The delivery space continues to heat up — with good reason. The weekly use of delivery services has nearly doubled over the past five years, according to a Technomic & American Express study.
For restaurant brands, the pressure to deliver superb pickup and delivery experiences has never been higher. Our newest endeavor at Olo is focused on helping restaurant brands answer the challenges of delivery at scale (more on that later). On the delivery services side, players like Postmates, Caviar, DoorDash, OrderUp, and many more are referring to themselves as “pickup services” rather than “delivery services.” In other words, they are the agent of the guest and are simply picking up the order for the guest at a fee — oftentimes with no formal relationship with the restaurant.
One day, I read a press release that McDonald’s was launching a delivery trial with Postmates (a well-known last-mile delivery company) in Manhattan. I had to give it a try and see what the experience would be like for me and to have an excuse to ask the delivery driver some questions about what the experience was like for him. I ordered from the Postmates.com site that McDonald’s directed me to. The bargain price for getting an Egg McMuffin delivered to me came to $14.55 (before tip): $3.80 for my Egg McMuffin and $10.75 in delivery service fees. This was for testing purposes! Sure enough, I was able to track my delivery courier’s turn-by-turn travel on an Uber-like map to deliver the Egg McMuffin to me.
“So how did this work for you?” I asked him as he handed me my bag in a rushed manner. He explained that he received my order on his smartphone, biked to the McDonald’s, stood in line, ordered, paid, waited for the order to be prepared, and then got back on his bike and biked to me. I could not believe how low-tech his experience was. I imagined a scenario in which McDonald’s delivery really took off and all of the sudden every other person standing in line was wearing a bike helmet and doing a pickup for a delivery guest. Wouldn’t that degrade the in-store guest experience? Couldn’t using a digital ordering platform to order and pay ahead, so that the delivery courier could skip the line be a better (more efficient and more affordable) approach for everyone involved?
National restaurant brands are interested in improving the ‘beta’ version of this experience for several reasons. Among brands with a national footprint, a few common restaurant delivery themes have emerged.
- Delivery is only meaningful to a small part of a large brand unless it is offered as part of a network. One national chain I met with did some research to see how much coverage they could get by signing on with one of the delivery companies. No one company has the geographic reach to offer delivery at more than 10% of their stores: not much of a national service.
- The lack of synchronization in the current model is posing challenges for both delivery couriers and the restaurant. Brands need coordination between the two, so that when the order is fired into the POS and kitchen system, it would be ready to collect at the exact moment when the delivery courier arrived to skip the line and pick it up.
- Brands want to maintain a direct relationship with their guests, instead of sending them off to a third-party delivery company website that lists their restaurant alongside of its competitors. That means that the customer experience of delivery, from selecting delivery as a service model, to seeing rates and times, to watching the order get picked up and turn-by-turn delivered should reside on the chain’s own website and mobile apps.
These challenges have driven our thinking at Olo with our recent announcement of Dispatch. With delivery top of mind for most restaurants today, we are on the cusp of a new era of delivery efficiency.
Delivery companies will win because they gain access to a whole new set of restaurants and each delivery is far more efficient when the courier doesn’t have to wait in line to order or wait for the food to be made, making a larger market for delivery and a more profitable business model.
Restaurants will win because they gain access to a whole new audience of customers (highly, if not entirely, incremental transactions) who want their food but cannot come to pick it up themselves, growing revenue and profit per square foot — all without having to invest in building a delivery fleet and logistics expertise.
Guests will win because they get faster, cheaper and more predictable delivery from the restaurants they love.
As restaurant brands get excited about expanding their off-premise sales channels by offering delivery, doing so in a systematic and coordinated approach will enable them to offer delivery at scale, driving incremental sales without compromising the integrity of their existing business.
Noah Glass is the Founder & CEO of Olo. Since 2005, Olo has helped restaurant brands increase revenue per square foot by delivering faster, more accurate, and more personal service through digital ordering. Today, over 15 million consumers use the Olo platform to order ahead and Skip the Line at the restaurants they love.
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