Food & Drink Delivery Disruptors: Threat or Opportunity?

Donna Hood Crecca and Dave Henkes present Dealing with Disruptors at the 2018 VIBE Conference. Image: Ernie Sapiro

Restaurants face a growing issue in slowing customer traffic, and the burgeoning world of delivery services won’t make that any better. At the recent VIBE Conference, Technomic’s Donna Hood Crecca and Dave Henkes’ presentation “Dealing with Disruptors” showed just how much the already existing challenge might grow.

For example, Technomic’s research showed that there was a four-percent increase in consumers saying they never visited a casual dining restaurant chain last year. And while the on-premise dollar growth for chains is predicted to be about 2.3 percent, volume is expected to continue to drop. The question: Is third-party delivery, including those services that might also be able to deliver beverages, help or hurt?

On-demand delivery through services like Uber Eats, Seamless, DoorDash and others is "fundamentally changing the way people engage with restaurants," said Crecca, associate principal for Technomic. More than 10 percent of consumers surveyed ordered food delivery once a month or more in the past year and most anticipate that number to grow. Red Robin, Cheesecake Factory and other major chains have already plunged in while others, including Texas Roadhouse, are abstaining from any delivery activity.

Nightclub & Bar Show Guest List

Get Exclusive Show Offers: Join the Guest List

Join the Nightclub & Bar Show GUEST LIST - the insider mailing list. Get early access to registration, show updates and more! Nightclub & Bar Show is the bar industry’s biggest and most exclusive event of the year, taking place March 25-27, 2019 in Las Vegas. For over 30 years, Nightclub & Bar Show has been the #1 conference and expo for owners, managers and bartenders - You can't afford to miss Nightclub & Bar Show 2019!

One of the early adopters was TGI Fridays, which partnered with third-party delivery service Lash. Their service allowed customers to place their food order directly through the restaurant chain’s stores. A driver then picked up the food order from the specified Friday’s unit. Most interestingly, there was the option of a second stop at an off-premise beverage alcohol retailer store partner.

Most significantly for full-service restaurants, about half expect their delivery orders of just alcohol to increase in the next year. Numerous alcohol delivery services, like Drizly and Minibar, have sprung up and are also expanding services. Technomic’s research shows about 35 percent of consumers say that beverage alcohol is one of the biggest drivers for their restaurant visits, which the firm forecasts will reach about $109.3 billion of restaurant sales this year.

Alcohol delivery poses many problems, but more than two-thirds of survey responders would prefer to order both food and drink at the same time, including beverage alcohol. Interestingly, Technomic’s research indicates that when consumer users are surveyed, both the delivery service and the restaurant get credit when the process goes well and the food is deemed acceptable. However, the restaurant receives more of the blame when the experience is negative.

Crecca and Henkes recommended a variety of questions operators must ask before diving into this growing business. Most importantly, what will the impact be on the brick-and-mortar units, especially in terms of traffic, brand identity, consumer engagement and loyalty, and adult beverage sales?