by David Klemt David Klemt No Comments

SevenRooms Reveals Third Party Impact

SevenRooms Reveals Third Party Delivery Impact

by David Klemt

Person using Uber Eats on their iPhone

New findings from SevenRooms, the powerful reservation and guest relationship platform, show the impact third-party delivery has on restaurants.

In partnership with YouGov, a respected internet-based market research and data analytics firm, SevenRooms finds that direct delivery saves operators thousands of dollars per month.

The overall finding of the “Data & Dollars: Revealing the Impact of Third-Party Marketplaces” report is startling. Operators are relying on a technology that in reality is harming them and their bottom line.

Cost of Convenience

Foodservice operators and workers, along with being hospitable in their mission to serve others, are adaptable.

The industry proves this time and time again. This is particularly true of the past 12 months.

Nimble operators pivot quickly, so it makes sense that so many restaurants, bars and other foodservice businesses embrace delivery, takeout and curbside pickup. Doing so is a direct and seemingly logical response to a major shift in consumer behavior to lockdowns, restrictions, and health concerns.

Most operators are well aware that state third-party delivery platforms take a 30-percent commission on average. However, the cost goes beyond devastatingly high fees: operators also lose control of the guest journey.

Real-world Example

SevenRooms illustrates the negative financial impact third-party delivery platforms with three examples: a high-end Italian restaurant in New York; a high-end steakhouse in Los Angeles; and a high-volume casual restaurant in California.

Let’s take a look at the last example.

Over a six-month period, the restaurant fulfills 19,000 combined orders. Delivery makes up 75 percent of these orders, takeout/pickup account for 25 percent. The average order is $33, and over the six-month period the total order volume is $617,500. Had the restaurant implemented direct delivery rather than third-party, they would have saved about $154,000.

Break those savings down and the restaurant would save approximately $25,600 per month that could go to:

  • PPE: 853 boxes of face masks or 196 boxes of gloves.
  • Takeout: 101,000 food containers.
  • Guest experience: 522 tanks of propane to keep guests warm on patios.

Using an average rent amount of $6,000-15,000 per month in Los Angeles, that’s also two to four months’ rent.

Guests Support Direct Delivery

The impact of third-party delivery on restaurants isn’t lost on consumers. Many view ordering food as more than just convenient, they see it as a way to support their favorite businesses.

Luckily, consumers are supportive of ordering delivery, takeout and pickup directly from restaurants.

Per SevenRooms:

  • Firstly, 37 percent of Americans are eager to do anything they can to help restaurants.
  • Nearly half, 48 percent, think it’s more economical to order directly from a restaurant.
  • 28 percent who say they prefer ordering directly to third-party delivery feel that way after seeing their favorite restaurants suffer.
  • 23 percent are informed and think third-party delivery platforms charge restaurants too much in fees.
  • 16 percent feel that the harm done to restaurants by third-party delivery outweighs any benefits.

Leverage Direct Delivery Support

SevenRooms identifies several ways in their report that operators can succeed in getting consumers to order directly.

One way is the platforms’ own Direct Delivery solution. We speak to SevenRooms CEO Joel Montaniel about this solution on our Bar Hacks podcast.

Then, of course, there are an array of incentives consumers are willing to accept in exchange for direct delivery and ordering:

  • 41 percent of Americans would order directly over ordering via third-party if a restaurant has its own app with features such as tracking and communication.
  • 37 percent consider a complimentary item such as an appetizer, drink or dessert in addition to their order an appealing incentive.
  • 32 percent like the idea of a personalized promotion applied to a future order or in-person visit.
  • 28 percent indicate interest in a personalized promotion for their meal such as a discount code or comp item.
  • 17 percent are fans of restaurants using ordering history to customize their menu and experience.

Read the entire report here. To learn more about SevenRooms, please click here. Connect with SevenRooms on Twitter, Facebook, LinkedIn and Instagram.

