Take control of third-party delivery to protect your brand - 7 food delivery trends + 10 steps to a successful delivery strategy - SMG
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R E P O RT | 3 R D E D ITI O N Take control of third-party delivery to protect your brand 7 food delivery trends + 10 steps to a successful delivery strategy
Background The impact of third-party delivery “Netflix + chill” changed the shape of the entertainment industry overnight. The restaurant industry is now in the throes of a similar cultural shift, with third-party delivery changing the way people eat food from restaurants — in the comfort of their own home. With delivery sales projected to grow at more than three times the rate of on-premise revenue through 2023, it’s clear restaurants need a strategy to meet the convenience craving of consumers.1 But in the volatile world of third-party delivery — where things often go wrong and restaurants are struggling to maintain control of the customer experience — how can brands protect their reputation + drive customer loyalty? 1 L.E.K, February 2019 © Service Management Group | Confidential | All rights reserved 2 // 43
Longitudinal study
Methodology Oct 2017
Wave 1
Feb 2019
Wave 2
Nov 2019
Wave 3
How we got the data 20 Third-party delivery apps included in research
key takeaways
SMG has been closely following third-party delivery
trends and their impact on the restaurant industry
since our first published report in 2017. To continue
this exclusive longitudinal research, we used
SurveyMini® — SMG’s consumer mobile research
app — to trigger custom surveys to more than 47,000
users across the largest DMAs in the U.S.
12 47,383
targeted questions unique
SurveyMini uses precise mapping technology to
per wave respondents
trigger visit-detected surveys to an active user base
of respondents. In addition to receiving competitive
data on more than 6,500 brands across 650,000+ Text analytics on nearly
locations, SMG clients can trigger custom surveys
like this to get a quick read on changing market 215 1M reviews
dynamics — down to the DMA level. DMAs from 11 social sources
© Service Management Group | Confidential | All rights reserved 3 // 43
SurveyMini
What’s inside 1 What’s the update on third-party
delivery + app performance?
We’ll explore 7 food delivery trends
by answering these questions
2 Is third-party delivery causing
business cannibalization?
Brand protection checklist
Don’t miss the top 10 steps every
3 What are the biggest risks
+ opportunities?
restaurant should take when evaluating
their third-party delivery strategy.
4 How are brands tackling
food delivery in new ways?
© Service Management Group | Confidential | All rights reserved 4 // 43
What we found
7 food delivery trends you need to know
Before we dig into the details, here’s a quick preview.
TREND #1 TREND #2 TREND #3 TRE ND #4
Third-party delivery DoorDash is now the Almost half of users People who use third-
awareness + usage leading third-party choose an app because party delivery visit
continue to rise delivery vendor it delivers from their restaurants more
favorite restaurant
TREND #5 TREND #6 TREND #7
More than half of third- Accuracy remains the If your restaurant isn’t
party users order from biggest problem with all available on third-party
more than one app providers delivery, 3 out of 4
customers will get their
food somewhere else
© Service Management Group | Confidential | All rights reserved 5 // 43
1 What’s the update on third-party delivery + app performance? © Service Management Group | Confidential | All rights reserved 6 // 43
TREND
Aware of Third-Party Delivery
Awareness + usage
% %
of third-party delivery
continue to rise —
80 4 Yes
+
YOY Change
though at a slower rate Used Third-Party Delivery in Past 3 Months
% %
43 2
4 out of 5 respondents are aware of third-party delivery,
while nearly half have used it in the past 3 months +
Takeaway Yes YOY Change
Though we saw more
aggressive growth two
years ago, third-party In 2022, third-party sales are
delivery continues to expected to comprise 70% of all
disrupt the restaurant delivery, up from 37% in 2016.2
industry at a steady rate. 2016 2022
