So far, online ordering has served up the biggest results in the form of increased efficiencies and sales for established delivery players like Pizza Hut, Domino’s, and Hungry Howie’s. However, it’s also poised to deliver their biggest threat. Direct competition from fast-food, quick-service, casual, and even fine-dining restaurants that, until recently, had no way to compete for delivery dining dollars. The proliferation of smartphones and widespread consumer acceptance of online ordering has spawned another force of change in the restaurant industry: the nascent crowdsourced food-delivery app sector. Many restaurants that would have never considered offering delivery a decade ago are finding they can’t afford to ignore the revenue stream offered by apps like UberEats, Postmates, Deliveroo, Caviar, Favor, and DoorDash.

Restaurants across the U.S. that have never actively marketed for delivery or carry-out customers are noticing a strange trend: despite declines in dining-room traffic, sales are up. A recent Marketplace article provides a prototypical example of this trend: Tacolicious, an independent San Francisco taco shop, can be “really busy but look really slow.” That’s because their lunch crowd was down 35 percent in 2018, but lunch revenue was up 8 percent. The delivery apps have customers eating more of their tacos off-site.[1] In a May 2018 QSR Magazine article, Firehouse Subs franchisee Clint Rohletter’s Atlanta location is served up as an example of the same trend. Five years ago, few customers took their food to go. Now, the opposite is true and “Rohletter’s team is sending out sandwiches via six different third-party delivery services: UberEats, Zifty, Postmates, Amazon, GrubHub, and DoorDash.”[2]

Firehouse is among the restaurant operators who have noticed this trend and shifted the way they do business to accommodate third party delivery services. According to Food on Demand News, “Firehouse Subs … grew its traffic 4 percent in 2018,” which CEO Don Fox said is a “5 percent spread” over the restaurant industry as a whole. Without growth in delivery and takeout volume, Fox said the chain would have lost revenue rather than growing in 2018.[3] Responding to this trend, Firehouse has taken steps to maximize out-of-the-restaurant sales with its “Rapid Rescue” program to improve the out-of-restaurant experience that includes dedicated pick-up racks and new packaging to keep hot sandwiches from becoming soggy in transit.

The delivery app trend shows no signs of slowing. According to mobile-focused market research firm App Annie, consumers ordered food and beverages through mobile channels 130% more in 2018 than in 2016. In that same time period, global downloads of the top 5 food delivery more than doubled, increasing 115%.[4] Newcomers to the delivery space from food carts to fine dining along with traditional delivery brands are benefitting from the value that delivery apps bring to the table. According to a July 2018 Gallup poll, 84% of U.S. adults order delivery or take-out each month. Apps are bringing seismic shift in how consumers order that no restaurateur can afford to ignore.

[1] Sam Harnett, “How Delivery Apps Are Changing the Restaurant Industry,” Marketplace, , accessed May 08, 2019, https://www.marketplace.org/2018/11/19/business/how-delivery-apps-are-changing-restaurant-industry.

[2] Sherri Daye Scott, “The Future of Firehouse Subs,” QSR Magazine, May 30, 2018, , accessed May 09, 2019, https://www.qsrmagazine.com/exclusives/future-firehouse-subs.

[3] Tom Kaiser, “Firehouse CEO Predicts Coming Delivery ‘Shakeout’,” Food On Demand, February 13, 2019, , accessed May 09, 2019, https://foodondemandnews.com/0213/firehouse-ceo-predicts-coming-delivery-shakeout/.

[4] Lexi Sydow, “Food and Mobile: Delivery and Beyond in 2019 | App Annie Blog,” App Annie, January 30, 2019, accessed May 09, 2019, https://www.appannie.com/en/insights/market-data/food-and-mobile-delivery-and-beyond-in-2019/.

Photo by Robert Anasch on Unsplash