The Delivery Boom: Logistics Are Complicated
I learn so much from my writers. We take a lot of care when we craft our writing assignments, but what we get back almost always teaches us so much more than we knew when we assigned the story. That was especially the case with this issue’s coverage of the impact of delivery on kitchens and equipment. It’s a huge topic, so in addition to a regular assignment, I asked our Senior Contributing Editor Mike Sherer to do a ton of web surfing to immerse himself in this fast-growing aspect of foodservice. I knew he’d have fun and he did. What I didn’t realize is how little I knew about delivery services, how they operate, what they charge and the complexities of the whole restaurant-delivery service relationship. For example, I didn’t realize that there are categories of players in this arena and they play by different rules and business models. I found out that some of the leading names in delivery don’t actually deliver, they just aggregate restaurants who can deliver into one site. Some restaurants handle their own delivery, maintaining and paying for drivers who either drive their own cars or use a company fleet. Others contract with actual delivery services. Some delivery services handle not only the ordering platform but the super critical “last mile” that food travels from the store to the door, others just deliver food. I had no idea that some delivery services will take and place orders to restaurants who didn’t sign up with them! Talk about losing control of your brand. In one article I read from 2015, when the restaurants objected— because they received customer complaints—the delivery service’s director of business development was quoted as saying “We’re a pick-up service representing the customer; we’re not a delivery service representing the restaurant.” Yikes. I also was shocked by the amount and range of what restaurants pay to get their food delivered, from 12% to 35% of the sale on average—that sounds like a big chunk of the profit margin to me. Most services say you can make up in volume what you lose in margin. I think we’re in the Wild West boom-town stage of delivery right now and I fully expect players are going to come, go and consolidate pretty quickly. I also think it pays big time to fully vet your delivery partners.