There are a lot of statistics and commentary surrounding delivery and what it means for restaurants. But this one sits heavy. In a recent study from strategy firm LEK Consulting, it’s estimated that, by 2023, delivery and off-premises dining will have triple the growth of on-premise dining. If you connect that reality with another, equally challenging one, courtesy of Dylan Bolden, senior partner at Boston Consulting Group, as reported in The Wall Street Journal, operators need to generate at least 25–30 percent of their orders from delivery for the labor economics to make sense.

So, there’s little mystery why this topic is pressing. As with many disruptors, there are two ways to look at the intrusion: Restaurants can get buried by their own lagged innovation—across all segments. Or, there’s ample runway to turn one of the most accessible channels to ever hit foodservice into a revenue and customer acquisition machine.

According to Statista, the revenue for online food delivery in the U.S. is predicted to exceed $19 billion in 2019. The company anticipates rapid growth through 2023 at an annualized rate of 5.9 percent.

But how vast is this whitespace really? By some estimates, delivery currently represents only 3 percent of total restaurant traffic.

Steritech, a provider of brand protection services for restaurants, surveyed more than 1,000 people nationwide about their food delivery and carry-out experiences in the six months prior to February 2019. The goal: provide a playbook for restaurants to craft a winning delivery experience as the industrywide heat dials up.

Tapping into consumer sentiment about off-premises dining can help brands separate by shaping a customer-centric approach. Just because it’s a tech-central movement doesn’t mean it should stray far from how brands treat guests who walk in the door. A seamless experience is simply defined in multiple ways in today’s purchasing journey. If that sounds retail-like, there’s no question delivery, in some ways, mirrors the effect e-commerce had on big-box retailers back in The Great Recession.

Restaurants need to meet guests where they are—and remain on-brand throughout the experience. Delivery can be a catalyst to driving sales and creating loyal, repeat customers. And just like a guest having a bad experience in the dining room, whether with an employee or with food, a subpar delivery setup will send guests running somewhere else.

Demographics

Here’s how Steritech’s sample broke down:

Age:

• Over 70: 3.8 percent
• 52–70: 17.2 percent
• 36–51: 27 percent
• 28–35: 23.8 percent
• 18–27: 27.6 percent
• Under 18: .6 percent

Gender

• Female: 69.5 percent
• Male: 30.2 percent

Geography:

• South: 37.6 percent
• West 23.4 percent
• Midwest: 21.1 percent
• Northeast: 17.9 percent

The delivery users

Data showed that busy customers are turning to delivery, frequently. More than 7 out of every 10 respondents said they ordered food in the six months prior to taking the survey.

The 18–27-year-old group ordered delivery at a higher rate than any other age group, followed closely by 36–51 year olds. Those over 70 ordered the least amount.

And here’s a key group to circle in marker: Those respondents who were married, with or without children, were the No. 1 group ordering delivery at 39.4 percent. Young families, in other words. Or millennial parents. Last year, a special report by Morning Consult for The New York Times found that roughly half of millennials were parents. Of those without children, 42 percent said they wanted them, 34 percent said they were unsure, and 24 percent said they did not want children. Assuming those who want children eventually have them, an estimated seven out of 10 millennials will be parents in the future. Add others from the currently undecided group and that portion could move closer to eight or nine out of 10.

And they might not be as keen to eat out as other millennials and those consumers who seek social experiences from food.

Across the board, millennials with children under the age of 12 score higher on various “foodie” checkmarks. According to Kantar, 60 percent of these millennial parents prioritize buying high-quality food over other spending areas, compared to 53 percent of the general population. The gap is even more pronounced in terms of identity: 73 percent of young parents consider food/cooking to be a major part of who they are as people; it’s 59 percent for the overall population.

How does this affect quick service? Kantar also found that 18 percent of millennial parents eat fast food a few times a week (with 4 percent reporting almost daily visits). Twelve percent visit “non–fast food, quick-service restaurants” a few times a week with 2 percent going nearly every day. These numbers drop off dramatically for sit-down restaurants as only 6 percent of millennial parents visit such establishments a few times a week.

In sum, there’s significant opportunity for restaurants to provide high-quality food in a convenient format. And in the case of many consumers, the apex of convenience is delivery.