2
Forbes, January 2020
© Service Management Group | Confidential | All rights reserved 7 // 43
Third-party delivery West North
East North
Central
New
isn’t isolated to one Pacific
Mountain
Central
Middle
England
region — all areas of the West
Atlantic
South
country are impacted Central South
Atlantic
East
Usage is highest in the Pacific + New England South
regions, with East North Central seeing the Third-Party Delivery Central
YOY
Usage by Census Division Change
largest YOY growth
54% Pacific + 15%
51 % New England + 9% Nearly every zip code
Takeaway 45 Middle Atlantic
% + 4 %
is now serviced by at least
Third-party delivery is no longer a “big city thing” 45% Mountain + 16% two delivery companies,
or a trend impacting certain parts of the country. 45% South Atlantic + 7 % a change facilitated by
Every region — from coast to coast — has more 42% West South Central + 9% more brands signing
customers using third-party delivery apps. 42% East North Central + 19% multi-delivery vendor deals
39% West North Central + 18% versus exclusive deals.3
3
34% East South Central + 3%
Forbes, January 2020
© Service Management Group | Confidential | All rights reserved 8 // 43
Casual-dining, fast-casual, + fast-food concepts
make up almost 75% of third-party delivery orders
Casual dining, fast food, and polished casual are seeing growth
% of Orders by Restaurant Type
YOY Change +10% - 6% +16% +2% - 9% - 13%
28% 25% 21% 10% 9% 1% 6% other
Casual dining Fast casual Fast food Polished Family Fine
(e.g., Chili’s Grill & Bar, Outback (e.g., Chipotle Mexican Grill, (e.g., KFC, McDonald’s, casual dining dining
Steakhouse, Texas Roadhouse) Shake Shack, Firehouse Subs) Wendy’s) (e.g., Yard (e.g., Cracker (e.g., The
House) Barrel) Capital Grille)
Takeaway
Understanding where customers are turning for third-party delivery (i.e., faster, more convenient options)
will help your restaurant prepare a sound strategy.
© Service Management Group | Confidential | All rights reserved 9 // 43Previous trends showed a boost in lunch +
late-night delivery orders, but now we see
a shift to growth in mid-day + dinner
Third-party delivery is no longer overly favored by people stuck at work over lunch
or partiers in need of a late-night snack — it’s now becoming a dinnertime staple
% of Orders by Daypart YOY Change
6am – 11am 4% Caret-Up 1% Takeaway
With an increase in mid-day
11am – 2pm 16% CARET-DOWN 6%
and dinner orders, restaurants
2pm – 5pm 13% Caret-Up 3% should review their menu
5pm – 9pm 56% Caret-Up 3% offerings, hours of operation,
and staffing availability to
9pm – midnight 7% CARET-DOWN 6%
meet customer demands.
© Service Management Group | Confidential | All rights reserved 10 // 43Are you using
third-party
Third-party delivery isn’t delivery more?
1 in 4 customers
say yes.
just gaining more users, Frequency of Third-Party Orders in Past 3 Months
it’s seeing more frequent ● 1–2 ● 3+
63% 37%
repeat customers
Oct 2017
56% 44%
Feb 2019
Gen Z + millennials are the heaviest third-party 55% 45%
Nov 2019
delivery users — but boomers saw an 8% increase
in usage overall Frequency of Orders in Last 3 Months by Age
● 1 ● 2 ● 3 ● 4+
Takeaway Under 25
31% 25% 19% 25% +2%*
The majority of third-party users aren’t just ordering 28% 24% 20% 28% +2%*
once — they’re placing multiple orders over a short 25–34
31% 24% 19% 26% +1%*
period of time. And with 1 in 4 customers reporting
35–44
they’re using delivery more, restaurants have a great 30% 25% 20% 25% +2%*
opportunity to gain repeat business. 45–54
35% 26% 18% 21% +8%*
55+
© Service Management Group | Confidential | All rights reserved * YOY Change 11 // 43TREND
Not only are customers # of Third-Party
Delivery Apps by Age
KeyBanc’s
research agrees:
Most customers
using third-party deliveryTREND
And which apps are they using?
DoorDash is the new preferred leader
Previous customer favorite Uber Eats is now trailing, with Grubhub coming in third
Preferred Provider
0% * Takeaway
9% When working on a
- 3% * third-party delivery
23% strategy, it’s important
+ 9% *
33% to consider the
- 5% * popularity of each
29% provider and which
0% * best fits the needs
6% Other of your customer.
