A generation or two ago, if someone said they were dining on food delivered to their door they were almost certainly eating nondescript pizza or so-called Chinese food.
Now, the convergence of technology and demand for convenient indulgence has created an extraordinary revolution in the restaurant industry: home delivery of fine dining from small, chic restaurants via behemoth brands like Uber, Amazon and Google.
What sparked the explosion? The launch of Apple and Android smart phones and their corresponding apps. They streamlined the ordering process by geo-matching participating restaurants with the consumer and serving up the menus in mobile-optimized fashion, offering credit card registration to make it a completely cashless business – tip included. And, they manage the delivery channel through fleet-monitoring software that connects drivers, delivery origins and destinations. The “fleet” may be cars, bikes or human feet, depending on the market.
Forerunner GrubHub brags, rightly so, about the four-star quality of the gourmet restaurant options they provide. For example, Tony’s Di Napoli in midtown Manhattan has shrimp and artichoke oreganta and veal Franchese on their GrubHub delivery menu. Packaging for home dining is designed to protect the presentation of the food and enhance the brand, thereby encouraging diners to come in person next time.
Each delivery brand has a spin on their technology offering.
- Uber describes their versions of the service, UberEATS and UberRUSH, as a small business’s “on-demand delivery fleet.”
- Amazon has slowly expanded the “Takeout & Delivery” extension of their Amazon Local service, building on its existing e-commerce infrastructure.
- Smaller but aggressive Postmates says that 80% of the company’s orders are for food pickups at restaurants that don’t deliver. They recently announced their alliance to bring home delivery to customers from Chipotle and Starbucks. Their Preferred Merchant Program charges a 15 percent commission on an order in exchange for being prominently featured on the Postmates app.
- Google started Google Shopping Express late last year in Los Angeles and New York, offering potential shoppers memberships for free, which means customers can pay nothing for same-day delivery for six months. The fascinating thing about this extension is that for many small businesses, Google is their single largest source of marketing expenditure and new prospect leads via paid and organic search. Shopping Express will make them that much more important to small business owners.
Recruiting and marketing efforts to enlist independent restaurants vary. Google, of course, has a staggering wealth of data and relationships with hundreds of thousands of restaurants nationwide, and a marketing machine and sales force to reach them. And unlike many categories, this is one where consumer-targeted advertising does a fine job of attracting restaurant owners who want to get on board. Ad Age reports that outdoor and other geo-targeted media have been particularly effective.
GrubHub started with hyper-local, back-door-knocking guerilla campaigns. Then it became more complicated. “We wanted to be a national company, but we couldn’t afford to put an office in every city in the U.S. So we had to figure out a way to build a market, drive awareness, and sign up restaurants without having to pay rent,” said Matt Maloney, GrubHub co-founder. “We ultimately hired a San Francisco manager who physically went to restaurants, signed them up, and built our network. These days, instead of having managers in each place, we just have people on the ground in our top 10 markets. The rest of our sales team is in Chicago and New York City.”
For decades, the stats have shown a first-year failure rate of individually owned restaurants of 60% or more, with only 10% being in business after six years. But thanks to new technology and huge brands like Google, Uber and Amazon thinking small, local and personal, those rates may be improving.
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