In today’s increasingly competitive restaurant market, delivery presents potential for growth. The lure of increased brand awareness and extended the customer base, while utilising surplus kitchen capacity, logically translates into opportunity to drive sales. As delivery becomes an expected part of the offer, operators need to understand how to effectively bring this channel into their mix.
A case for delivery-only service kitchens?
In the face of growing demand, alongside the operational challenges of servicing delivery from an existing restaurant, the market is opening its mind to the notion of delivery-only kitchens.
There are several benefits of operating an off-site kitchen dedicated to delivery. The separation of restaurant and delivery means increased coverage and capacity, more affordable pitches, lower fit-out cost, fewer customer-facing staff and a better customer experience through both channels.
The delivery-only customer
What does this mean for the customer? A singular focus on delivery means that speed, packaging and importantly, choice, is optimised. Additionally, as the model matures, it is reasonable to expect that taking the complexity out of the equation will result in a better service. And from the operator perspective, the appeal of integrating a delivery only kitchen into their expansion strategy is in driving volumes and serving new areas that they would not otherwise achieve, with less initial capital risk. At the same time, it offers flexibility and versatility around menus on offer.
But operationally, running a delivery-only kitchen is very different from a managing a restaurant operation, and to do it effectively requires the skillset, preparation, adaptation and investment to make it work. PizzaExpress tried but, deterred by the costs and logistics of running their own delivery operation, decided instead to partner with Deliveroo.
In addition, an F&B brand must have sufficient traction in an area for a standalone delivery offer to prosper. This can either be achieved through the existence of physical restaurant units, or through heavy investment in marketing. The operators of ClockJack Chicken moved away from their 50-cover, high rent Soho site, in favour of a restaurant in more affordable Woolwich and a delivery-only basement kitchen in Monument. In the absence of the same level of physical brand presence, and a smaller ‘window to the brand’, delivery sales were weak, and the business closed early 2018.
Deliveroo has trialled, and is rolling out, what appears to be a natural solution, and an easy expansion plan in the form of their ‘Editions’ delivery-only kitchens. This entails chefs from different restaurants cooking exclusively for Deliveroo orders. Foodservice brands effectively buy into the kitchen space, serviced by the delivery fleet. The operator’s only concerns in this arrangement are COGS and staffing.
There are just a handful of Deliveroo editions currently, but many more are planned, with established chains such as Wagamama, Franca Manca, Busaba and MEATliquor taking up residence alongside many more local operators.
What does the future hold?
As the experience economy garners momentum, we expect to see continued growth in delivery-only kitchens. This will diversify too. So, we’ll see more purpose-built, multi-brand production units, to include versions of the Editions partnership format in the future. At the same time, operators looking for an economic solution for multi-brand restaurant groups are likely to open delivery-only kitchens. Longer-term, we anticipate a shift towards multi-cuisine delivery kitchens, such as the Green Summit concept in the US: the so-called “ghost kitchens” comprise one operator, one central kitchen and a portfolio of customer-facing ‘own brands’.
Data is key…
The ability to harness digital technology and embrace the benefits of real-time data analysis will be the key weapon in fighting margin erosion and resuming growth. This means identifying hot-spots for new delivery territories, engaging new customers, and supporting operational efficiency. The customer journey will become more seamless, with one-click purchases. Delivery partners will hone their propositions to focus on data and relationship management, and automation (drones and driverless cars) will reduce labour costs.
Once again, surviving in this fast-moving market demands innovation, creativity and an absolute focus on customer behaviours. We will see the stronger operators anticipating and responding to change, constantly reassessing – and redefining their operating models in a way that supports their brand and growth in the next phase of food-delivery innovation.
By Helene Mills, director of business management consultant firm, Pragma