* Indicates % change between February – November 2019
© Service Management Group | Confidential | All rights reserved 13 // 43Preferred Provider by Region + YOY Change
DoorDash’s success ● DoorDash ● Uber Eats ● Grubhub ● Postmates
is consistent across 0%
+ 4%
- 1%
+ 18%
0%
+ 8%
the country 0% - 1% - 7%
East North East South Middle
Except in New England where users prefer Central Central Atlantic
Grubhub and growth is the highest - 2% - 10% - 2%
+ 2% - 7% - 3%
+ 7% + 7% + 5%
- 5% + 13% - 4%
Takeaway
New
When we conducted our first third-party Mountain
England
Pacific
delivery research in 2017, DoorDash - 3% - 8% + 1%
wasn’t even mentioned. Now, it’s the - 1% - 3% 0%
provider customers most prefer across the + 13% + 13% + 7%
country. This proves how quickly trends can - 2% - 6% - 3%
shift, and only agile brands — ones that are
South West North West South
quick to evolve + adapt — will stay on top. Atlantic Central Central
- 10% - 2% - 5%
© Service Management Group | Confidential | All rights reserved 14 // 43“Who, me?” It’s no longer a question —
third-party delivery is affecting your brand
Though the groundbreaking growth we saw with And that strategy cannot be static. The third-party delivery
third-party delivery in 2017 has steadied slightly, space is constantly evolving and only brands who embrace
customer awareness + usage are still increasing. This (and act on) change will survive. Case in point: when we
isn’t a new concept anymore — it’s now a staple in the published our first report on third-party delivery three
restaurant industry. Every kind of customer in every years ago — DoorDash wasn’t even mentioned as one of
part of the country is using third-party delivery — and the top providers, with Uber Eats and Grubhub dominating
using it more often, at all times of the day. Restaurant the field. Today, DoorDash is customers’ most preferred
brands — particularly fast-casual, fast-food, + casual- vendor, in most age groups across the country.
dining concepts — must implement an air-tight third-
New providers are entering the arena. Apps are constantly
party delivery strategy to beat out the competition
evolving. Consumer expectations continue to rise.
and win with all generations.
Restaurants are responsible for staying on top of these
trends and being educated on what their customers
want. If they don’t, they’re leaving their reputation in
someone else’s hands.
© Service Management Group | Confidential | All rights reserved 15 // 432 Is third-party delivery causing business cannibalization? © Service Management Group | Confidential | All rights reserved 16 // 43
TREND
REALITY CHECK 24% Make a meal
What would you have
If your restaurant isn’t available done if third-party
delivery was not an
on third-party delivery, option the last time you
wanted food from
3 out of 4 customers will get 23%
a restaurant?
Carry out or drive thru
their food somewhere else at another restaurant
Only 24% of customers will choose another option
to eat from your restaurant 18% Carry out or drive thru at same
restaurant I ordered delivery from
Takeaway 8% I would not have eaten anything
Customers want the convenience third-party delivery offers them.
6% Dine in at same restaurant
Only 6% of customers would dine in at your restaurant if it wasn’t I ordered delivery from
available with third-party delivery — with 8% saying they just wouldn’t eat 6% Dine in at another restaurant
at all! That bears repeating: more customers would rather go hungry than 6% Something else
dine in at a restaurant. The game has changed, and delivery is winning. 5% Carry out prepared meal from grocery store
4% Carry out prepared meal
© Service Management Group | Confidential | All rights reserved from convenience store 17 // 43TREND
Third-party delivery users visit restaurants more
There was a 5% increase in restaurant visits from people who weren’t using third-party delivery but now are
Third-Party Delivery Users + Do you use third-party delivery?
Their Restaurant Visits ● Yes ● No
Takeaway
Wave 2 Though there were
Feb 2019 increased visits across the
board, third-party users are
+ + + + more frequent restaurant
Wave 3
customers. Business
Nov 2019
cannibalization is a myth —
the existence of third-party
% % % %
Increase in
restaurant visits 3 5 2 6 delivery actually increases
your chance that customers
will come to your restaurant.
