Third-Party Service Partnership With Restaurants - Dine-In and Carry-Out
The media coverage of late seemingly suggests, the dine in model of restaurant dining is on the wan in favor of a third part delivery model. However, in reality is, this could not be further from the truth, with dining in preferred by the majority of Americans. Digital ordering, perhaps skewed the result in favor of a delivery model, however dine in restaurants have risen to the challenge and incorporated digital ordering into the dine in experience. Although convenience and experience appear to be at opposite ends of the spectrum, this does not have to be the case, and providing a service that represents both is a trend that is forcing many restaurants to redefine their service model.
- After briefly romancing the delivery experience, consumers are trending toward dining in. Dining in is the most popular restaurant experience, despite suggestions its popularity is waning. Irrespective of generation, 62% of Americans prefer to dine in when it comes to restaurant food. This is compared to 34% who prefer delivery or takeout. A recent survey finding 83% of Americans were eating out, either the same or more this year compared to last, provides persuasive further evidence,
- In fact, more Americans dine in, once or twice per week (56%), compared to those using delivery with same frequency (47%).
- The dine in model plays a role in determining the restaurants consumers choose to dine at. 38% of consumers choose a restaurant based on their experience, This includes the atmosphere and staff. Another survey corroborates this data, with experience (25%) and affordability (25%) key in the consumer decision making process.
- The reason dine in remains so popular is directly related to what consumers are looking for in a restaurant, quality (experience) and affordability. Quality, of course, can be adversely affected when food is delivered or consumers take away, which may a factor in why dine in is preferred.
- Delivery models are increasingly losing out to the dine in model in the affordability stakes, as well, with many of the third party delivery companies charging, what is perceived among consumers and restaurant owners, excessive commission-based delivery fees, In some states the fees have become some exorbitant, the state has stepped in and regulated maximums"
- It is projected digital ordering in the restaurant industry is forecast to triple over the next few years, a trend that seemingly favors the third party delivery services. However, dine in restaurants have risen to the challenge.
- Incorporating technology into their operations has become a priority for restaurants. Digital sales increased 23% over the last four years, with a current annual value of $26.8 billion.
- There are an increasing number of QSR restaurants looking to enhance their digital sales. Self service kiosks are a popular option; MacDonalds being a restaurant chain that has invested in this option, with self services kiosks slated for every US location by the end of the year. Many are trying to incorporate AI technology, Flippy, the robot that flips burgers, was debuted last year , generating considerable talk in the industry.
- This trend has created a further sub-trend that focuses on the takeaway consumer. Chipotle has utilized dedicated pickup areas to optimize the consumer's digital experience . Other companies , like Starbucks, have gone a step further with dedicated pick-up only stores.
- Chipotle has woven digital technology throughout its experience, and has reaped the benefits, with nearly $1 billion in sales, as at November 2019. The automation of the cooking process and the utilization AI technology is evidence of technology driving this trend, especially in the dine in and rake away model of operation,
- While technology must take some credit for the growth of delivery services in the restaurant industry, it has been largely limited to the over saturated platforms provided by third parties, although, it fails to exhibit the innovation of the dine in and takeaway model of operation.
The Experience: Consistency, Convenience, and Quality
- The appeal of the dine in model to the consumer is driven by the experience it provides. Consumers are increasingly looking for the complete experience. which is driving the behavior of restaurants. A Salesforce survey found 67% of consumers reporting their standards relating to experience as being higher than ever confirms this,
- Quality contributes to the experience, and is a determinative factor when selecting a restaurant, but is not alone. Consistency goes hand in hand with quality, both contributing the experience. The role the experience plays in the consumer journey should not be underestimated. The recent success of experience focused restaurants, like Main Event and Cooper Hawk is testament to this.
- Matt Brown, Chief Revenue Officer, Vixxo., explains what the data says, "Whether they dine in or carry out, guests notice when the quality of the food, from the temperature to the taste, are inconsistent. In fact, quality impacts the entire dining experience, including how well equipment functions and ultimately supports the staff's ability to efficiently serve its guests."
- Convenience has largely been associated with the delivery model, however, dine in restaurants, using many of the strategies discussed in this report, is staking its claim , and looking has explored a range of options.
- Previously, convenience and experience have, to a degree, been mutually exclusive, however, the dine in model is currently evolving, and recent variations seem to have a newfound harmony, with dine in restaurants looking to capitalize, with multiple consumer contact points to create this experience giving the model a clear edge.
- Chic Fil-a provides a perfect illustration of this new harmony in practice, with dine in mobile ordering, theme nights, and mum's valet service.
- For the most part, the research in this area focuses largely on the dine in and delivery operational models. Takeaway is treated as a peripheral part of the dine in model, although has potential to become more defined in the future, with the advent of pick-up only restaurants. Technology is driving trends in the restaurant industry, and to date the dine in model has embraced it, using it to provide model-specific innovations that are revolutionizing the industry. While the third party delivery model is popular, the majority of Americans prefers to dine in.
- As with any current research of this nature, COVID-19 should also be at least noted, as being a market disruptor. With lock downs and social distancing not even a blip on the radar at the time of the aforementioned surveys, having since impacted significantly on the American psyche, future research could address this issue.