Operations

Some operators use PPP money to launch self-delivery

The move comes as tensions continue to rise between restaurants and third-party delivery, and as consumers express growing displeasure with delivery providers.
Original ChopShop
Photograph courtesy of Original ChopShop

Jason Morgan, CEO of fast-casual concepts Bellagreen and Original ChopShop, was forced to close some units and furlough employees as the coronavirus devastated dine-in business.

But once his restaurants received Paycheck Protection Program (PPP) money last month, he was able to rehire some of the staff as drivers for the restaurants’ new self-delivery program.

“It is a big undertaking,” Morgan said. “We’re going to ease into it. We will be able to maximize the use of the PPP funds and will hopefully garner more goodwill and sales from direct-order mode.”

Across the country, consumers are beginning to understand the financial relationship between restaurants and third-party delivery providers, with growing numbers of diners making the shift to contact restaurants directly to place orders.

Third-party providers are the least-preferred delivery method, with just 18% of consumers overall (and 7% of baby boomers) surveyed selecting them as a favorite in a study by consulting firm AlixPartners.

A social media post from food truck operator Giuseppe Badalamenti, owner of the Chicago Pizza Boss food truck, showing his Grubhub statement from March went viral late last week. The invoice shows that he made $1,042.63 from 46 orders and netted $376.54 after delivery-service fees and commissions. Badalamenti said in his post that his earnings are “almost enough to pay for the food.”

Taco Bamba, a five-unit concept in Washington, D.C., has not heard back about any government aid. Nevertheless, chef-owner Victor Albisu said he is repurposing employees from his closed dining rooms to do deliveries.

“We’re trying to employ as many delivery drivers ourselves,” Albisu said. “Deliveries have grown exponentially for us. We were never a delivery concept.”

Las Vegas-based Pinkbox Doughnuts, which has three stores, is working to grow its self-delivery business. The bakery-cafes, which are part of a larger company, did not apply for PPP money.

“Prior to this, we used third-party delivery companies, which I don’t love,” CEO Stephen Siegel said. “We had been working on getting an app and doing our own delivery. We don’t have an app yet, but we’ve started to slowly, a little bit, deliver in-house with our own drivers. It gives us more oversight on the quality of the product. We want to be able to control that delivery all the way through.”

In additional to launching self-delivery, Original ChopShop and Bellagreen are using their marketing messaging to drive sales through their channels, Morgan said.

“Almost immediately, we decided we were going to take an aggressive stance against third-party delivery partners,” said Morgan, whose restaurants still work with outside delivery services. “We’re trying to convince consumers to order through us.”

Once this crisis has passed, Morgan hopes self-delivery will help his restaurants become more financially sound and able to weather future trouble spots.

“What is the silver lining in this?” he said. “How can we emerge stronger than where we started? We wanted to increase consumer goodwill and employee goodwill.”

 

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