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New delivery model gains speed

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 like 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 format, Red Robin Express, who carts the food is determined by how the order is placed. “If you’re a DoorDash customer and 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 be the party ringing the doorbell, since that’s the brand they’re dealing with.

That holds true for transactions that originate with the Express unit’s two 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.

The restaurant doesn’t have to grapple with manually inputting a delivery order because the placement system doesn’t integrate with Red Robin’s platform, andthere aren’t the usual fears about a brand being represented by an outside stranger. “With self-delivery, there is a friendly, smiling team member who understands our culture and knows how to take care of our guest,” says Rusk.

Bloomin’ Brands, parent of Outback and Carrabba’s, declined to discuss the particulars of the self-delivery/third-party system that’s being used at its new takeout-and-delivery-only concept. But descriptions of the Outback and Carrabba’s Express suggest the prototype is following processes similar to the setup at Red Robin Express.

Operationally, self-delivery is easier for Red Robin Express because of its location, Rusk noted. The store is in the middle of downtown Chicago, enabling employees to deliver most orders on foot. If a car ride is needed, they summon an Uber driver for a lift.

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,” and that platform might be the Yelp, Uber Eats or Grubhub app. “It’s what the consumer is asking for.”

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. The brand’s short delivery time—25 minutes, on average—has moved it up on the listing of its delivery partner, Uber Eats. “You’re getting pushed up farther on the app and people will see that more often,” he explained. 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 Red Robin’s Rusk. “Are the economics better if you do self-delivery vs. third party? The answer is ‘Yes,’” he says. “Pizza chains have been doing it for 25, 30 years.”

From a pure cost standpoint, the challenge is building volume—“quantities of deliveries per dollar spent,” says Rusk. As a delivery-only operation, 100% of the Express’ sales will factor into that equation.

But there’s still the matter of exposure on third-party apps.

“A necessary evil—that’s how we view third parties,” he says, noting that commissions typically run from 20% to 30%, product integrity and temperature are worries, and exceeding promised delivery times can be a problem.

The chain will be closely monitoring the setup of the Express store to see if that arrangement could work elsewhere.

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