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The Spoon

Daily news and analysis about the food tech revolution

hybrid delivery

Little Caesars Is Finally Delivering Its Pizzas, Thanks to a Hybrid Strategy With DoorDash

Little Caesars — a chain best known for its pickup-only model for pizza — announced today a partnership with DoorDash to deliver from Little Caesars stores in the U.S. and Canada directly to customers’ doorsteps. 

Here’s the catch: Little Caesars will not actually be listed on DoorDash’s website. Instead, the chain is adopting a hybrid delivery strategy where orders originate via the Little Caesars website and app. DoorDash will only be involved for the last mile, using its drivers to transport the food from restaurant to customer. 

The deal is just the latest of many hybrid delivery strategies restaurant chains are employing of late when it comes to using third-party delivery services. Panera operates an inverse version of the Little Caesars deal, where orders originate on the DoorDash, Grubhub, or Uber Eats platforms and are then delivered by Panera’s own drivers. Outback Steakhouse, meanwhile, struck a deal with DoorDash in September of 2019 to “complement” its existing in-house delivery program and receive incoming orders from both its own app and that of DoorDash.

By some accounts, 70 percent of restaurant delivery orders will come from third-party platforms like DoorDash by 2022. At the same time, however, restaurants large and small are looking for ways to offset the hefty commission fees and loss of control over branding that come with letting third-party services handle the entire delivery stack. So whether it’s handling the technical logistics, the last mile, or some combination of those, it makes sense more restaurant chains are experimenting with ways they can customize the third-party delivery model to meet their specific needs.

The deal with DoorDash will cover about 90 percent of Little Caesars’ locations in the U.S. and Canada. The chain’s full menu will be available, and there will be no minimum amount required for delivery.

Last year, Little Caesars unveiled its self-service Pizza Portal to speed up in-store pickup orders. With the addition of delivery, the chain is clearly taking consumer demand for off-premises options seriously. 

Report: 70 Percent of Delivery Orders in 2022 Will Come From Third-party Services Like DoorDash

Restaurant food delivery from third-party services like DoorDash and Grubhub will account for 70 percent of all delivery orders by 2022, according to a new report from CBRE Group.

It’s a surprising prediction — said no one ever. CBRE’s new report, the third in the firm’s U.S. Food in Demand series, is one of many, many pieces of research confirming the central role third-party food delivery services now play in the restaurant industry. Off-premises ordering is expected to be the major driver of restaurant sales over the next decade. An undeniable part of that growth is delivery, which according to the CBRE report reached $34 billion in sales last year, up 13 percent from 2017.

DoorDash, Grubhub, and other third-party services remain an important — and obvious — element of this growth, and for good reasons. As CBRE points out, there are many elements of the delivery stack restaurants need to meet today’s demand, whether it’s technical logistics to process orders, marketing services to widen a brand’s audience, or couriers and drivers that place the actual food in customers’ hands. “Restaurants often lack the infrastructure for direct delivery and the customer reach that third-party delivery operators like Grubhub, Seamless, Eat24 and DoorDash provide,” the report notes.

However, these services are also expensive for restaurants to use. Controversial commission fees eat into restaurants’ overall profit margins, which are already thin. The third-party delivery model itself is also currently under fire from multiple angles — how it treats workers, what it does to the environment, and the increasingly important question of profitability. 

None of those issues mean third-party delivery services are going away any time soon. Instead, the model will evolve, so that by 2022 it will look substantially different from the one we use today.

Already, we are seeing clues as to what direction that shift will take. A growing number of restaurants are now adopting hybrid strategies, where customers place orders and pay for them through the restaurant’s own mobile app or website, which handles the technical logistics around processing and fulfilling that order. Third-party delivery companies, meanwhile, supply the last-mile logistics, including drivers and couriers. Some restaurants, notably Panera, work off an inverse version of this, with customers placing orders via the third party’s app and the restaurant handling that last mile itself. 

Both approaches have pluses and minuses. The general consensus is that the hybrid concept will continue to gain popularity over the next year, even as it too changes and evolves alongside the way third parties process, fulfill, and deliver our restaurant orders.

Wendy’s Ramps Up Its Digital Order and Delivery Strategy

Wendy’s is intensifying its efforts around digital order and delivery, announcing at an Investor Day call last Friday that it is aiming to make digital sales 10 percent of all orders by 2024. Right now, digital sales account for 2 percent of orders.

Earlier this year, the Dublin, OH-based chain said it was investing an incremental $25 million into building “a stronger foundation” across its digital platforms. So far, that move to play catch up to its competitors appears to be paying off. At Investor Day this past Friday, Wendy’s Chief Digital Experience Officer Laura Titas noted in a presentation that check sizes are now 20 percent larger with mobile orders. For delivery specifically, the chain now sees check sizes 50 to 60 percent larger.

Titas’ presentation also suggested delivery will be key towards helping Wendy’s reach its 2024 goal for digital sales. To that end, she outlined multiple initiatives around improving the delivery experience.

For starters, it’s adding more delivery services. Wendy’s has partnered with DoorDash since 2017. Next year, the chain will expand its reach with third-party delivery to include Uber Eats and Grubhub, too.

And as is the case with many chain restaurants, QSR or otherwise, Wendy’s isn’t focusing its delivery strategy solely on those third-party partnerships. Instead, it will also launch what Titas called “in-app delivery,” where, thanks to a POS integration, Wendy’s can also process orders directly through its own app. While she didn’t give too many details, Titas said she expects this direct integration to knock three to five minutes off the delivery process. Meanwhile, the arrangement will also allow Wendy’s to track customer data more precisely.

Geolocation capabilities, to improve delivery and help ensure that customers are ordering from the right (i.e., the closest) Wendy’s, voice-order via Google Assistant, and a long-needed loyalty program were all announced at the Investor Day event as well.

Wendy’s certainly has its work cut out when it comes to evolving into a tech-forward restaurant company. Between Burger King’s many publicity stunts to drive mobile orders and McDonald’s turning itself into a tech company, competition is only growing fiercer when it comes to retaining customer loyalty. But with 60 percent of all restaurant orders now off-premises, there’s also a lot of room for growth and new audiences to grasp for those who can make their reach wide enough.