© Service Management Group | Confidential | All rights reserved 18 // 43IN THE NEWS
How third-party delivery boosts
restaurant sales
“‘McDonald’s says 70 percent of the
orders it gets through its partnership
with Uber Eats are customers it might
not have gotten otherwise, particularly
late at night.’ McDonald’s has also
reported that Uber Eats has increased
“Farm Burger, an Atlanta-based grassfed their traffic by 10%.” 5
burger chain with 12 locations, has limited
marketing resources, so it’s grateful for
the business that delivery services bring
in. After DoorDash featured the chain in
a December promotion, it saw an all-time
monthly high of 2,942 orders, says Dawn
5
Associated Press, February 2019
Law, the chain’s marketing director. ” 5
© Service Management Group | Confidential | All rights reserved 19 // 43And when customers do visit, We now have a consumer
culture of convenience
convenience is still the top priority And this shift is expanding the
Customers are 2X more likely to use the drive-thru at your restaurant competition: It’s not just a battle
between restaurants. C-store
than dine-in or order to-go + grocery have entered the
fresh-and-prepared food space.
And what’s more is younger
Average Number of Visits in Last 3 Months by Dine Type generations are gravitating
toward these options.
UTENSILS Dine-in 6 Read this report to learn why more
customers are turning to c-stores
car-side Drive-thru 16
for their food + beverage needs.
mortar-pestle Carry-out 8
Takeaway
When third-party users visit a restaurant, they are favoring drive-thru
considerably over dining in. These customers want the convenient option.
Ensure your brand is providing an exceptional drive-thru experience from start GET THE REPORT ⊲
to finish — one focused on efficiency, accuracy, + most importantly, speed.
© Service Management Group | Confidential | All rights reserved 20 // 43TREND
Motivation for How do you typically choose...
...which delivery app to order from?
selecting delivery Third-party delivery
It delivers food from my favorite specific restaurant
42%
apps + restaurants motivation is
mostly based on
I’ve had a previous positive experience
41%
is similar — it’s all
It features lots of coupons and deals
delivery from
34%
favorite restaurant,
It provides a good selection of my favorite cuisine
about the food
experience, and 29%
coupons + deals It is easy to navigate
28%
Customers want food from their favorite
restaurant or a specific type of food, ...which restaurant to order from?
I have a specific cuisine craving and seek it out
but cost + previous experience matter, too
35%
Restaurant I look for a place with free/low cost delivery
Takeaway motivation is 35%
I look for a place that I’ve had a good experience from
Customers who like your food will still mostly based on
31%
order from you on third-party delivery specific menu
I look for a restaurant available on the app I’m ordering from
item, cost,
apps — and make sure the experience is 25%
+ experience I look for a place with quick delivery
a good one to keep them coming back.
24%
© Service Management Group | Confidential | All rights reserved 21 // 43All third-party delivery How do you typically choose...
...which delivery app to order from?
customers, regardless It delivers food from my favorite specific restaurant
of frequency, pick a I’ve had a previous positive experience
delivery app if it has their
It features lots of coupons and deals
It provides a good selection of my favorite cuisine
favorite restaurant It is easy to navigate
0 10 20 30 40 50
...which restaurant to order from?
Takeaway I have a specific cuisine craving and seek it out
Infrequent third-party delivery
Frequency I look for a place with free/low cost delivery
customers are more apt to I’m using third-party
choose restaurants with lower delivery: I look for a place that I’ve had a good experience from
● More
delivery costs — brands can
● About the same I look for a restaurant available on the app I’m ordering from
entice these customers with
● Less
lower fees + delivery specials. I look for a place with quick delivery
0 10 20 30 40 50
© Service Management Group | Confidential | All rights reserved 22 // 433 out of 4 customers say:
If your restaurant isn’t on my third-party
delivery app, I’ll go someplace else
You’ve likely heard rumblings that third-party delivery is The truth is only 6% of customers will opt to dine in at
cannibalizing business. That instead of offering delivery, your restaurant if they can’t get your food from third-party
you should be drawing in customers to eat at your delivery. The majority are taking their business elsewhere.
restaurant — where they are more likely to spend more
Today’s customers prefer more convenient options over
money with drink orders, upsells, etc. That in the end,
dining in restaurants. And the best way for you to stay
you’re losing money with third-party delivery.
relevant is to provide them with more convenient ways
That’s a myth. to get food. Yes, third-party delivery can hurt your brand
and negatively affect business outcomes if you refuse to
get in the game. But if you’re telling yourself it’s best to
stay out, you have a lot to lose.
© Service Management Group | Confidential | All rights reserved 23 // 43The phenomenal growth of
third-party delivery indicates
3
customers will put up
with some hiccups for the
convenience and variety
delivery apps provide.6
What are the biggest risks
+ opportunities?
