Hey Hot Potatoes,

Welcome to the latest edition of the Hot Potato Newsletter. This week, we look at the world of food delivery and the impact it has had on the hospitality industry. Having spent over three years in the food delivery sector and now over five years in hospitality overall, it’s a subject I know a thing or two about! We explore the pros and cons of food delivery and whether it may or may not be the right fit for your business.

In today’s email: Food delivery… Should you embrace it?

The Benefits of Food Delivery

Source: Peckwater/ Ibis

Food delivery is a massive revenue channel for restaurants, with the industry worth £3.7BN in the UK alone. Being on food delivery platforms or delivering direct can bring a number of benefits to a restaurant.

Key Points:

1. Revenue Channel: Simply put, food delivery provides an additional revenue channel that you wouldn’t have had otherwise.

2. Increased Brand Presence: Being on delivery platforms exposes your business to a wider audience, meaning more people will see your brand and offering. Really, you could view this as a powerful marketing tool, since increasing your online presence can bring new customers to your brand and businesses, even if they are located further away.

3. Amplify your Creativity: Even if you’re not a restaurant, you can start a culinary business from the comfort of your own home. You could experiment, test new dishes or work with virtual brands exclusively for delivery. This also provides an opportunity to capitalise on consumer trends and concepts. Perhaps try out a viral dessert on your menu, capture valuable data to see if it works, if doesn’t, and then allow these insights to influence your next step.

4. Maximise Kitchen Resources: Offering food delivery specifically during off-peak hours means you can make the most of your resources. Whether that’s a chef who is idle in between the lunch and dinner rush, or using surplus ingredients into meals that potentially would have been wasted. This approach ensures your resources are being used more efficiently.

The rise in food delivery apps with their own courier services, such as Deliveroo, Uber Eats and Just Eat, has made it easier than ever to get started on a delivery platform. In most cases, the cost to get started is minimal and can have an immediate positive impact on your business. Companies like Peckwater Brands can even provide ready to go delivery concepts, including advice on the cuisine, menu optimisation, training and support to set your delivery service up for success.

The Drawbacks of Food Delivery

Source: Coredinat

Despite the benefits of having a delivery service, this additional channel for your business does add another layer of complexity.

Key Points:

1. Lack of Control: When using a third party delivery app, you have limited control over the end to end process. From driver availability in an area, to how long the food takes to get to the customer, as a restaurant your influence is minimal. As couriers are technically self employed, they have no obligation to accept orders and can work on more than one platform too. There has been ongoing back and forth on determining their legal employment status over the years.

2. Slim Margins: It is a well known fact that having the benefit of a delivery service does come at a cost. In some cases the delivery aggregators charge +30%, which means despite most food and beverage establishments increasing their menu prices to compensate, there still isn’t much left over.

3. Unforgiving Customers: Customer expectations are exceptionally high these days, especially when they know they are paying a premium for delivery vs the dine in menu prices. On top of this, as you know, when providing a food and drink service, orders can go wrong… and when it does, customers in some instances may blame the restaurant despite it being a delivery related issue. This can negatively impact a business’ reputation and leave the restaurant to deal with disgruntled customers.

4. Impact on Dine In: Let’s be honest, during busy periods, having couriers walk through a restaurant and wave their phones to get the staff’s attention can detract from the customer’s pleasurable experience of eating out. A high volume of orders can also put a strain on the kitchen, particularly during peak hours, leading to increased customer waiting times.

When deciding whether or not to go down the food delivery route, we can see there are a number of considerations you should take into account. It can have an impact across the board, from your bottom line, to operations, to customer experience, so it’s important to be aware of both the good and the not so good!

_{Should you embrace Food Delivery?}

Source: Unilever

After reviewing the pros and cons, you may feel uncertain whether food delivery is the right fit for your business. To help you think it through, I’ve highlighted a few more critical points that I think you'll want to mull over before making the call.

Key Points:

1. Capacity: Do you actually have the capacity to do more orders and manage an additional channel? Start by reviewing the number of available staff you have, the average number of bookings you get on a given day or typical kitchen preparation time; these are some metrics to consider to help you decide if you have the capacity to handle additional orders.

2. Dine In vs Takeout Focus: What type of business are you? If you’re a traditional takeout or grab and go business such as Greggs or Pret, food delivery is of course a no brainer. If you’re a restaurant or establishment that solely focuses on the dine in experience such as The Ledbury or Nobu, then a delivery service might not fit your brand.

3. Menu Offering: Is your menu suitable for delivery? Can you prepare your food at speed and ensure it travels well?

My take is that choosing to do delivery depends on the type of business you are, what you want to prioritise and what you want your brand to represent. Personally, I’ve always been pro delivery because I believe restaurants need to embrace new technology and the digital world as much as possible. Even if you were to turn your tablet on only during off-peak periods and offered a specific takeaway friendly menu, I don’t see the downside.

If you are considering launching a food delivery service and want to weigh up your pros and cons to decide if it is the right route for you, drop me an email. Or even if you just want to continue the delivery debate, let’s chat.

Today we’ve explored how food delivery services can benefit your business and the sometimes unforeseen challenges it can pose. So with all that being said, what are your thoughts? Would you embrace food delivery?

Thanks for reading and don’t forget to subscribe to stay updated weekly on all things hospitality!

Next week we explore the common mistakes made when launching a hospitality business, not one to be missed.

Bon appétit,

Max Shipman, Editor-in-Chief, Hot Potato

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