Let’s look deeper at Steritech’s data for “who is using delivery.”

• Single: 34.4 percent
• Married with children under 18: 25.4 percent
• Married with no children: 14 percent
• Live with roommates: 10.6 percent
• Not married, with children under 18 in the household: 9.1 percent
• Other living situation: 6.5 percent

The single group is an interesting one for brands to target as well. Considering the fees, people ordering solo, especially those not in high-traffic urban areas, appreciate incentives and deals above other groups ordering in comparative bulk. This is one area where controlling data is very powerful for restaurants. Knowing that customer and their spending habits, and how to lure them back for repeat orders if they lapse, is essential.

Frequency counts

As fiery as this topic might be, the truth is delivery hasn’t become a way of life for the majority of diners. Steritech asked consumers, “within the last six months, how often have users placed delivery orders?” Whether directly from a restaurant or through a third-party app, delivery remains “casual” for close to half of all users.

• 1–3 times: 49.6 percent
• 4–10 times: 37.2 percent
• More than 10 times: 13.2 percent

Steritech’s takeaway from this involves who a restaurant’s biggest delivery customers are. Its survey showed that nearly the same percentage of respondents ages 18–27, 28–35, and 36–51 ordered delivery in the last six months, but order frequency increased with each respective age group.

In the previous six months:

• 9 percent of those ages 18–27 ordered more than 10 times
• 15 percent of those ages 28–35 ordered more than 10 times
• 18 percent of those ages 26–51 ordered more than 10 times

Again, survey takers who were married represented the top group ordering delivery, regardless of whether they have children in the household or not. Age and marital status, Steritech said, could point to higher incomes that come with increasing career status and dual incomes.

What does this amount to? Perhaps restaurants should focus less on capturing the purchasing power of upcoming generations. Given that cost is the biggest concern for those who skip delivery, restaurants could benefit from refocusing their delivery strategy on older, married customers.

Of the nearly 750 people who ordered delivery, nearly one-third (29.8 percent) said they used an app to do so.

Why aren’t more people using delivery?

More on that cost note. Among respondents who didn’t use delivery, reasons varied.

• Cost: 30.3 percent
• Not convenient: 25.1 percent (if you consider the wait times, delivery really isn’t always the most convenient option depending on where a consumer lives and what their routine is like. But again, people define convenience differently and sometimes not leaving the couch is all that matters).
• Don’t use apps on their phone: 18.7 percent
• Not happy with past delivery food quality: 4.9 percent (you’d think this would be higher, but it reflects something many brands tout: guests will lower their bar when they can get food delivered. The question is what’s the breaking point? And can you afford to lean on this crutch when everyone is delivering now, not just pizza and Chinese chains?)
• Not happy with past app experience: 1.8 percent
• Not happy with past delivery drivers: 2.1 percent
• Other: 17.1 percent

One of the comments, from a 28–35-year old, married female with children under 18 in the house: “I haven’t looked into trying it yet. I am afraid the cost will be higher than me just going to get something myself.”

For the most part, she’s right. It will be higher. But this mindset is also an opportunity for restaurants to pulse a freebie or other deal to get them over that initial cost hurdle. If the experience then proves to be worthwhile and satisfying, perhaps the cost-benefit equation blurs a bit in the future when getting in the car for pickup doesn’t sound as enticing.

Steritech’s takeaway: Restaurants will win over delivery customers by taking a hard look at pricing models and considering ways to educate guests about the fee structure. Simply, delivery fees, combined with the need to tip drivers, is a pain point for many customers.

How is delivery happening?

Understanding how consumers use delivery services helps restaurants target their marketing and refine internal processes to bring in more revenue, Steritech added.

How did people in the study place their orders?

Of the nearly 750 who ordered delivery, nearly one-third (29.8 percent) said they used an app to do so. The largest percentage of these users came from the 18–27-year-old demographic. The second largest was the 36–52-year-old base.

• Call-in order: 32.9 percent
• Via the restaurant website: 24.9 percent
• Via the restaurant app: 18.2 percent
• Via third-party delivery website: 12.4 percent
• Via third-party delivery app: 11.6 percent

These are numbers that will probably vary widely by user. But it never hurts to open multiple pathways to order points. Food delivery apps offer an expanded channel for distribution and widen reach. And they cater to consumer behavior trends.