Image: cottonbro from Pexels

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E-Commerce Alters Drinking Occasion

E-Commerce Alters Drinking Occasion

by David Klemt

According to estimates, beverage alcohol e-commerce grew by 40 percent in 2020.

Per data from the IWSR, ten “core countries” are driving that growth: Australia, Brazil, China, France, Germany, Italy, Japan, Spain, United Kingdom, and the United States. China, the reigning campion of beverage alcohol e-commerce, is expected to be toppled by the US by the end of this year.

Of particular note: growth in the above markets more than doubled from 2019, when online alcohol retail grew by 11 percent.

What this Means for Brick-and-Mortar Operations

We all know what drove the growth in online alcohol sales.

In their quest to find comfort in the midst of the global 2020 pandemic, they became comfortable with purchasing alcohol online as a long-term behavior. Alcohol brands were forced to pivot to online sales channels due to restaurants, bars, lounges, nightclubs and other brick-and-mortar F&B operations facing constantly shifting restrictions and closures. (See also: Los Angeles County restaurant restrictions.)

To compete, operators must continue to do what they’ve had to even before a pandemic absolutely ravaged the hospitality industry and millions of people’s livelihoods: adapt.

For at least several more months, drinking at home will be its own occasion, for obvious reasons. The IWSR expects brands to invest more into online alcohol retail. If that proves to be the case, operators can expect–as a worst-case scenario–fewer dollars spent on their brick-and-mortar operations.

Getting creative with alcohol delivery, takeout and pickup is crucial to give operators the best chance to be included in the at-home drinking occasion.

The Trends to Watch

In terms of delivery trends, you can click here for food trends so you can consider complimentary beverages. Click here for 2021 drink trends, which certainly include alcohol-free beer.

Athletic Brewing Co. alcohol-free craft beers.

Athletic Brewing Co. alcohol-free craft beers. Image: Athletic Brewing Co.

Speaking of delivery, the growth in alcohol e-commerce makes owning the guest journey by offering direct delivery even more important.

The IWSR has identified their own set of trends tied to the growth of alcohol e-commerce:

  1. As touched on above, at-home drinking becoming its own occasion outright.
  2. Premiumization will change. Some consumers will experiment less and focus on their favorite brands, and others will turn to brick-and-mortar channels for premium experiences.
  3. Politics will play a noticeable role on beverage alcohol, not just in the US but across the globe. Tariffs could change and strict e-commerce regulations could loosen.
  4. RTDs will remain strong or get stronger. Per the IWSR, “innovation in alcohol bases, exploration of new and increasingly local flavors, and premium product offerings” will ensure RTDs remain a crucial beverage category in 2021.
  5. Low- and zero-alcohol drink options will continue their evolution. Once stigmatized, these drinks exploded in popularity in 2020. For 2021, the IWSR expects them to become aspirational.

Last year changed the industry. Comfort, convenience, and a heightened awareness of health and wellness are altering how people consume and engage with brands, restaurants and bars. Operators, already facing challenges from all sides, must take the time to develop strategies to compete for e-commerce dollars.

Image: mentatdgt from Pexels

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Rise of the ‘Not’ Delivery Platforms

Rise of the ‘Not’ Delivery Platforms

by David Klemt

The big third-party delivery services are facing pushback in the form of community-based competition.

We’ve kept our eye on this burgeoning trend and the push for operators to implement first-party delivery, also known as direct delivery.

It isn’t directly related to hospitality but the first of the “not” sites that grabbed our attention was Not Amazon. As the name suggests, Not Amazon is…well…not Amazon.

The founder highlights businesses owned and operated by women and BIPOC and LGBTQA+ people. However, Not Amazon goes even further, as illustrated in their mission statement:

“Providing the most we can, while taking as little as possible, in order to build a new kind of community.”

