We in the restaurant industry should probably be talking more about pickup.
Its cool younger sibling, delivery, has gotten a lot of ink over the past few years, and for good reason: It’s where all the growth has been.
But as we’ve seen recently, that growth is starting to hit a wall. And pickup appears to be taking some of its share.
The shift has been underway for a while now. We’ve seen it at Domino’s, which got a lot of buzz when it offered to “tip” customers who picked up their own pizzas, and at ghost kitchens, which are increasingly embracing takeout and even dine-in as delivery fades.
A report out today from tech supplier Paytronix puts some data behind those hints. The company looked at online orders over the past two years and found that pickup now accounts for more than half of them, up from 35% in January 2020.
“While delivery was king before and during the height of the pandemic, more recent data indicates that takeout orders now dominate online orders,” the report said.
Overall, pickup has always been bigger than delivery. In 2021, delivery accounted for the smallest share of off-premise orders, clocking in at 11%, according to researcher NPD Group. Pickup was more than 3 times that, at 37% of all orders. Now it's starting to build on its lead.
There’s anecdotal evidence to back this up. Dine Brands CEO John Peyton told me this week that the off-premise sales mix at Applebee’s and IHOP has been shifting away from delivery and toward more carside and carryout recently.
One reason for that is price. It doesn’t take a rocket scientist to understand that picking up a meal yourself is cheaper than paying someone else to do it. Plus, a lot of restaurants charge higher prices on their delivery menus to begin with. As inflation rises across the board, people are sensitive to that.
“The savvy consumers know that they can get their Applebee’s and IHOP meal less expensively if they pick it up in the restaurant,” Peyton said.
O’Charley’s, a 148-unit casual-dining chain, has also seen customers switch from delivery to pickup recently. CEO Craig Barber acknowledged that the cost has something to do with it, but he noted that people’s routines are changing, too.
“A lot of businesses have begun to reset this whole remote work,” he said. “As people begin to go back to the office, the curbside pickup becomes more prevalent because they’re in their car trying to get home.”
This is good news for restaurants. Pickup margins are generally better because the operator doesn’t have to pay a delivery commission. Plus, it allows the restaurant to control the handoff experience rather than a delivery driver. Now it appears that a lot of customers prefer it, too.
With that in mind, operators should think about how they can promote pickup and make it a top-notch experience rather than an afterthought. That could mean coming up with a creative offer like Domino’s, investing in a high-tech pickup cabinet or assigning an employee to focus on carryout orders.
That kind of emphasis on pickup has proven successful at Hungry House, a ghost kitchen in New York City.
“We actually focus on creating a really delightful and brand-driven pickup experience as part of our overall model,” said CEO and founder Kristen Barnett. That includes ordering kiosks and an expediter who can answer questions and add a bit of hospitality to the transaction.
The special treatment makes sense, as most of Hungry House’s business comes from pickup, not delivery.
“That’s a reason why we can drive better margins in our model than a traditional ghost kitchen,” Barnett said.