The app breakdown

While this also will fluctuate greatly by market, Steritech’s survey looked at which third-party apps were earning the most business.

• Uber Eats: 18.7 percent
• Grubhub: 15.1 percent
• DoorDash: 14.6 percent
• Postmates: 7.6 percent
• Other 2.1 percent

The Wall Street Journal predicated Uber Eats to hit $11.6 billion in U.S. gross food sales by 2022. Grubhub the same figure. DoorDash $10.6 billion and Postmates $7.3 billion. Yet so much can change between now and then in terms of consolidation and other factors. Very hard to predict the specifics, but a safe bet to say they’re all nowhere near tapping out on earning potential.

One of the benefits of online ordering is that it cuts down on the human error element. Verbal and phone orders can get dicey, and they can bottleneck operations. A busy employee isn’t going to be at their most attentive during calls, both in taking the order and executing whatever they were doing before they picked up the phone. Naturally, there are in-house solutions, like call centers and employees dedicated to the process. But, regardless, from an accuracy standpoint, nothing compares to guests typing in their choices.

For restaurants and third-party delivery firms, Steritech said, it’s critical to have an optimal online experience that meets customer expectations. Here are some features worth considering:

• Offer online payment options
• Create a portal for dispute resolutions
• Provide real-time delivery tracking or time estimates
• Send text notifications and alerts
• Clearly communicate your fee breakdown
• Offer online tipping options

Moving on to another dilemma

The in-house versus third-party delivery debate rages on. In some cases, it’s not even a discussion, however. Not every restaurant can put together a fleet of drivers like Panera (and they’re still using third party). It’s just difficult to staff in-house delivery. And, for the most part, it’s impossible to reach as many customers as one of the major platforms, or multiple platforms, could.

That’s essentially what led Panera to take the third-party dive. “This deal is not about switching customers from one or the other app. It’s about putting Panera in places where customers are looking for it,” Dan Wegiel, the fast casual’s EVP and chief growth and strategy officer said.

The obvious pro for in-house delivery is that restaurants have complete control over ordering and delivery, which lowers risks in an industry where there are always risks. But, as Steritech points out, this can get costly. Technology development (and struggles if tech goes down), continual updates as tech evolves, additional employment costs for delivery personnel, and trouble scaling the platform along with unit growth.

Third-party has its own bag of concerns. Commission and delivery fees scrape away at the already small margin generated by delivery. It can muddy a brand’s value proposition, which, in turn, results in lost customers. Quality control. Once food leaves the restaurant, brands can’t control how long it takes, food temperatures, security, and delivery personnel behavior like they could if order completion was serviced in-house.

A 2018 Steritech survey showed that nearly 30 percent of delivery users experienced a problem with their order. Of those, 80 percent blamed the restaurant. It didn’t matter if they ordered from the location or a third-party delivery service. As operators can attest, it’s always the restaurant’s fault. Even when it isn’t.

It’s that notion that led Domino’s CEO Ritch Allison to comment in April, “I’d have a tough time sleeping at night if I was handing our food to an untrained, random third-party driver to then carry that over to our customer, because what happens when you have a service failure or you have a product quality problem in that situation?”

But not everybody is Domino’s, from a resource and delivery experience standpoint.

Solving the problems

A top-of-mind delivery complaint for consumers is what do you do if something goes wrong? It’s why trackers are so popular. There’s a certain ceding of control with delivery that worries guests. Steritech asked respondents how they tried to solve their problems.

• Called the restaurant directly: 57 percent (this is worth noting considering third-party delivery. Can you keep track of where the order went and which orders were picked up by which platforms?)
• Called the delivery service or submitted an issue through the app: 26.9 percent
• Posted an online review: 10.6 percent (scary proposition for restaurants that may or may not have had any hand in the delivery problem. But do guests reading reviews give restaurants the benefit of the doubt? More often than not, the answer is no).
• Tried to get it resolved using social media: 4.1 percent
• Other: 1.4 percent

Steritech did find that consumers were forgiving. More than 75 percent of those who experienced a problem were able to get their issue resolved and said they would use the restaurant or delivery service again. The main point is probably that first part, and if the customer has any alternative options at the ready. In other words, how much did they really want to order from that specific restaurant? If the answer is a lot, perhaps because of previous dine-in experiences, the margin for error expands. Another reason why dine-in experience is a key to off-premises demand.