Community and neighborhood support is at the core of Not Amazon. The digital era has been marked by local, mom-and-pop brick-and-mortar businesses suffering in the wake of online shopping. Convenience has outweighed community. More often than not, women-, BIPOC- and LGBTQA+-owned businesses have been disproportionately affected by “convenience.”

Of course, it makes sense with a global pandemic to shop online. Not Amazon, which currently serves Calgary, Halifax, Toronto and Vancouver, provides a viable alternative to its behemoth of an online retail counterpart.

That brings us to two compelling hospitality industry-specific platforms.

It’s not a secret that KRG Hospitality supports first-party and last-mile delivery. In fact, we’ve very clearly explained that operators lose guest data and control over the guest journey when they sign with a third-party delivery company.

That’s to say nothing of the fees third-party services charge their F&B “partners.” Is it convenient that DoorDash, UberEats, Postmates and other companies provide a semblance of infrastructure, the lure of reaching a larger pool of customers, and drivers (including the associated liability)? Sure.

But are the costs associated with doing business with a third-party delivery company worth it? Most likely not.

Studies have also shown that when a delivery goes wrong on the third-party’s end–cold food, for instance–it’s the restaurant that tends to get the blame.

There are two websites that, like Not Amazon, have popped up to put supporting local restaurants front and center: Not UberEats and NotGrubhub.

The former serves Toronto and operates as a non-profit, according to their FAQ page. The latter is mainly focused on the United States, offers the option to purchase gift cards, and is powered by Lunchbox. NotGubhub also boasts more than 100,000 direct ordering links.

Both operate in similar fashion: Restaurants submit their information to be added to the respective platforms, provide an ordering link, and obtain a listing. From there, people can search by location for restaurants in their area to place a delivery order.

In the case of NotUberEats, deliveries are fulfilled by Ritual or DoorDash. As noted on their FAQ page, Ritual is offering Toronto restaurants free delivery through 2021. Restaurants can also DoorDash because, as NotUberEats explains in their FAQs, the service is charging a flat rate and not collecting any commissions.

People can also send restaurant information to NotUberEats to help grow their listings. Anyone who wishes to do so is asked to provide at least 50 businesses in their city and submit them here.

Operators ready to make the move to first-party/direct delivery and own their guest journey should consider the following platforms:

With delivery here to stay, the sooner operators transition to direct delivery, the better. There’s no longer a reason to lose control of guests, a profitable operational element, or costs.

Image: Nathan Dumlao on Unsplash

by David Klemt David Klemt No Comments

Delivery and Takeout Food Trends for 2021: United States

Delivery and Takeout Food Trends for 2021: United States

by David Klemt

Yesterday we reviewed food delivery data and 2021 food trend predictions for Canada. Now it’s the United States’ turn.

Before we jump into the data and predictions, a word on succeeding with delivery in 2021 and beyond.

As I pointed out yesterday, when an operator signs up with a third-party delivery service, their guest data becomes the delivery company’s data.

That means that company and not the restaurant or bar owns the guest journey and guest engagement, and therefore owns the guest for all intents and purposes.

When a restaurant, bar or other F&B business enters into a contract with a third-party delivery company—unless otherwise explicitly stated—they give up control of targeted marketing efforts. In other words, third-party delivery platforms disrupt the guest journey.

Delivery became a way for many businesses to generate revenue during 2020, for obvious reasons. Operators who can afford to implement first-part and last-mile delivery should do so to maximize their revenue and control the guest journey and marketing.

To help operators own delivery, we’ve reviewed end-of-year reports from three delivery titans—UberEats, Grubhub and DoorDash—to share their 2020 findings. When it comes to the most ordered items, cuisines and categories, some third-party platforms are willing to share data.

According to UberEats, comfort foods were the most popular category:

  • Burgers and fries
  • Burritos
  • Pad Thai
  • Mac and cheese
  • California rolls
  • Chicken Tikka Masala
  • Miso soup
  • Mozzarella sticks

Per the platform, the following cuisines proved most popular:

  • American
  • Italian
  • Mexican
  • Chinese
  • Japanese
  • Thai
  • Indian
  • French
  • Caribbean
  • Greek

As UberEats stated in their report, it appears that customers found a way to travel after all—they just did it through food.