6
Associated Press, February 2019
© Service Management Group | Confidential | All rights reserved 24 // 43TREND
Problems are happening more often —
and it’s usually due to an inaccurate order
The high rate of problem occurrence was alarming in 2017 + it’s only gotten worse —
now almost half of customers are experiencing an issue
Experience a Problem? What’s the Problem? Takeaway
Problem occurrence
Caret-Up
40% 17% 14% continues to increase
+ accuracy by far
Freshness
% Accuracy of order Delivery time
58
No
%
42
Yes
%
22 remains the biggest
issue. Arm your staff
Since
Oct 2017 8% 8% 7% 6% with best practices to
ensure they’re prepping
Friendliness Order Appearance Appearance
of driver experience of food of driver accurate orders.
© Service Management Group | Confidential | All rights reserved 25 // 43Newsworthy
Third-party delivery is blowing up
the Internet — and it’s not all good
news. With all the negative attention
third-party delivery is getting, it’s
no wonder restaurants aren’t sure
how to best navigate the space.
But these headlines are the reason
brands must regain control of the
customer’s delivery experience.
NATION’S TODAY PALM BEACH POST
RESTAURANT NEWS
1 in 4 delivery Riviera police:
Shake Shack sales drivers admit to Threat of bad
hurt by exclusive tasting your food food-delivery review
Grubhub partnership before delivering it led to car chase,
assault charge
VIEW ARTICLE ⊲ VIEW ARTICLE ⊲ VIEW ARTICLE ⊲
© Service Management Group | Confidential | All rights reserved 26 // 43More apps, more problems
An increase in problem occurrence is in part due to more third-party delivery customers using
multiple apps; more than half of customers with 4+ apps experience an issue with their order
Average Problem Occurrence by Number of Apps
Takeaway 1 APP 2 APPS 3 APPS 4+ APPS
Few third-party users
are loyal to one app. And
because no app is delivering
a perfect user experience, 40% 39% 48% 55%
customers are facing issues
with each. Restaurants Average Problem Occurrence by Preferred Provider
61%
need third-party delivery 53 % 56% 55%
50% 50% 50% 46%
strategies that translate 43% % % 40%
35% 39 39
%
37 38 36%
%
across multiple apps.
© Service Management Group | Confidential | All rights reserved ● DoorDash ● Uber Eats ● Grubhub ● Postmates 27 // 43When issues happen, Problem Attribution
users are still most likely Not sure
CARET-DOWN 13% since Oct 2017
to blame the restaurant 12%
Problems are happening with almost half of Restaurant
%
third-party delivery orders — and 62% of customers
put at least part of the blame on the restaurant
26 % 35 CARET-DOWN 5% since Oct 2017
Delivery
Takeaway %
27
CARET-DOWN 9% since Oct 2017
%
Even if your brand isn’t at fault, customers
are likely to blame you. And if you don’t have 62
a way for customers to contact you directly
about issues, your brand will suffer.
Restaurant + Delivery
* New selection, Nov 2019
* The decrease in blame specific to restaurant or provider is largely due to the addition
of the “both” option we added in 2019. We are beginning to see trends that point to
customers expecting brands + providers to work together.
© Service Management Group | Confidential | All rights reserved 28 // 43But who customers blame can vary by problem type
More than half of customers attribute inaccurate orders to the restaurant, but are more likely to fault the
delivery service for speed issues
Primary Problem by Problem Attribution
● Restaurant ● Restaurant + Delivery ● Delivery ● Not sure
57% Takeaway
Your restaurant will
38% likely take the fall for
27% 27% inaccurate orders,
23%
20% 21% 21% which is a problem
17% 15%
12% 13 % 14% you have to solve since
9% 8% 6% 8% 9% 10%
6 %
6 7
% % 7%
4% 5% 3% 5%
2%
it’s the issue customers
cite most often.
Accuracy Time to Freshness or Appearance Order Friendliness Appearance
of order receive order temperature of food experience of driver of driver
of food
© Service Management Group | Confidential | All rights reserved 29 // 43When it comes to negative Problem Type by Preferred App Provider
mentions, accuracy remains ● Accuracy of order
● Freshness or
temperature of food
●
●
●
Appearance of food
Order experience
Friendliness of driver
the biggest problem — ● Time to receive order
43%
● Appearance of driver
regardless of app used 38% 37%
34%
Though DoorDash is leading the charge overall,
18% 18%
it has the worst reputation for accuracy 17 % %
16
12 %
17 %
13% 12%
10%9% 10% % % %
10%
8% 9 9 9 8%
7% 7% 7% 7%
5% 5% 5%
Opportunity #1: Order accuracy
DoorDash Postmates Uber Eats Grubhub
The bad news is accuracy is a big problem.