Other numbers:

• 10.2 percent said their problem was resolved, but they would NOT order from the same restaurant/delivery service again.
• 8.7 percent said their problem was not resolved, yet they would order from the restaurant/delivery service again.
• 3.6 percent said their problem was not resolved, and they would not order from the restaurant/delivery service again.

Returning to an aforementioned problem, a recent Eater article quoted an anonymous employee of a top delivery app as saying “it takes the app days to respond to complaints about orders.”

Yet, referencing back Steritech’s 2018 study, eight out of every 10 consumers blamed the restaurant. Improving tech should help. But that also comes as demand surges and third-party apps handle more orders, leading to additional issues.

Offering customers an easy way to get their problems resolved helps brands stand above competitors. Steritech suggested printing phone numbers for problem resolution on receipts, packaging, or seals.

And when it comes to handling complaints or issue resolution, restaurants would be wise to staff for call volume and train employees not just how to take orders, but also how to problem shoot delivery setbacks. An issue resolution hotline for the entire brand is another possibility, Steritech said.

Messing with tampering

Yes, drivers eat delivery food. It’s a disturbing picture. A terrifying one if you’re a restaurant owner. A doubly horrifying image if you’re a local operator or single-unit restaurant owner who’s poured their soul into the business.

Steritech asked consumers if they expected to see a tamper-evident seal on their food.

• 32.8 percent expected it would have a seal
• 32.8 percent did not expect it to have a seal
• 34.4 percent had never considered it

Chains continue to tweak packaging and seals to alert customers to tampering. Per Steritech, there remains some debate over whether tamper-resistant packaging or tamper-evident seals provide a better option.

The first typically carries higher costs for the operator, cutting, yet again, into the slim delivery margin. Tamper-evident seals might be more cost effective, but the quality of the seal needs to be such that it cannot be broken.

And there also needs to be a clear process for the customer to follow if a seal arrives broken, which goes back to the handling of complaints on the restaurant side. Who takes that call? What is the protocol? Does the third-party vendor need to respond if the seal is broken on its watch? All of these questions need to be considered before picking one of the options, and executing it so it’s worth the added cost.

Carry-out or delivery?

In Steritech’s survey, delivery won with nearly 60 percent preference.

In both cases, a willingness to wait was key.

• Up to 30 minutes: 50.6 percent
• Up to 45 minutes: 35.5 percent
• Up to 60 minutes: 11.6 percent
• Up to 90 minutes: 1.9 percent
• Other (two thirds of this group said 10 minutes or less): .4 percent

One data point that jumped out: More than two times as many women used online reviews to resolve issues versus men. Monitoring online review sites closely provides an opportunity not only to resolve issues but to also humanize the brand.

Steritech asked customers, “If you could change one thing about your delivery or pickup/carry-out experience, what would it be?”

Quality and service:

• Keep food warmer.
• Care in transporting the food.
• Faster delivery and temperature control.
• Order accuracy and how long it takes to arrive after placing the order.
• Correct order and ability to see order before it leaves the restaurant.
• Cost.
• Better value for the cost.

Delivery experience

• Pay online, not over the phone.
• They would deliver later.
• Have the deliverer coming to my door
• identify him/herself before I opened the door.
• Not have to talk to a person face-to-face. Even the delivery driver.
• I would add that more restaurants opted into it. There are some restaurants that I wanted to eat from but weren’t on the app.

Packaging

• The items need to be sealed to prevent contamination.
• Secure packaging to prevent spills.
• Sealed packaging would be nice.
• Better packaging to keep food from getting cold/soggy, especially for crispier foods like fries.

The conclusion

“Now is the time for brands to capitalize on this revenue stream by listening to their customers’ feedback, refining their delivery processes, and staying on top of trends that allow them to meet the growing consumer demand for food anywhere and anytime,” Steritech president Doug Sutton said in the report. “By some estimates, by the end of 2020, more than $220 billion in delivery sales could be up for the taking. What enterprising restaurant wouldn’t want to take their share?”

That’s an easy question to ask. But getting there, while guarding profitability and customer experience, is anything but simple.