Church’s Chicken spent a year studying the logistics of third-party delivery before beginning a rollout, an upfront investment that executives cite as a key reason for the rapid-fire adoption now underway within the chain.
“It’s a lot easier than we thought it would be,” says Hector Munoz, global CMO for the 1,078-unit quick-service brand. “We did our homework all of 2017 to prepare for executing in 2018.”
“We studied it so much that we went into it with our eyes wide open,” agrees Pete Servold, EVP of U.S. operations for the largely franchised brand.
Still, the shift into delivery was not without its surprises. Church’s decided to forge ahead with the service even though customers can’t yet use the brand’s app to place delivery orders. Instead, they order through the apps of Church’s four third-party partners, and the brand learned those users aren’t typical Church’s customers.
Off-premise's big reveals
“We see probably triple the number of tender sales [through delivery], which is a good indication that these are new customers,” says Servold, noting that Church’s core in-store product is bone-in chicken.
Similarly, a store’s peak hours typically fall from 5 p.m. to 9 p.m. Some units offering delivery have seen their business surge well past that traditional rush period, with a dramatic uptick between 10 p.m. and 11 p.m. As much as 80% to 90% of that late-night business is incremental, Servold estimates.
Overall, “well north of 50%” of delivery sales have been incremental, says Munoz. Servold says that business now accounts for about 4% of total sales.
What’s more, Servold continues, those sales are highly profitable because delivered meals aren’t sold at a discount, the average check is more than double the in-store norm and virtually no additional labor is required.
He acknowledges that franchisees had to be sold on the profitability after they learned the commission paid to third parties for a delivery order can run far into double digits. Most chains peg the norm at 18% to 28%, though Servold would not reveal what Church’s pays.
“We really dug into the commission and were able to show that it’s very profitable because of the savings on labor,” says Servold.
Unlike many newcomers to delivery, Church’s discovered that most customers opting for the service are individuals, not couples or families. The chain’s No. 1 delivery order is a four-piece meal with a side.
Yet those patrons tend to add on other items, including beverages. Church’s offers gallon and half-gallon servings of noncarbonated beverages such as lemonade and iced tea, and the attachment rates for those products aren’t dissimilar from the sales patterns for dine-in orders, Servold says.
Teaming up pays off
The chain decided to forge partnerships with the four largest third-party services—DoorDash, Uber Eats, Postmates and Grubhub—to provide broad options for franchisees. Not all of the deliverers have expanded into each operator’s market. And some franchisees have a relationship with one of the four through other concepts within their portfolios.
Servold and Munoz both speak positively about their relationships with the four services.
“They assign people to work with you specifically on your menu, to utilize their dashboard,” says Servold. “They’re very dedicated to helping us.”
Church’s is still learning all the ways those relationships can be leveraged, says Munoz. “From a marketing perspective, I’d love to move more quickly,” he says.
“It’s moving so quickly that it’s difficult to get our arms around it,” Munoz continues, noting that it’s not unusual for 100 or so Church’s units to add delivery in a single day, the result of a delivery service entering a new market. At least one of the third parties has informed Church’s that the chain is expanding delivery service faster than any of its other partners are.
Munoz and Servold both voice regret that third parties don’t share customer information with their partners, a gap that Church’s is striving to fill by surveying known customers.
Munoz says his marketing plans include “optimizing” Church’s menu for delivery, using insights the chain is collecting today. He cites such possibilities as offering Church’s boneless tenders in larger servings to reflect that product’s popularity as an eat-at-home option.
The chainwide rollout of delivery, which Church’s began just a few weeks ago, is the first step in the concept’s push for more off-premise sales. The chain is working on an order-and-pay-ahead function for its app, as well as a catering program.
“We’re going to chase the money,” says Servold.