How the restaurant delivery industry is sustaining itself thanks to the return of in-person meals
OAKLAND, Calif .– Last fall, as the weather cooled and coronavirus cases began to increase, May Seto, owner of Grand Lake Kitchen in Oakland, refurbished a used pizza oven and started a take out and delivery pizza business in an additional kitchen where she had cooked for catering and private events.
Today, one of two Grand Lake locations serves as a hub for couriers who collect coffee and pizza dishes from the restaurant. Ms Seto also plans to rebuild the entrance to her alternate location to provide more space for the herds of delivery drivers who collect food.
“We could rearrange the restaurant front a bit and keep the delivery in mind as if it’s here to stay, because it is,” she said.
Delivery services like DoorDash and Uber Eats have become a lifeline for businesses during the pandemic. Restaurants learned the logistics needed to manage them – rearranging kitchens and stocking take-out containers in abandoned dining rooms – and reluctantly accepted delivery charges that squeezed their already slim profit margins.
Some of these changes are starting to look like they could become permanent, as consumers don’t let go of their newfound penchant for delivering food to their front door. In a recent JD Power survey, 71% of consumers said they would continue to order as much or more than they did during the pandemic.
In markets that reopened earlier than most places, such as Florida and Texas, as well as Australia, DoorDash’s order volume has fallen about 20% from the peak of the pandemic, said the society. Uber Eats also saw declines as communities reopened, but its revenue still grew 230% per year in the first quarter of this year – a welcome respite from Uber’s plummeting ridesharing activity.
Something similar is happening in places like San Francisco. As lockdown orders eased this spring, Laurie Thomas, co-owner of two restaurants in the city, said deliveries had declined. But as San Francisco began to reopen more fully in June, Ms Thomas’ DoorDash orders rebounded and were slightly lower than they had been during the pandemic.
“Delivery has become an important part of life during the pandemic,” said Ben Bleiman, head of the San Francisco Bar Owner Alliance. “The question is how much of this is here to stay and how much is going to go. “
There is no doubt that the pandemic has been a boon to online delivery services. In the first quarter of the year, DoorDash processed 329 million orders, a quarterly record for the company and an increase of 219% from the previous year, he said. DoorDash estimated it would process $ 9.4 billion to $ 9.9 billion in orders in the second quarter of the year, after processing $ 9.9 billion in the first quarter.
If delivery is here to stay, restaurant groups are pushing for ways to manage it financially. Ms Thomas heads the Golden Gate Restaurant Association, an industry group that has lobbied to cap the fees charged by delivery companies, while allowing them to charge additional fees for marketing services. At the start of the pandemic, many cities urgently put a cap on the fees delivery companies could charge restaurants. But many of those orders expire. If charges return to pre-pandemic levels, delivery will become unaffordable, business owners said.
Last week, the San Francisco supervisory board voted unanimously for a permanent 15% cap on delivery charges. Similar measures are under consideration in Chicago and other cities.
“We cannot have a system where people have to pay more than 30% of their sale to survive,” said Ahsha Safai, a board member who co-sponsored the legislation.
DoorDash and Uber Eats have responded to emergency caps by revamping the way restaurants pay for their services and enforcing local charges. In April, DoorDash gave restaurants the option to pay a 15% fee for basic services and the option to pay higher fees for marketing and other services. In some cities, such as Chicago, DoorDash charges customers a “Chicago Fee” of $ 1.50. In Jersey City, NJ, which temporarily capped the fee at 10%, Uber Eats added a “temporary local fee” of $ 3.
Christopher Payne, chairman of DoorDash, said there are other ways for lawmakers to support restaurants, such as pursuing alfresco dining and alcohol delivery.
“Most restaurants want to meet customers where they want to be,” Mr. Payne said. “The reality is that customers want both opportunities. They want to go to restaurants and have the great experience that they miss, but they also want to get what they want at home.
Even high-end restaurants that turned to take-out as a lifeline during the pandemic have said they could keep it as a complement to fine dining.
“There is currently enthusiasm around returning to in-person meals, but we strongly believe that the long-term health of restaurants and other service businesses requires creativity and a variety of revenue streams,” said Nick Kokonas. , co-owner of Alinea, a Chicago restaurant that offers dining experiences that can cost $ 210 to $ 415 per person.
During the pandemic, Alinea began offering take-out options at $ 35 per person, and Mr. Kokonas, who is also the managing director of catering software company Tock, said Alinea will expand its take-out offerings.
Genie Kwon and Tim Flores opened their Filipino cafe and bakery, Kasama, in Chicago last July. Delivery was not part of their initial vision for the restaurant, but the pandemic has changed their plans. They’ve stacked their bar with take-out containers and their dining room full of couriers and customers taking orders.
Ms Kwon said she made a habit of letting new menu items sit for an hour before testing them so she could be sure they would still taste great after being delivered. As coronavirus cases skyrocketed in winter, she and Mr Flores debated adding a dedicated courier window to pick up food, as a measure of social distancing. During storms, Ms Kwon said, there were often not enough couriers to deliver orders, so she and Mr Flores ended up doing the deliveries themselves.
Ms Kwon said she hoped to reduce Kasama’s reliance on delivery, which she said accounted for 25% of her business during the pandemic, phasing it out over the next month to make room for meals. in person.
“At this point, we don’t have the space or the manpower to continue with the volume of delivery we were doing,” she said. “We’ll probably just keep the day as it is and then stop making the dinner delivery.”
To make sure customers stay with them, DoorDash and Uber Eats quickly expanded their delivery offerings. In addition to hot meals, businesses now deliver groceries, pet supplies, alcohol and dry goods, and encourage customers to add the new offerings to their baskets when ordering dinner. .
“Many Uber Eats users who primarily used the app to order food are now moving around and sticking to other parts of the business,” said Pierre-Dimitri Gore-Coty, vice president senior delivery at Uber.
Mr. Payne of DoorDash said: “One of the constant trends is that as they become more convenient, consumer expectations are rising, not falling. “
He added, “The arc of wanting more convenience, more things delivered to you faster, that only seems to go one way.”