It’s only July 9 and I feel like I’ve already written “delivery is table stakes” this year so many times it’s lost some of its meaning. But it — the phrase and the delivery model itself — is here to stay, and businesses who aren’t at least working towards a strategy in that area will lose competitive advantage as more consumers migrate towards getting their food dropped at the front door.
That’s not a brand-new revelation. Restaurant owners, tech companies, and investors alike have been saying as much for some time. What is new, however, is that there are now more ways for restaurants to do delivery than the two extremes of pay for your own fleet or sign up with a third-party service. The new middle ground starting to get more attention is powered by technology.
A lot of it’s about using tech to drive more users to restaurants’ in-house apps, rather than to a third-party service like DoorDash or Grubhub, since restaurants risk losing some brand integrity and valuable customer data the minute they ink a deal with a third-party service. Companies like ShiftPixy, whom The Spoon talked to recently, are answering this problem by building software platforms that help restaurants drive more traffic and orders through their own mobile apps, but enable them to still take advantage of gig-economy-style driver fleets. ShiftPixy provides its own W-2 drivers to restaurants it works with.
Another company, Olo, offers a similar tech platform with a slightly different model, where they essentially partner with third-party services like Uber Eats and Postmates so that a restaurant doesn’t have to. The result could be the best of both worlds. Teriyaki Madness, for example, works with Olo and says it hopes to have 50 percent of its orders coming through its own mobile app and 50 percent coming through third-party apps by year’s end.
Third-party Delivery Apps Are Still Growing
Teriyaki Madness’ goal is a wise one to strive for right now, because even with increased talk of putting control back into the hands of restaurants, it’s clear third-party delivery services aren’t going away any time soon. That fact was underscored this week by eMarketer’s latest forecast, which predicts third-party food delivery apps will see upwards of 44 million users in the U.S. by 2020.
The forecast includes the usual suspects of third-party delivery and where they stand in the market, numbers that could swap around at any time, given how competitive food delivery is and how difficult attracting and retaining customers actually is, even for the top players.
What eMarketer does make clear, however, is that giving consumers more choices will be the key to driving growth for restaurants in the future.
Restaurant Menu Personalization Is on the Rise
An avenue for creating more choice in the restaurant will be through the menu itself. It’s a topic The Spoon’s Mike Wolf discusses often, and this past weekend he picked up that thread again on a podcast with Scott Sanchez, CEO of THE.FIT.
THE.FIT uses AI to help diners comb through restaurant menus and find items best suited to their dietary needs and preferences. While THE.FIT’s business is specifically focused on those with a lot of restrictions (e.g., Keto, gluten-free), this trend of using technology to personalize restaurant menus is one we’re going to see a lot more of. Large quick-service chains like McDonald’s are already employing AI-powered tech in some stores, while others, most recently Dunkin’, hint at similar initiatives for the future.
It will almost certainly play a role in the future of delivery. What that looks like, exactly, isn’t clear yet. But companies — whether a third-party service or a multi-unit chain using its own app — which use it to offer customers not just more choice but more relevant choice will be at a competitive advantage. At least, that is, until AI and personalization become table stakes themselves.
Until next time,