Pizza, bagels, wings, tacos, burgers and dumplings led the way for Grubhub in 2020. The most popular pizza order was Hawaiian (because some people are monsters and put pineapple on their pies), while the most popular burger was garlic mushroom. Grubhub revealed that their top French fry was the loaded curly fry, and the most popular plant-based item was the eggplant burger.

In descending order, the top F&B Grubhub orders overall from 2020 were:

  • Spicy chicken sandwich
  • Chicken burrito bowl
  • Chicken wings
  • Waffle fries
  • Cold brew coffee
  • Steak quesadilla
  • Iced latte
  • Fish and chips
  • Strawberry shake
  • Roast beef sandwich

Per Grubhub, the top breakfast item was the acai bowl, the top side dish was French fries, the number-one late-night order was strawberry cheesecake, and the most ordered dessert was apple pie.

Moving on to DoorDash, the platform identified their top ten 2020 items back in November:

  • Chicken fingers and French fries
  • Fried chicken sandwich
  • Mac and cheese
  • Chips and guacamole
  • Apple pie
  • Pad Thai
  • Chicken quesadilla
  • Iced coffee
  • California roll
  • Chicken Tikka Masala

The UberEats, Grubhub and DoorDash revelations align with data collected by the National Restaurant Association between November and December of 2020. Per the NRA, the following were the top items sold by full-service casual, family and fine-dining restaurants:

  • Burgers
  • Seafood
  • Pizza
  • Steak
  • Chicken (excluding chicken wings)
  • Breakfast items
  • Pasta
  • Mexican food
  • Sandwiches, subs and wraps
  • Chicken wings

According to the NRA, the items below were the most popular for limited-service restaurants (fast casual, quick-service, coffee and snack):

  • Sandwiches, subs and wraps
  • Pizza
  • Burgers
  • Chicken (excluding chicken wings)
  • Ice cream, cookies and cakes
  • Baked goods
  • Breakfast items
  • Mexican food
  • BBQ items
  • Seafood

For 2021, DoorDash predicted the following items to see a lift:

  • Sausage, egg and cheese on a biscuit
  • Create your own omelettes
  • Carrot cake
  • Cinnamon roll
  • Caramel latte
  • Chocolate brownies
  • Black coffee
  • Donuts
  • Blueberry muffin
  • Biscuits

DoorDash revealed that Mexican, Chinese and Tex-Mex were the top cuisines ordered via the platform. The company also predicted five cuisines would be popular in 2021:

  • Taiwanese
  • French
  • Filipino
  • Australian
  • Moroccan

When it comes to 2021, multiple sources have named vegetarian, vegan, plant-based, and health and wellness items as the foods to watch. Even this early into the year it’s not exactly a controversial statement to say that all of those categories are going to perform well in 2021.

According to DoorDash, nearly half of Americans (47 percent) plan to consume more plant-based items. Whether it’s truly healthier than its traditional counterparts, plant-based is perceived that way. In total, per DoorDash, 72 percent of Americans plan to make a concerted effort to eat healthier in 2021. This is likely due to an increased interest in boosting immune systems due to Covid-19.

Put another way, operators will likely struggle if they don’t add vegan, vegetarian, and plant-based foods to their streamlined menus, another trend expected to continue through 2021.

Predictions from the Specialty Food Association in particular caught our attention. For 2021, the association has predicted spices and herbs native to West Africa (Senegal, for example) will be in demand. Scandinavian and Cambodian flavors are also expected to perform well, as are Latin American and Southeast Asian items.

Due to interest in tahini sauce and black sesame, the SFA expects halva, which is a Middle Eastern confection, to get plenty of attention. The SFA and Datassential both named fermented honey as an item to watch in 2021.

