Delivery boom is changing everything about the restaurant business

Delivery boom is changing everything about the restaurant business

Charisse Jones, USA TODAY Published 2:01 a.m. ET April 24, 2018 | Updated 10:28 a.m. ET April 24, 2018

NEW YORK - Micha Magid would prefer that guests grab a table to enjoy the sweet corn fritters, chicken wings and "brontosaurus" ribs served at Mighty Quinn's Barbecue, his restaurant chain. 

But so many diners want their food delivered to their front doors instead, the eateries have to carve out valuable space solely dedicated to fulfilling those orders.

"If we have our preference, everyone would come to the restaurant,'' says Magid, one of Mighty Quinn's co-founders. "You get a much better experience when food doesn't have to travel for 15 minutes. It's hotter and better . . . But if someone wants to stay home and get great barbecue, we want to deliver that.’’

The growth in the restaurant industry is coming from those who are dining at home.

Customers are increasingly ordering food through apps on their smartphones or by calling in.  And that demand for deliveries, from sit-down restaurants as well as the more familiar pizza chains and Chinese take-out spots, is dramatically changing the restaurant industry.

Besides having to redesign restaurants to take delivery into account, the phenomenon is enticing restaurants to modify menus and pick ingredients that hold up well during travel.

In the last five years, revenue from deliveries jumped 20% and the overall number of deliveries increased 10%, according to The NPD Group.

Restaurants, from quick-service chains like Panera Bread to sit-down eateries such as Applebee's are ramping up or diving into delivery for the first time to meet the demand of diners who increasingly want everything -- from groceries to gadgets --dropped at their door.

“Convenience is among the chief reasons why consumers visit restaurants and delivery brings a heightened level of it,” Warren Solochek, NPD's senior vice president, said in a statement.  “Restaurants need delivery in today’s environment in order to gain and maintain share. It has become a consumer expectation.”

Restaurants have seen the shift. Wesley Wobles creates high end, sit-down fare at his Southern-French hybrid eatery dubbed Pinky's Space in New York, then sends most of it right out the door. Delivery has grown to the point that its' as much as 75% of his business.

“When we signed up with GrubHub that changed everything for the business,’’ he says of the online and mobile food ordering site. “Our first day online, our business tripled.’’

These days, Wobles says he recognizes that  "we won’t make a lot of money from walk ins,’’ Wobles says. “Our business is going to be delivery and catering.’’

Chef and restaurateur Zach Pollack says that he designed his Italian-American eatery Cosa Buona in the Echo Park section of Los Angeles with delivery in mind.

That means its menu is completely different from Pollack’s other Los Angeles restaurant, Alimento, where the cooking of the pasta is timed to the minute to ensure it’s the perfect texture when it arrives at a diner’s table from the kitchen.

“Obviously when it’s in a box for 60 minutes, and not 60 seconds, that changes’'’ the food, he says.

So, at Cosa, there are no pastas. The specialty is pizza, along with some other menu choices like meatballs finished with burrata and eggplant parmesan that's "as good reheated as it is cold from the fridge.’’

Roughly two-thirds of the food Cosa Buona serves is eaten on site. But the lion's share of the food going out the door is delivered rather than customer's taking it out.

Tapping into the strong demand for delivery is particularly critical in a city like Los Angeles, Pollack says, where rising minimum wages and other regulations make it harder for restaurants to make a profit. "A lot of places are trying to figure out how can we increase revenue without physically expanding our business,'' he says.

Diners are increasingly asking for their food to be dropped off not only for dinner, but for breakfast and lunch as well. Delivery of breakfast or morning snacks soared 13% between 2012 and 2017, while lunch deliveries ticked up 3%, NPD says.

BJ's Restaurants, which operates 198 casual-dining restaurants in 28 states, says the percentage of its business that is comprised of takeout orders and deliveries "has almost doubled in the last year,'' says chief marketing officer Kevin Mayer.

"It's definitely a strong emerging market,'' Mayer says of delivery. The dining chain has been offering complimentary delivery promotions, like free pizzas earlier this month to celebrate National Deep Dish Pizza Day, to spread the word about the option.

But it's not just national chains that are boosting delivery.

Mighty Quinn's Barbecue has 10 eateries in New York City and suburbs. With their delivery orders continuing to grow as a percentage of their business, the chain sometimes has three or four drivers working during a given shift at its New Jersey restaurants while it uses third party courier services at its other locations. 

"I think as people look at having their family meals at home, it's less about spending an hour in the kitchen cooking, and more about delivery or take out,'' says co-owner Magid, "We saw an opportunity to participate in that growing segment of the market.''


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