It used to be that if you wanted food from a restaurant, you had to go there. Ah, how times have changed.
Consumers’ demand for on-demand convenience is spreading across industries and demographics. Now, people can go online to order groceries, home repairs, even dog grooming – and it shows up at their doors. This has huge implications for the restaurant industry. Delivery’s skyrocketing popularity is a game-changer, and brands must get on board or risk losing customers to their more savvy competitors. Online ordering and delivery will only get more common in coming years, so it’s imperative that restaurant owners lay the groundwork in order to stay in the game.
Change is tough, but here’s the bright side: Studies show that leaning into delivery increases overall revenue. For Capriotti’s franchise partner Craig Garofalo, partnering with third-party delivery services helped increase sales by 38 percent year over year, and a whopping 37 percent of his sales now come from off-site orders. That’s a big deal, and Craig wants all current and potential franchisees to know how best to capitalize on delivery and catering. Here are some of his key takeaways:
Don’t Get Spooked By Commission
Let’s be honest: Third-party delivery services can take anywhere from 17 to 30 percent commission on your restaurant’s sales, and that hurts. It’s what keeps many restaurants from working with these services. These hold-outs avoid paying fees to third parties, but they also miss out on a lot of potential delivery business.
When it comes to delivery services, Craig encourages franchisees to look past the pain points. Most third-party services offer free sign-up, and they boost your bottom line.
Craig and his business partner Andy Poch started to look at commission for delivery companies as a marketing investment for their two Chicago Capriotti’s locations. Each platform displays the Capriotti’s brand to visitors, keeping the restaurant top of mind and driving sales. They now partner with eight different online ordering and delivery services.
By viewing commission as an investment rather than a cost, Craig and Andy increased their delivery and catering sales from $6,300 in January 2017 to $32,000 in January of this year. That’s a 500 percent increase.
Learn About Your Delivery Customers
One of Craig’s biggest misconceptions when he started pursuing third-party delivery business was that those customers would eventually “convert” and begin ordering directly from the Capriotti’s website, saving him money on commission.
What he learned was that third-party delivery customers have more brand loyalty than he expected. These users don’t switch between different delivery services to find their favorite restaurants – they have a favorite delivery service, and they browse restaurants straight from that site.
Because of this, it’s important for restaurants to develop a presence across delivery sites in order to reach the greatest number of customers.
It’s also essential for restaurants to understand why various customers use delivery. Roughly 90 percent of Craig’s catering sales come from business lunches, so he takes extra measures to target those corporate types with his marketing.
Craig figured out that many companies provide lunch stipends for their employees. To make billing easier, these companies often partner with online ordering or delivery services. Employees simply log on and choose what they want for lunch, and their stipend is already applied to their account. By making sure that Capriotti’s is featured on those sites, Craig snags repeat business from employees.
Setting up partnerships with third-party delivery services is a simple process. Capriotti’s is a national brand, so popular services have ready access to the menu – franchisees just provide pricing and store hours. The vast majority of services offer free onboarding for restaurants, and Capriotti’s has negotiated rates with companies like UberEats that charge a small fee.
“It’s generally up and running in two days,” Craig said. “As soon as they get the tablet to us, we’re ready to go.”
Soon, third-party delivery will get even easier for restaurants. Now, many services provide a tablet that’s synced with the ordering system and tells restaurants what to make and when. By 2019, Craig expects many services to link directly with restaurants’ POS systems and print tickets automatically.
With such a painless setup, it’s easy for restaurant teams to be caught off guard by the number of orders they receive. For Craig, the third-party partnerships created a whole new day part for his Capriotti’s locations – they often receive 100 to 150 orders before 11 am.
Craig avoids backups by preparing well in advance for catering and group orders. He takes large orders into account when scheduling employees and buying supplies. His team prints out catering tickets for the week and hangs them on a clipboard – sometimes they have up to 10 in one day. Team members review the tickets the night before and do any preliminary preparations. Craig often schedules drivers as soon as he receives the order, instead of waiting until the day of the job.
An Easy Choice
Craig and Andy learned a lot by leaning into delivery and catering, and they’re glad they did.
“If I don’t offer delivery, those delivery customers won’t be persuaded to come in by any marketing tactics from my end,” he said. “They’re committed to that service.”
By taking advantage of the widespread shift toward off-site ordering, Capriotti’s franchisees can springboard their sales to new heights.
To learn more about franchise opportunities with a restaurant brand that stays on the cutting edge of industry trends, contact us at (702) 745-5848.