Along with vegan and plant-based items, creative meal kits are expected to perform well. Restaurants and bars will continue to face restrictions and indoor dining bans over the course of at least the next few months. Creative meal kits will get the attention of customers who have grown tired of preparing the same meals over and over.

Whether an operator chooses to stick with their current menu or embrace one or more food trends, they should look into first-party or last-mile delivery. It’s imperative that operators own their guest journey and marketing efforts.

For more information about first-party and last-mile delivery, please listen to Bar Hacks episode 13 with “Rev” Ciancio, an advocate of keeping delivery and data in-house.

Image: Robert Anasch on Unsplash

by David Klemt David Klemt No Comments

Orange County’s #OPENSAFE Restaurant Collective Defies Governor Newsom

Orange County’s #OPENSAFE Restaurant Collective Defies Governor Newsom

by David Klemt

A group of California restaurant operators is pushing back against current restrictions in defiance of orders they feel go too far.

Gov. Gavin Newsom’s stay-at-home order mandates that restaurants remain open only for delivery and takeout. The order affects five California regions: Northern California, the Bay Area, Greater Sacramento, the San Joaquin Valley, and Southern California.

Throughout 2020, similar orders have been issued throughout the United States. They’ve included an array of restrictions, from banning indoor and outdoor dining to choking traffic by imposing significant capacity restrictions.

Allowing only delivery and takeout is not the health and safety solution lawmakers believe it to be. Third-party delivery platforms and their policies can be detrimental to operators, worsening an already bad situation.

Several operators in Orange County, located in the Southern California region, are, per an Instagram post, refusing to comply with Gov. Newsom’s order.

The statement on publicist Alexandra Taylor’s Instagram account is posted in its entirety below:

“We, as responsible small business owners and operators, do hereby declare our intention to protest the current state stay home order and to maintain our safety standards of service as set forth by country and state health guidelines.

“We cannot, in good conscience, allow our employees and their families to have their health and safety jeopardized as resources to them have been exhausted.

“We will continue and strengthen our mitigation of the potential spread of SARS-Covid19 with the highest standards of safety protocol including, but not limited to: Outdoor Dining, Socially Distanced Seating, Mask Requirements when not seated, PPE, Readily Available Sanitizer to back of house/front of house staff, immediate quarantine and isolation of potentially infected employees, Barriers to prevent close quarters transmission between guests, limited capacity, etc.

“Although eating and drinking establishments (both indoor and outdoor) have shown to increase the potential for viral transmission, current data also indicates that travel and essential shopping have as much as a 10x more likely chance of transmission than these establishments based on CDC risk assessments.

“We agree, as responsible business owners, to commit to staying open with a dedication to public health.”

The image of the statement is accompanied by the hashtag #OPENSAFE and American flag emoji. More than 80 Orange County establishments that support the #OPENSAFE movement were listed in the caption of the post at the time of publication. The original post states that the list of venues is growing daily.

Taylor, the founder and president of The ATEAM, included a caption that read, in part:

“RESTAURANTS. I represent them, I invest in them, I celebrate them, I support them, I am passionate beyond words for them, for the PEOPLE behind them— and I will fight for them.

“This is a declaration for not only restaurants but all SMALL BUSINESS OWNERS to commit to STAY OPEN SAFELY and RESPONSIBLY, while giving their establishments, their employees, and their families a fighting chance to survive this BS.”

State and county officials across the nation can impose a number of penalties on businesses that defy orders. Fines and temporary suspensions of business licenses appear to be the most common. In Chicago, for example, operators can face fines in excess of $10,000. One restaurant, Ann Sather, owned by Chicago Alderman Tom Tunney, violated a ban on indoor dining and ignoring Covid-19 safety rules and faces a maximum fine of $10,500.

Earlier this year, a restaurant in Monterey County, located in California’s Bar Area region, faced fines of up to $35,000 violating shelter-in-place orders.

