Web Exclusive | May 2013 | By Christine Blank
Signed, Sealed, Delivered
Burger King hopes its new delivery service will be a great profit-driver for the chain, as the company is banking on customers to put in large orders for office lunches, birthday parties, and other gatherings in the select cities where the service is offered.
But it may not be the only brand with a careful eye on the BK Delivers service. Other non-pizza quick serves might be hoping for its success to validate investing in the space, which could open new sales opportunities in urban communities.
Burger King began testing BK Delivers in late 2011 and recently expanded the option to 70 of its restaurants in San Francisco; Washington, D.C.; Los Angeles; Chicago; Oakland and San Jose, California; Miami; Brooklyn, New York; Las Vegas; and Houston.
“The demand has been overwhelming, and we hope to announce more locations soon,” says Petru Pusta with retail innovation for Burger King, in an e-mail to QSR.
Burger King is not the first major burger chain to offer delivery service, but it is the most prevalent in the U.S. McDonald’s began offering McDelivery in 2005 and has expanded the option to 1,800 restaurants in 19 countries, including China, Hong Kong, Taiwan, Singapore, Malaysia, Japan, Korea, India, and several Middle Eastern countries. Burgers, french fries, and other McDonald’s fare is delivered via bicycles.
“Packaging is the same as you would use for takeaway, but we have a special thermal backpack with compartments to keep the food fresh,” says Becca Hary, spokeswoman for McDonald’s, in an e-mail. As far as expanding McDelivery to domestic business, Hary says, McDonald’s has “nothing to report on the U.S. side.”
Burger King’s BK Delivers service is expected to contribute incremental sales to the chain, rather than eat into restaurant orders. U.S. businesses are likely to use the service to cater lunches and meetings at their offices, instead of having pizzas delivered, experts say.
“The office niche is huge; the average takeout order for office lunch is $134,” says Steven Johnson, grocerant guru with foodservice consulting firm Foodservice Solutions. “People don’t always want pizza. America loves burgers.”
Burger King and other quick-service operators could even take advantage of the need for catered breakfast meetings at offices, Johnson says. In fact, select McDonald’s restaurants on the East Coast were offering breakfast delivery service to offices a few years ago, he says.
Darren Tristano, executive vice president of foodservice consulting firm Technomic Inc., says Burger King is going after larger orders with its new delivery service. “They have a $2 service charge with a minimum $10 order,” he says. “It is designed to feed a group of friends. They are basically getting into catering by offering delivery using online ordering.”
Families that normally would have ordered pizza may now order burgers, Tristano says. “Burger delivery could also be used for tailgating. There are options for chicken and pizza delivery, but now they can order burgers.”
However, profitability in delivering fast food is not a slam dunk, analysts and consultants say. If the food is delivered cold and is of poor quality, the program will quickly lose steam.
“Food integrity and distance for travel are going to be the keys for success. You don’t want the beef to dry out or get cold, the vegetables on the hamburger to get soggy, or the bread to get hard,” Tristano says. Chains adding delivery also have significant added expense and potential cannibalization for customers who would have placed larger orders inside the restaurants or at drive thrus, he says.
Burger King uses proprietary thermal packaging that isolates cold food from hot food. “Both the hot compartment and the cold compartment are specially designed to help ensure a quality product when delivered,” Prusta says.
Other major non-pizza quick-service and limited-service chains have toyed with delivery over the years. “Burger King is following suit with other successful brands that are creating a new outlet to grow their sales,” Tristano says. Jimmy John’s is the only major sandwich chain to offer delivery service at all of its locations. Domino’s Pizza also recently added sandwiches to broaden its delivery menu.
Restaurant delivery services such as Doorstep Delivery have been delivering food for Red Robin, Fuddrucker’s, and other burgers chains in select cities. “If you are not delivering food to your customers, someone else is going to,” Johnson says. “Restaurant managers and brand managers are very naïve when they think about brand protectionism, saying, ‘Our brand doesn’t do that or go there.’ Customers will decide where to buy your product.”
Deciding whether or not to add delivery to a quick-service business might simply be a matter of location. College campuses, for example, have a built-in delivery audience and a generally small radius to deliver to.
Wrap eatery [B]Ski’s in Chapel Hill, North Carolina, has successfully offered delivery around the University of North Carolina at Chapel Hill’s campus since its inception seven years ago.
“Being on a college campus, we didn’t want to make it difficult for people to order from us,” says Bradley Smith, cofounder, president, and CEO of [B]Ski’s. Delivery accounts for more than one-third of the operator’s business because its wraps are delivered warm and quickly. It will only deliver in a limited area around campus and to the University of North Carolina Hospital.
“Every item we serve is made to order and made hot,” Smith says. “The wraps have foil wrappers that hold in the quality and the heat. Multiple wraps in the bag keeps the other wraps warm.”
There is no indication whether other major burger brands will dive into delivery as wholeheartedly as Burger King. But Tristano says it’s a safe bet they’re paying attention.
“They are all looking at how Burger King is doing it, to see examples of best and worst practices,” he says. “If Burger King is successful, they will have successfully created demand for burger delivery, and then all the other brands will jump in afterward.”
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