Delivery / Curbside Innovation

Part
01
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Part
01

COVID-19: Small Restaurants and Technology

Creator has expanded its technological solutions to include a safe and contact-free food delivery system.

OVERVIEW

  • With lockdown measures in place as a result of the COVID-19 pandemic, "independent restaurants are adapting by offsetting their dine-in business with delivery, takeout and even drive-through services, where feasible."
  • To keep their businesses afloat, independent restaurants and quick service restaurant (QSR) chains are leveraging technological solutions to be able to compete with their much larger nationwide counterparts and industry giants who are more recognized and have massive advertising budgets and broader access to operational technologies.
  • Patronix which provides technology services to around 30,000 restaurants in the US said that in three days, the company saw the restaurant industry grind to a halt, and at the same time, try to include curbside pickup and delivery, change kitchen models to operate as ghost kitchens and make meal kits.
  • With the end of dining-in due to the coronavirus outbreak, many restaurants are signing up to make use of meal delivery services such as Uber Eats, Postmates, Grubhub, and Doordash.
  • According to Yahoo Finance, Grubhub is receiving 5-10 times its usual restaurant sign-ups.
  • The uptick in the use of online ordering and digital services due to the global health pandemic has also led to an increase in fraud. As such, some restaurants are leveraging technology to protect their customers against the same.

EXAMPLES

  • While the Mile End Deli in New York utilizes an online delivery portal that predates the COVID-19 pandemic, the owner of the restaurant Joel Tietolman included a new feature days after the restaurants in New York were shutdown.
  • The feature allows customers to sponsor meals for medical professionals at the frontline during checkout.
  • Creator, a restaurant chain in San Francisco that is famous for its robot-made hamburgers, has expanded its tech to facilitate safe and contact-free food delivery.
  • A recent survey by TransUnion showed that 22% were targeted by digital fraud related to the COVID-19 outbreak. As such, LYFE Kitchen partnered with Olo, a mobile and online food delivery platform and Punchh, a customer engagement and loyalty platform, for their ATO fraud prevention systems.



Part
02
of three
Part
02

COVID-19: Small Restaurants and Technology Case Studies

Uber Eats is waiving the delivery fees for independent restaurant consumers to drive up restaurant sales during the COVID-19 pandemic.

UBER EATS

  • Uber Eats is waiving the delivery fees for all orders from over 100,000 independent restaurants on its app in a bid to aid them during the COVID-19 pandemic.
  • Many restaurants in the US are observing an economic meltdown due to the closure of non-essential businesses and, in effect, the shutdown of restaurants and bars.
  • Denver Mayor Michael Hancock, along with Los Angeles Mayor Eric Garcetti, ordered that all restaurants and bars in both cities be closed down, except for delivery and takeout service. Such sudden changes are thus encouraging the use of restaurant technology companies such as Uber Eats and Grubhub, among others.
  • Using the EAT LOCAL banner on the Uber Eats app, customers will receive automatic waivers on the delivery fees from these companies. It is also providing the option of contactless delivery to assure customers that their food items are not touched after being packaged by the restaurant.
  • The company says that they aim to drive up restaurant sales by eliminating the cost of delivery for customers since every successful restaurant is driven by customer demand.
  • There have been no reported success metrics as the aid system only kicked off in March 2020.
  • However, according to the Executive Vice President of Public Affairs for the National Restaurant Association Sean Kennedy, "efforts that promote drive-thru, takeout and delivery are important tools to help restaurants continue to serve consumers during challenging times."

EZ-CHOW

  • EZ-Chow provides e-commerce solutions such as online ordering to restaurants in the US.
  • As part of its aid to restaurants during the COVID-19 pandemic, the company is offering a relief package which provides a discounted rate for restaurants looking to add digital channels for ordering and delivery.
  • The relief offering allows restaurants to list 40 menu items at a $75 monthly rate, which is $20 less than the standard fee.
  • This package is available for restaurants that enlist a three-year commitment.
  • Due to the rapid escalation of the COVID-19 pandemic, residents in the US have been confined to staying in their homes, and this has led to an upsurge in online orders. EZ-Chow is thus providing its relief package to facilitate restaurants who wish to transition to digital mediums to take orders and delivery.
  • It currently works with 125 restaurants, including Flanigan's Seafood Bar and Grill and Ford Fry Restaurants.
  • Many of EZ-Chow's restaurants are experiencing a rapid rise in online orders, with 2x the volume of orders on Monday, March 23, compared to regular Mondays.



