Consumer Trends | October 2017 | By Kevin Hardy

What's New in Off-Premises Dining

How operators are responding to guests’ booming demand for food outside the restaurant.
By maintaining in-house delivery, meal-kit service Farm Hill has more control over providing great customer service. Farm Hill
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Traffic in the dining rooms at Which Wich’s 500 locations has thinned out over the last year and a half, but nothing’s wrong with the business. Sales aren’t hurting. Customers aren’t fleeing to the company’s competitors.

Dining-room traffic is down because consumers are increasingly eating Which Wich beyond the brand’s four walls, whether it’s picking their sandwich up to go, ordering it via the drive thru, or using third-party delivery services. The brand has responded to those changing behaviors by placing less emphasis on customization and more focus on speed and convenience.

Which Wich founder and chief vibe officer Jeff Sinelli says customers can still use the brand’s iconic brown paper bag and Sharpie marker to pick their own unique combinations of meat, cheese, and other toppings. But more are opting for the ease and speed of selecting pre-determined sandwich options. As many as half of customers now select signature sandwiches.

“It’s a great shift for us,” Sinelli says. “They don’t have to make as many choices.”

Which Wich is far from the only limited-service chain that’s been affected by the evolving nature of off-premises dining. With mobile apps and other tech tools providing guests easier access to food than ever before—and with the need for speed and convenience at an all-time high—operators are necessarily finding ways to accommodate consumer demand for food outside the restaurant.

Sinelli predicts that today’s average Which Wich size of 1,600 square feet could shrink to below 1,000 square feet. In recent years, the company has signed agreements with many third-party delivery services across the country to bring sandwiches directly to customers.

Across the country, countless quick-serve and fast-casual brands are similarly reinventing their experience on the fly so they don’t fall behind.

Balancing speed with service

The rise of off-premises dining presents both opportunities and challenges for brands. As customers continually request convenient, on-demand dining options away from a restaurant’s dining room, it puts more pressure on brands to meet speed and convenience demands, while oftentimes increasing operational complexities.

It also leaves fewer chances for those personal touches that can elevate the customer experience. While quick serves may have only a few seconds to impress guests with customer service at the drive thru, third-party delivery and online-ordering platforms often mean guests receive no personal contact from employees.

“Service is important. But speed and convenience are an aspect of service,” says Juan Martinez, principal and founder of Profitality, a foodservice industrial engineering and ergonomics consultancy. “And as a guest, you have to say, what’s most important to me? The challenge is that the needs for guests have evolved dramatically over the years. You might want one piece of service, and somebody else wants another piece of it.”

Martinez says demand for off-premises options continues to reshape restaurant design. Many fast-casual and quick-service concepts are rolling out a version of curbside pickup, long a mainstay among casual-dining chains, in what Martinez calls a “park-thru.” Meanwhile, drive-thru concepts big and small continue adding extra windows, lanes, and parking spaces past the drive-thru window to keep up with the operational complexities of constant menu innovations.

For years, fast-casual brands have seen sales spike as they’ve captured market share from other segments, says Victor Fernandez, executive director of insights at TDn2K, which compiles sales data from thousands of restaurants. But they’re losing share as diners increasingly flock to opposite ends of the restaurant spectrum; on one hand, they’re choosing upscale casual and fine-dining concepts for their in-store restaurant experiences, while on the other they’re choosing quick-service brands that offer convenient, off-premises options for when they’re in a hurry.

“Those brands that provide more of that experience and better-quality food and different flavor profiles seem to be having success,” Fernandez says. “But when it comes to value and convenience—just a good meal to feed my family on a Tuesday night—it seems to be that those who are providing better to-go, delivery, and drive-thru options are really winning that game.”

For quick-service and fast-casual brands, these trends mandate technological investments in apps and online ordering platforms. Yet Fernandez acknowledges that this sets up a “hard-to-walk balance” for restaurateurs.