Accuracy Mentions from Customers
The good news is this is one area where restaurants
Percent mentions Negative sentiment
can regain control. Implement multiple accuracy Postmates 28% Postmates 76%
checks in the prep process, include a copy of the DoorDash 26% Average 81%
receipt, + staple the bag after it’s checked to make Average 22% Uber Eats 81%
sure no mix-ups happen in the delivery process. Uber Eats 19% Grubhub 82%
Grubhub 13% DoorDash 84%
© Service Management Group | Confidential | All rights reserved 30 // 43Service Mentions from Customers
Text analytics revealed Percent mentions
Postmates 44%
Negative sentiment
Uber Eats 43%
customers mention DoorDash
Average
41%
35%
Average
Grubhub
51%
51%
service most often, Uber Eats
Grubhub
31%
25%
Postmates
DoorDash
55%
55%
but comments on speed Speed Mentions from Customers
Percent mentions Negative sentiment
are more often negative Postmates
DoorDash
28%
27%
Postmates
Uber Eats
54%
60%
Again, though DoorDash is a customer favorite, it has Average 24% Average 61%
the most negative mentions about speed and service Uber Eats 22% Grubhub 64%
Grubhub 18% DoorDash 65%
Takeaway Taste Mentions from Customers
Percent mentions Negative sentiment
Though some elements are out of the restaurant’s
Uber Eats 42% DoorDash 24%
control, you can do your part by implementing seamless
DoorDash 38% Grubhub 31%
communication with the third-party provider for quicker Postmates 33% Average 32%
delivery and tastier food. Average 32% Postmates 36%
Grubhub 16% Uber Eats 36%
© Service Management Group | Confidential | All rights reserved 31 // 43IN - PR ACTICE E X AMPLE
Assign franchisee accountability
to deliver on order accuracy
S I T U AT I O N INSIGHT ACTION R E S U LT S
In order to withstand third-party Data showed that while Accuracy 01 | Made accuracy top priority McDelivery customers:
delivery disruption and the of Order held less weight with for delivery orders
evolved needs of customers,
McDonald’s UK rolled out its
partnership with Uber Eats in
traditional visit types (since
dine-in/drive-thru guests can
see if their orders are wrong
02 | Held franchisees
accountable, by ensuring
+
6 ppts Accuracy
of Order
7
restaurants contributed towards
August 2017. Over the course of and get it quickly fixed), it was ppts Overall
2 years, SMG’s CX data showed much different for delivery.
refunding inaccurate orders +
Satisfaction
lower customer satisfaction Accuracy was one of the top key
with delivery orders, compared
to other visit types. To better
understand what drives OSAT
drivers for delivery customers —
and also one of the lowest
performing measures, with a
+
3ppts Likelihood
to Return
for McDelivery customers, the significant number of orders
brand requested deeper delivery being reported as incorrect.
analysis from its SMG team.
© Service Management Group | Confidential | All rights reserved 32 // 43More than half of third-party users are
concerned about their food being safe to eat
Food concerns are highest among less frequent users
How concerned are you wth the food you have delivered being safe to eat?
I’m using third-party delivery: ● More ● About the same ● Less
Opportunity #2: Food safety
Restaurants can’t control what
21% 25% 24% 10% 20% a driver will do, but you can
implement processes to help
31% protect the order and signal to
27% 27% 27%
25 % 26%
customers the food hasn’t been
18% 19% 20% 19%
15%
tampered with. Food should
% 13%
13 11% arrive in a clean (no grease
%
8
stains or spilled condiments),
well-packaged, + closed
Not at all Not very Somewhat Concerned Very concerned
concerned concerned concerned
container with a branded seal.
