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Growing off-premise demand drives major industry changes

A survey from Technomic and the National Restaurant Association shows rapid increases in off-premise sales—and a restaurant industry scrambling to keep pace.
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On-the-go consumers are using the drive-thru more frequently, ordering more takeout and getting their food delivered, keying a rapid, technology-infused shift in the industry that is putting pressure on operators to keep pace.

That’s the conclusion of a new report from the National Restaurant Association and Technomic, a sister company of Restaurant Business.

Consumers say that about 60% of their occasions are takeout as they shift from dining inside restaurants to eating their prepared meals in the office or at home, according to the report, “Harnessing Technology to Drive Off-Premise Sales.” And consumers are taking advantage of every opportunity to place those orders.

“It’s quite clear that the proportion of occasions, traffic, orders that are off-premises-driven continues to grow,” said Hudson Riehle, senior vice president of the research and knowledge group for the National Restaurant Association, in an interview. “Particularly among the younger age cohorts. Their perception is there’s nothing more convenient than having the restaurant come to them.”

The report is an in-depth look at the key factors in off-premise consumption and how operators are investing in technology to manage those sales.

Adapting to this environment is a major priority for most restaurant companies, with 78% saying they consider off-premise sales to be a “strategic priority” and 74% saying they are investing in off-premise programs.

Yet the study also found a disconnect between what consumers want and what operators are giving them.

For instance, 56% of consumers order delivery from a restaurant website, but just 45% of operators offer the option. Meanwhile, 43% of delivery users place orders through the restaurant’s app, but just 18% of operators offer that option.

And 31% of consumers say they would be willing to order via a smart speaker such as Amazon’s Echo device, but just 12% of operators offer that option.

The growing use of technology, Riehle said, is essentially creating a new business model, different from the traditional table-service and counter-service models the industry has used for decades. The new model involves food ordered via a device, often through a third-party.

“Now that there is the technology available for both the consumer and the operator, it’s allowing for the development of an entirely new business model,” Riehle said. “In some cases, you’re having operators change their model to take advantage of the growing consumer interest. On the other hand, ghost kitchens allow for the development of a new business model.”

The shift in restaurant sales is being driven by all channels, but one, a more traditional takeout channel, is still king: the drive-thru.

According to the study, 39% of consumers say they use the drive-thru more often now than they did a year ago. And 92% of consumers say they use the drive-thru at least once a month.

Delivery is also more common: 34% of consumers say they get their food delivered more often, and 53% of consumers say they’ve used third-party delivery. Overall, 79% order delivery.

Younger consumers are driving this shift. Consumers ages 18 to 34 are more likely than older cohorts to use delivery, takeout or the drive-thru.

Operators are seeing benefits by offering these strategies: 93% of operators allow for regular takeout orders. And two-thirds now offer delivery provided by a third party. Meanwhile, 55% offer self-delivery and 46% offer catering.

Operators will need to continue investing behind these efforts because that’s where all the growth is. Riehle noted that the industry’s growth has slowed since the recession, and all of that growth is coming in off-premise channels.

Large operators have been investing heavily behind these efforts. McDonald’s, for instance, bought two companies this year that will increase the capabilities of its drive-thru order systems. Taco Bell owner Yum Brands invested in Grubhub last year.

Small companies will need to make investments, too. “From an operator perspective, it’s important to look at the current business plans and rethink how they want to be 10 years from now,” Riehle said. “It’s a new arena of growth for the industry.”

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