“You want technology to enhance the customer experience. You want technology to make it faster and more convenient,” he says. “But at some point, there’s a person involved. And when that happens, that person needs to elevate the experience. No matter what happens, it’s that personal experience that can elevate the experience to where you’re more likely to come back.”

As goes delivery, so goes carry-out

Only a few years ago, most Americans had to choose between Chinese food and pizza if they wanted at-home food delivery. That’s no longer the case; most urban residents have access to third-party delivery options powered by the likes of Amazon, Uber, and Yelp that deliver everything from pasta to sushi to barbecue.

That’s led to a decline in delivery as a share of sales for limited-service pizza concepts, says Scott Iversen, vice president of marketing for Toppers Pizza. While other fast-casual and quick-serve brands focus more on delivery, Iversen says, pizza concepts are, ironically, leaning harder on carry-out orders.

Five years ago, nearly three-quarters of all Toppers’ business came from delivery orders. Now, delivery makes up about 55 percent of sales. Iversen says comparable sales continue to grow, and check averages have remained steady.

“I think it’s more that the share of the pie is changing,” he says. “It’s additional transactions. It’s additional carry-out business that we maybe weren’t getting in the past. I think technology has been a huge factor. It’s just so much more convenient now.”

If pizza delivery once held a semi-sacred role among American families as a special Friday night family meal tradition, it now sits on a long list of home-delivery options. That could have spelled disaster for pizza concepts. But Iversen says customers are choosing pizza more often and for more ordinary occasions, like weekday dinners for one and even for snacking occasions.

“Pizza being that shared meal occasion with usually multiple people in the family eating pizza has morphed into people eating pizza as individuals,” he says. “More personalization and customization comes into play. It’s used in more occasions today than what it was.”

Convenience for the whole family

In a nod to an ever-busier consumer base, Chick-fil-A in July announced a test rollout of its Family Style Meals in three markets. The meals, starting at $29.99, include an entrée, two sides, and eight mini rolls to serve four people, with options to add more entrées, sides, and beverages.

Matt Abercrombie, manager of menu development, says the to-go meals were designed in partnership with a group of parents who wanted more convenient options for family mealtimes.

“Chick-fil-A wanted to provide a simple solution for guests who are looking for easy ways to provide meals for their whole family,” Abercrombie says. “Family Style Meals are about more than just the food. It’s an easy meal kit that can be ordered inside the restaurant or through the drive thru, but it’s also about connecting over a shared meal instead of individual orders.”

Restaurant traffic over the last several years has shown a “consistent increase” in the number of diners taking their food to go, he adds. Even the busiest of families desire to maintain a semblance of normalcy and consistency. Mealtimes are meant to be happy, he says, but the logistics of grocery shopping and meal preparation take away from that experience for many. Chick-fil-A has added “conversation starters” to the family meals to encourage families or groups of friends to put down their phones and have a conversation over a meal.

“Through this test, we wanted to see if providing a one-stop shop to our customers could simplify their lives and enable them to enjoy more quality time with their families,” he says. “The thing I’m most excited about with our Family Style Meals is the potential to help busy families connect over a meal. We know customers can order four individual meals, but there’s something about sharing food from the same serving bowl that fosters a connection.”

Why customer service is still key

Customers have grown ever accustomed to transactional business; meal kits are ordered with the push of a button and unceremoniously arrive on the front porch. UberEATS and Postmates orders arrive with no interaction from the restaurant. And countless concepts offer easy online ordering.

Yet many customers still crave personal touches in their food service, says Mark Wittman, cofounder of the San Francisco–area meal delivery service Farm Hill.

“We have many customers who like to still call in or use our online chat function and rely on that interaction,” he says. “Especially with larger groups of customers, they want to have the opportunity for some customization. But the delivery aspect is where we’ve seen an opportunity to differentiate ourselves. And because we are serving larger groups, there is a little more margin for us to provide that elevated experience.”

In 2016, Farm Hill began transitioning away from individual, one-off orders and now requires a minimum order of $30. Now, most of Farm Hill’s orders are big; they feed large conferences and rotate into companies’ regular lunch programs for employees.