© Service Management Group | Confidential | All rights reserved 33 // 43Average Social Score
A brand’s social reputation 3.8
takes a big hit when customers Without third-party mention
post about their third-party 2.4
delivery experience
With third-party mention
-1.5
On average, social ratings decline by 1.5 stars when
third-party is mentioned at all Difference in Social Scores by Provider
Opportunity #3: Online reputation
With online ratings + reviews, customers are more likely
-1.7
DoorDash
-1.7
Grubhub
to air their grievances with your brand, not the third-party
delivery service. To protect your brand, you need a solution
that integrates your other CX data and allows for easy access
to reviews, seamless engagement with customers, and swift
problem resolution.
-1.5
Postmates
-1.1
Uber Eats
© Service Management Group | Confidential | All rights reserved 34 // 43REALITY CHECK
Your mistake could go viral Take action on
this place. first of all, where the
napkins? who the works here. i got this
are my ranches? and no
delivered cause
4
customer reviews
Online reviews are a foundational
Leverage
part onlinepresence and
of your brand’s
reputation.
engagementRead this best practice
to increase
a er is tired from work. the dlivery was made by doordash. guide for steps to keep you ahead
search engine visibility,
idk if that delivery just didn’t check the items properly or didn’t of drive
the competition and drive more
store traffic,
new and repeat customers to
bother. why dont the employees do correctly. check the + prove ROI
your business.
ing ranch. you have one ing job. the you give me a bunch of
ketchup for anyways. next time, check your before shipping it off.
This real review by a really unhappy This type of viral post is all it takes to
customer named Timmy has the potential do serious brand damage and make
to reach thousands of people. And potential customers choose someplace
given its colorful context, it’s also likely else — one that won’t dare to forget their
others will share — extending its reach to ranch dressing.
countless consumers. GET THE GUIDE ⊲
© Service Management Group | Confidential | All rights reserved 35 // 43What goes hand-in-hand
with problems?
Opportunity.
Third-party delivery is not a new concept anymore, but But here’s the good news: there are several steps
the kinks in the process have yet to be ironed out. With restaurants can take to improve the process. With the
problem occurrence on the rise — and happening nearly highest number of delivery issues coming from inaccurate
half the time — there is a lot of room for improvement. orders, restaurants should implement best practices by
What’s worse (for restaurants) is customers default to double checking and sealing all orders. During peak times,
blaming them for mishaps, even if it’s not their fault. dedicate a team member to delivery orders —
someone who is responsible for every piece of the order
from fulfilling special requests to including dipping sauces.
Those little details matter to customers.
The proof is on Yelp.
© Service Management Group | Confidential | All rights reserved 36 // 434 How are brands tackling food delivery in new ways? © Service Management Group | Confidential | All rights reserved 37 // 43
Some brands are partnering with third-party providers... “DoorDash is implemented directly “The restaurant industry has long into Popeyes’s point-of-sale system. complained about the lack of access Through DashPass, subscribers can get to crucial consumer buying habits favorite Popeyes menu items through that are often held hostage by third- DoorDash without delivery fees. For party delivery companies. With the $9.99 a month, DashPass offers its partnership, Grubhub will provide Shake members unlimited $0 delivery fees on Shack with ‘guest data insights’ that both orders of $12 or more from participating companies will use to jointly market to restaurants.” 7 customers.”8 7 QSR Magazine, January 2020, 8 NRN, August 2019 © Service Management Group | Confidential | All rights reserved 38 // 43
...while others are choosing to forego partnerships
+ strengthen their own delivery options
“The company announced that it ‘will “The pizza chain says it can provide
never authorize third-party companies delivery at a far better rate than the
like Uber Eats, DoorDash or Grubhub delivery providers can. There’s also
to deliver sandwiches to its customers.’ this: It controls the information from
those orders.” 10
‘We want to control the experience
from the fresh prep to the hand off Takeaway
to the customer,’ said James North, Determining if a provider partnership is
CEO of Jimmy John’s.” 9 right for your brand is one of the first steps
to your third-party delivery strategy.