Part
03
of three
Part
03

COVID-19: QSR / Fast Food Recovery

Quick service restaurants should prepare for a long recovery that may not begin until there is a vaccine for the Coronavirus. The Coronavirus will also have lasting affects on the QSR industry, including a shift of market share towards chains, menu changes, capital spending decreases, and a continued consumer preference for dine-out services.

Long Recovery

  • Currently, during the virus, quick service restaurants have seen on average a 50% drop in sales.
  • Experts predict that the restaurant industry will take a long time to recover from the impacts of COVID-19, with many restaurants, particularly small independent restaurants, not recovering at all. Experts state that the industry will not begin to recover until a vaccine for the virus is created.
  • Some experts expect that when recovery does begin, QSR will see "a 3 to 6 percent month increase in sales growth as consumers venture outside followed by cash strapped consumers looking for value offerings."
  • In Asia, however, as soon as the virus was contained and stay-at-home orders lifted, QSR sales recovered relatively quickly, with QSRs in China having recaptured 65-70% of lost sales already. However, experts also state that Asian countries did a better job overall containing the virus than the US, so this could impact how quickly the recovery occurs.

Chains Gain Market Share

  • Experts believe that quick service chain restaurants will draw business away from independent restaurants during and post COVID-19.
  • This is due to the stronger financial position of chain restaurants in general that makes them better able to withstand and adapt to the COVID-19 measures, including stronger carryout and delivery sales and lower digital ordering costs vs independent restaurants using third-party platforms for online ordering.
  • This will be especially evident in quick service pizza restaurants, where independents still held a majority of the market share pre-COVID-19. Experts believe that large chains like Domino’s and Papa John’s, who are more accustom to carryout and delivery orders and who have more access to credit, will gain market share from independents due to the Coronavirus outbreak.

Menu Shift

  • Experts recommend that quick service restaurants begin offering more day-time menus or emphasizing these offerings to attract more customers, who are now available during the day instead of being at an office building.
  • Additionally, QSR may expand their menus to include more ready-to-assemble and partially cooked options, which consumers could take home to finish preparing.

Capital Spending Decrease

  • Experts expect capital expenditures by quick service restaurants to decrease dramatically due to the COVID-19 pandemic, as companies cancel planned expansions and defer maintenance.
  • This impact is expected to last through 2021, given the long construction permitting timeline and the fact that companies will shift spending to repayment of debts taken on during the Coronavirus outbreak, rather than expansion.

Dine-Out Preference to Last Post-Coronavirus

  • Experts state that even post-Coronavirus, consumers demand for takeout and delivery services will remain higher than it was prior to the Coronavirus outbreak.
  • This is because consumers will still be concerned about gathering in public places after the virus and will prefer takeout options. 69% of consumers say that they will avoid crowded places, even if the government says it is safe, for a while after the virus passes.
  • A survey also found that 15% of consumer plan to "order carryout instead of dining in" to save money post crisis.
  • As such, as the recovery begins, quick service restaurants should "increas[e] their investments in mobile and delivery solutions, offer value-meal and family-meal promotions, and focus on occasions that saw the biggest declines during the crisis (such as breakfast on the way to work)."
  • As the recovery progresses, quick service restaurants should "build internal capabilities, invest in next-generation technology (such as delivery drones), or join forces with third-party providers. Loyalty programs will become more robust as QSRs look to increase “stickiness” among customers. Some QSRs may also reformat their locations—for instance, by shrinking seating areas and increasing drive-through capacity."
Sources
Sources