By maintaining in-house delivery service, Wittman says, the “virtual restaurant” can offer personal touches that customer-facing restaurants just can’t get through third-party delivery services. Aside from standard vehicles and uniforms, Farm Hill delivery drivers build relationships with customers. Some even have their own security badges for regular deliveries at office buildings.

With delivery, corporate customers crave quality and dependability, Wittman says.

“Sometimes, I think with some of the third-party services picking up from the restaurant and delivering, they can’t always depend on what time things will arrive,” he says. “And it’s hard to scale those things. So if you’re a company that wants to order from a larger group, it’s harder to order from a third-party delivery service.”

The third-party debate

Tucked into a parking deck near Georgia Tech University in Atlanta sits a tiny Wing Zone outpost. Workers deliver wings, burgers, and sandwiches to the campus and its surrounding area, but most students have no idea where the store is located.

“But I would tell you the store is incredibly successful,” says Wing Zone CEO and cofounder Matt Friedman. “It does over $800,000 a year in 1,000 square feet.”

Wing Zone has offered in-house delivery since its founding in 1991. And Friedman says the brand won’t give up that tradition, even with the multitude of available third-party options. With those services, the restaurant has no control over drivers, their cars, or their uniforms. And they lose the chance to provide branded customer service.

“You don’t know if they’re parking on someone’s grass,” Friedman says. “People are just looking at it from the perspective of, ‘I want the sale and I’ll do anything for the sale.’ I’m telling you, it could hurt brands. People are not thinking this through as clearly as they should. They’re just jumping onto this bandwagon.”

The explosion of delivery has put pressure on Wing Zone to change, Friedman says. A rebranding effort introduced better delivery and carryout packaging, invested in online ordering, and cut preparation time in half.

“It has forced us to become a better restaurant brand,” he says. “We’ve got to be faster; we’ve got to be better. We’ve got to be experience-driven. We love the segment that we’re in. Yes, there’s more competition out there. But we know we can beat them on execution. I also like the fact that, from our perspective, if someone has a problem or question, they’re coming to the restaurant or calling the restaurant directly. … We believe owning it in-house is important.”

Protecting the dine-in experience

Chicken Salad Chick’s first store had no dining room—just a carry-out counter and drive-thru window. And convenience continues to be an important play for the 70-unit brand; about 20 percent of sales come from the brand’s pre-packaged half-pound and 1-pound tubs of chicken salad and sides.

The company recently redesigned its kitchens and counters to better accommodate call-in orders and has added third-party delivery in some markets. President and CEO Scott Deviney says the portable nature of the brand’s namesake product gives the company an advantage in competing for off-premises dining dollars.

“It doesn’t need to be heated. It doesn’t need to be under a heat lamp,” he says. “It travels very, very well. It is a very portable product that people can take with them to the beach, the lake, soccer fields, wherever.”

Yet for all the brand’s success in the off-premises arena, Deviney isn’t ready to give up on the dine-in business, which still accounts for half or more of sales. Restaurants have fostered a comfortable vibe to sit and stay a while, he says. Though the model is fast casual, tables are covered in white tablecloths and employees offer some service by clearing plates and refilling drinks.

“They want to come and sit down and have a meal with their friends or their coworkers. That’s still going to be a very big portion of our business,” he says. “Our guests are going to be taken care of. We want them to feel loved when they come in the building. Many people come for that experience.”

For now, Deviney is content to do both: encourage growth of off-premises, convenience-driven sales and promote the more experience-centric dine-in business. The market is too uncertain to do anything else.

“It’s uncertain where we’re heading in the long run, but we know that today we can’t necessarily react. We’re not going to be the trendsetter. We’re going to take care of our business today and worry about things we can control,” he says. “And as things change and consumers tell us things, we’ll react accordingly. But it’s pretty unclear where some of that carry-out and third-party delivery will take us.”