9
QSR Magazine, February 2019, 10 Restaurant Business, October 2019
© Service Management Group | Confidential | All rights reserved 39 // 43S T R E A M L I N I N G PA R T N E R S H I P S Some third-party delivery providers are making efforts to create a more seamless process with restaurants “In an effort to solidify its status “Chowly partners with DoorDash, as a leader in the $250 billion enabling restaurant partners U.S. takeout market, Grubhub has to use third-party delivery launched Ultimate technology, drivers while still taking orders a hardware and software solution through their native channels. that integrates all restaurant ordering Will streamline delivery channels into one system.” 11 operations during peak times.” 12 11 Fast Casual, January 2020, 12 Restaurant Drive, September 2019 © Service Management Group | Confidential | All rights reserved 40 // 43
Ghost kitchens — or “cloud kitchens” — offer
lower real estate + menu innovation costs for
restaurants willing to experiment
Ghost, or cloud, kitchens — restaurants “The growth of virtual kitchens is outpacing
conceived only for delivery or takeout — our projections and I expect this to continue
are quickly becoming the next big thing. as the rise of millennial consumers continues
With benefits like closer proximity for to drive innovation and demand for off-
delivery routes and lower operation costs, premise dining options,” said Arman Narang,
these spaces are gaining popularity. co-founder of POS provider Toast.12
Brands like Halal Guys, Sweetgreen, and
Chick-fil-A have partnered with leading
Takeaway
ghost-kitchen brand Kitchen United to offer There are pros and cons to setting
delivery out of a shared commercial kitchen. up a ghost kitchen. Not every brand
And with the “Chipotlelane” — a secondary has the means or space, but with
prep line dedicated to fulfilling out-of-store delivery orders increasing so rapidly,
orders — Chipotle can still provide the same
it’s worth exploring the option.
fresh food customers expect, but also not
12
CNBC, December 2019
© Service Management Group | Confidential | All rights reserved bottleneck frontline operations. 41 // 43BR AND PROTECTION CHECKLIST Corporate strategy Field improvements
Do your research. ■ Compare providers to determine
which app(s) best meet the needs of
■ Address 3PD problem occurrence +
refine your close-the-loop process for
What’s best your customers.
■ Optimize internal operations
3PD customers.
■ Determine the level of control you
for your brand? to accommodate third-party
delivery (3PD).
have, if any, over updates to your
location’s information on 3PD app(s).
From provider partnerships to ghost + ■ Improve CX for customers ■ Implement food safety protocols
cloud kitchens, there’s no one-size-fits-all buying through native to address customer concerns +
convenience options. drive trust.
approach to food delivery. But this is no
longer a question of if you need a third- ■ Evaluate 3PD data management ■ Decide which menu items should be
+ ownership strategy, including offered via 3PD app based on times of
party delivery strategy — it’s about finding
which provider(s) will give you highest demand.
the right one. access to customer feedback.
Convenience options
To get started, work through this top 10 ■ Segment 3PD data as a separate
■ If you opt out of 3PD, define a
checklist of items to address for your dine type to better understand
delivery strategy that will capitalize
corporate strategy, field execution, and the specific experiences of your
on convenience expectations without
3PD customers — especially when
long-term success. sacrificing CX.
using ghost kitchens.
© Service Management Group | Confidential | All rights reserved 42 // 43Change the way you do business.
The longer you wait to implement or fine-tune your
third-party delivery strategy, the more you stand to lose
Today’s customers have high Third-party delivery is now the king
expectations and more options than of convenience and instead of trying to
ever when it comes to food delivery. dethrone it, brands must learn how to
For restaurant brands to survive, you optimize it. SMG partners with
must make operational and partnership 85% of NRN’s Top 20 restaurants
To learn more on how we can
decisions that will meet + exceed and 75% of QSR’s Top 20 concepts, help you implement a winning
customer demands — providing superior helping them use real-time customer delivery strategy, drive changes
experiences that will drive customer feedback to adapt to changing market that boost loyalty, and improve
loyalty and, ultimately, business dynamics and tackle complex operational business performance, visit
outcomes. challenges — like third-party delivery. smg.com/contactus.
About Service Management Group smg.com
SMG inspires experiences that improve people’s lives. We are a catalyst for change, providing actionable customer, Connect with us
patient, and employee insights that boost loyalty and drive business outcomes. Our unique model puts a dual
Kansas City: +1 800 764 0439
focus on platform technology and professional services — making it easier to collect, analyze, and share feedback
London: +44 (0)20 3463 0700
and behavioral data across the enterprise. To learn more about our customer experience management, employee
Tokyo: +81 (0)3 6432 0871
experience, and brand research solutions, visit www.smg.com.
43 // 43
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