Chances are this sticks? It seems a safe assumption value is going to take on a significant role in the coming months. For one, nobody is quite sure where discretionary income is going to be. Will America be in a recession? Even if it’s not, restaurants are going to have to win back customers and they’re going to have to compete with grocers and other at-home options that historically carry better value perception. It’s one reason you see a lot of restaurants offering discounted bundle meals.
Additionally, keep an eye on what happens with loyalty, rewards, and app battles as restaurants break out the incentives to build lists and fight for the most valuable currency there is—data. This was unfolding pre-COVID and it’s only become more relevant as restaurants try to reach customers through mobile ordering and other contactless lures that have gained prominence, and to encourage spending journeys through direct channels instead of less-profitable third-party platforms. That app signup is going to be worth its weight in gold. Customers have proven more brand loyal in a COVID arena where they value safety, familiarity, and ease of ordering.
2. COVID drives a massive growth of off-premises purchasing
Here’s an interesting data point from Sense360: While about half of people used delivery during the pandemic, just as many have done it by calling on the phone as through third-party aggregators.
“Have you purchased food from a restaurant since the start of coronavirus?”
- Drive thru: 52 percent
- Curbside: 46 percent
- Carry-out: 42 percent
- Dined inside: 27 percent
- Delivery from calling: 26 percent
- Delivery from website: 25 percent
- Third-party delivery: 23 percent
- Delivery from restaurant’s app: 22 percent
- Have not eaten from restaurant: 8 percent
In sum, as of early July, 54 percent of people had used one or more restaurant delivery options since COVID began.
And despite the colossal growth in third-party delivery, more than half of those ordering delivery said they preferred to order directly from the restaurant.
“Which of the following do you prefer to use?”
- Directly from the restaurant: 63 percent
- Third-party delivery: 18 percent
- No preference 20 percent
Chances are this sticks? Restaurants have learned a lot from COVID restrictions and cost-cutting measures. One of them is the desire to invest in white-label or direct delivery. The pandemic compressed the innovation cycle and forced brands to get on board with delivery. In many cases, this meant engaging one or multiple third-party vendors or breaking exclusive contracts to expand reach (like Shake Shack did). There’s little doubt third-party delivery will remain a growing (and consolidating) player for an extended period of time, and many restaurants will continue to find ways to make it work, including jostling for better deals and data sharing, but the push toward direct delivery isn’t going away. Restaurants want to control the experience, and keep the fees down. Plus, it’s a more cost-effective option for customers and one reason curbside has been so popular.
The heightened adoption rates during COVID (forced by necessity) informed customers to some costs they might have ignored before. Or just traded off for convenience without understanding how many options they had. That’s likely changed now. There are far more off-premises choices in the game, and that includes restaurants that deliver through their own app or site. Whether they engaged outside help for last-mile service or not, restaurants have come a long way, quickly in terms of advancing delivery capabilities. And first-party preference is heart to the progress.
3. How restaurants and retailers have performed during COVID comes down to location.
Restaurants are racing to the suburbs. Starbucks has spoken at length about this. Urban city centers, as NYC’s indoor dining shows, are going to lag recovery. But importantly, moving to the suburbs allows brands to build drive-thru locations en masse. A lot of chains unveiled “restaurant of the future” models in recent weeks. What do they have in common: Smaller dining rooms, dedicated curbside spots outside, and pickup windows concepted with mobile ordering in mind. Taco Bell and Starbucks are working on the Chick-fil-A and In-N-Out model, too, where employees roam the line to get orders in quicker. This tells us one simple fact—restaurants are trying to bolster drive-thru experience and tools as we prepare for a convenience war unlike any other.