. But in the future, everyone is going to be doing it.”
The thing about waves is that they keep on coming. Here’s how experts at RLC predicted the landscape will shift as off-premise washes over the restaurant industry.
1. Delivery will no longer be an option
“You have to get your head around [delivery],” said Kelly Roddy, president of Schlotzsky’s, noting that the fast-casual sandwich chain has had its “toe in the water” on the issue for a while.
While the large cut that third-party delivery services such as Postmates and Door Dash take from restaurants’ off-premise sales is a stumbling block, Roddy admitted, it’s so profitable and it’s a huge part of what your guest wants, he said. “You’re either going to be in, or someone else is going to get that business.”
2. Consolidation among third-party deliverers could bring fees down
While third-party services continue to rule the delivery space, &Pizza founder and CEO Michael Lastoria believes consolidation is inevitable. On-stage with other fast-casual operators at RLC, he called the business model of these services unsustainable and “inherently flawed,” speculating that the increase in fees operators are witnessing is an outcome of services like these waking up and figuring out that this doesn’t work.
Still, Lastoria plans to ride it out: “We never want to build out our own fleet of delivery drivers and vehicles.” Consumers’ expectations have increased so high, we would probably just screw that up, he said.
Instead he views the current fees as a marketing expense. “I’m OK paying 10% to 20%, because if it’s not my food, it’s going to be somebody else’s.” In exchange, he demands third-party providers pony up a certain amount of marketing support for his brand—and they’ll give it, he says, providing an awareness with potential customers he’s not currently getting on his own.
3. Forget headless restaurants—some third parties are going for the ‘heart’
The popularity of delivery—driven especially by younger consumers, as Technomic noted—has given rise to kitchen-only restaurants (sometimes called headless or ghost restaurants) that don’t bother with amenities such as seats and dining rooms, operating solely to crank out meals for off-premise orders.
Focusing on food coming out of the kitchen—arguably the heart of a restaurant operation—without the trappings of the front of house allows concepts such as Maple and Ando to focus on both the quality of the food and getting it from the restaurant to the customer in a way that is very fast and very good, said Winsight's Tristano, who expects to see more such concepts.
At least one industry insider at RLC told operators about an offshoot of this trend: no-kitchen services. These third-party deliverers offer not only to transport your food off-premise, but to prepare it too, according to the specs of your menu.