Mom-and-Pops May Fare Best In the Third-Party Delivery World
Located just outside the busy LAX corridor of Los Angeles, Ayara Thai has offered delivery for years, using store employees to zip soups and noodles to nearby airport hotels, homes, and major employers. But with growing labor costs and regulations, chef and owner Vanda Asapahu realized moving to the burgeoning array of third-party delivery providers could help the restaurant focus on food, rather than worry about the complications of cars, GPS navigation, and drivers.
“We realized that third parties like Uber, DoorDash and Postmates do it much better than us—and much cheaper than us,” Asapahu says of her transition to such services in 2016.
Asapahu says off-premises orders account for as much as 40 percent of her business. To accommodate, she expanded her kitchen and built in a station to prepare to-go and delivery orders. That addition was hidden in the back of house to protect the experience of dine-in customers.
Ayara Thai has long marketed itself as a middle-of-the-road concept—a nice-enough setting to celebrate a special occasion but affordable and casual enough to order carryout for a night on the sofa. Asapahu thinks mom-and-pop restaurants like hers will fare best in the growing world of third-party delivery. That’s because fast-food establishments already excel at speed and convenience, and she suspects fine-dining establishments will struggle to earn frequency with off-premises occasions.
While delivery requires operators to evolve, Asapahu says those who sit idle do so at their own peril. The proliferation of companies like Amazon and Netflix has reshaped consumer expectations for nearly every commodity, including food.
“We’re that instant gratification society. You can’t change that. It’s becoming our culture,” she says. “While my parents cringe at the fact that people are going to enjoy my pad thai or crab fried rice hours later, it’s reality. As business owners, we have to accommodate.”
Similar sentiments led Black Bear Diner to sign onto DoorDash in September 2018. The 120-unit chain tested its off-premises prowess by first using online ordering system Olo for a year to acclimate employees to higher volumes of to-go orders.
Before DoorDash, 3.4 percent of the chain’s sales came from off-premises orders; just a few months in, that rate had already shot up to 6.7 percent.
“The sales are real,” says CEO Bruce Dean. “More in some stores than in others, but it’s been a very positive thing from a sales perspective.”
Many of Black Bear Diner’s biggest competitors, including IHOP, Denny’s, and Cracker Barrel, were already offering delivery services, so Dean says the company felt pressured to also enter the space.
It has worked to realize incremental sales growth without adding more staff. At the same time, Dean says he doesn’t want DoorDash orders to overwhelm kitchens and slow down food for in-store guests. Some stores have even throttled down the numbers of delivery orders they’ll accept during busy Sunday morning rushes.
While quick-service and fast-casual brands might have been first in the delivery space, Dean believes third-party services work well across the service spectrum. “I think the platform works for us all,” he says. “It’s an equal opportunity for everyone in the business.”
But adding delivery to a full-service operation isn’t without its growing pains. Fees from third-party services can top 30 percent in some cases. And operators can struggle to maintain food integrity when shipping items off in cardboard and plastic.
“I still feel that eating in is a much better experience,” says Angie Corrente, owner of Doma Kitchen in Marina Del Rey. “Our food is made from scratch so it’s better when its hot off the grill or hot off the skillet.”
Doma Kitchen, which specializes in European and Central Asian cuisines, partners with DoorDash and Postmates. But Corrente says they charge too much, and she also worries about sending a $20 plate off in cardboard packaging.
“If it was my choice, I’d rather them come in and enjoy the food,” she says. “But consumers want to eat at home.”
On the delivery bandwagon
While operators often focus on providing new and exciting menu items, many customers simply want comfort and convenience, says Bill Duffy, associate director for research at Gartner L2. So, it’s no surprise that the numbers of full-service chains adopting mobile ordering and delivery continue to spike.
“What customers are looking to do a lot of times is cocoon,” he says. “They want to be at home and have food brought to them.”
Fast-casual chains have implemented delivery the fastest, but full service is on the move. In 2018, 16 percent of full-service chains studied by the research firm’s digital IQ index added pick-up programs and 9 percent added delivery services. Duffy pointed to companies like Bloomin’ Brands, Applebee’s, and Cheesecake Factory, all of which have added delivery options. He expects more will do the same in 2019.
“Whether it will be brand-owned is still an open question,” he says. “Customers do want these things delivered to their door so full-service restaurants need to be able to provide that.”