It’s unclear at the moment if the collective of defiant Orange County operators will face consequences for their civil disobedience. Orange County Sheriff Don Barnes has stated that the department has no intention of enforcing Gov. Newsom’s order closing restaurants.

“Orange County Sheriff’s deputies will not be dispatched to, or respond to, calls for service to enforce compliance with face coverings, social gatherings, or stay-at-home orders only,” said Sheriff Barnes. “Deputies will respond to calls for potential criminal behavior and for the protection of life and property. Our actions remain consistent with the protections of constitutional rights.”

Whether operators in other counties across America coalesce around their own #OPENSAFE movements remains to be seen. The consequences must be fully understood and weighed, and law enforcement’s stance on enforcing stay-at-home and shelter-in-place orders regarding bars and restaurants must also be considered.

Two things are, however, clear. One, operators have had enough. Two, government officials need to listen to restaurant and bar operators and workers about the impact of restrictions before issuing orders.

by David Klemt David Klemt No Comments

LCBO and SkipTheDishes Hit Pause on Partnership After Public Lashing

LCBO and SkipTheDishes Hit Pause on Partnership After Public Lashing

by David Klemt

The Liquor Control Board of Ontario (LCBO) faced outrage over the weekend, ultimately deciding to “pause” a controversial partnership after receiving a public lashing.

In case you missed it, the LCBO and SkipTheDishes announced on December 4 that they had partnered to offer home deliveries of beer, wine and spirits in Toronto. For those who are unfamiliar, SkipTheDishes is a food delivery service similiar to Grubhub that serves Canada. In fact, SkipTheDishes pulled out of the United States in 2020 and their services were handed over to Grubhub.

Just two days after the partnership was made public, it was announced by the LCBO that, due to “direction from the Ontario Government,” the deal had been suspended.

Restaurants and bars in Ontario have been allowed to offer alcohol for delivery and takeout since March via an emergency order due to the Covid-19 pandemic, shutdowns, and utter carnage that has befallen the industry. Many would like for the emergency order to be made permanent.

To understand the outrage, one must realize that restaurants and bars in Ontario have been operating under forced lockdowns. Premier Doug Ford announced the lockdown—which affected Toronto and Peel Region—on November 20. It went into effect a minute past midnight on November 23. No end date accompanied the mandate.

When the LCBO—which is able to make purchases and sales of beverage alcohol at lower wholesale prices than restaurant and bar owners and operators—arranged the deal with SkipTheDishes, those who operate in Toronto and Peel interpreted the move as undercutting their struggling businesses. Alcohol delivery and takeout is one of the only ways operators in those areas can generate any revenue and give themselves a fighting chance to keep from closing their doors permanently.

In terms of optics, the situation did anything but paint the LCBO and SkipTheDishes in a positive light. The LCBO, for those outside Canada, is what’s known as a Crown Corporation. That is, it’s entirely owned by the Sovereign of Canada—a state-owned enterprise. One could argue that it appeared the government in Ontario hobbled the LCBO’s competition—restaurants and bars—in an effort to boost their revenue and profits.

A tweet by operator and author Jen Agg regarding the timing of the partnership read, in part, “It is timed to UNDERCUT restaurants that are already bleeding out. It is timed to benefit companies that DONT NEED ANY HELP! It is timed to devastate restaurants and they damn well knew all of this.” (Emphasis Jen Agg’s.)

While the “pause” of the LCBO-SkipTheDishes partnership is a victory of sorts, countless operators—and likely customers and other small business supporters—would like to see this arrangement permanently dissolved. Several tweets have mentioned that the LCBO has increased profits during the pandemic, while others have pointed out that the Crown Corporation could help restaurants and bars by offering them wholesale pricing to reduce costs.

For now, operators in Ontario will need to keep their eyes and ears open, remaining vigilant should the LCBO and SkipTheDishes press play on their deal again.

Photo by Talha Atif on Unsplash