With rising delivery and carryout orders, restaurants can capture more sales through off-premises channels.
This month, TDn2K reported that chain restaurants finally saw strong sales growth in March with comps lifting 1 percent in the first quarter. In fact, every month since June 2018 saw same-store sales growth, excluding February 2019, which was impacted by bad weather. This is good news after several years of declining sales industry-wide. While it seems the industry is recovering, it’s important to note that business will not continue the same as it was before these declines.
Though sales are up and check sizes are higher, posting a whopping 3 percent gain over the fourth quarter of 2018, restaurant traffic is down. And while check sizes are certainly helping the gains, there has been another boon for restaurants: delivery.
Though once-busy dining rooms may now seem less populated, there is still demand for on-premises dining. NPD Group reports on-premises dining still makes up 37 percent of restaurant orders. Though this might be a stark difference over the dining scene of a decade ago, restaurant-goers don’t want to ditch the dining room altogether—they want choices.
Yet the fact remains, off-premises dining has helped restaurants attract young diners. Forbes reported a study conducted by investment bank UBS, in which researchers found that millennials are three times more likely than their parents to order delivery. As a result, many restaurant delivery apps can now be found in top 40 lists for downloads. The shift is so dramatic, UBS sees a future in which most meals diners currently eat at home would be ordered and delivered by restaurants.
Furthermore, NPD Group reports that while restaurant visits remained flat from September 2017 to September 2018 compared to the previous year, 32 percent of all restaurant traffic was consumed at home—a 2 percent increase across all segments.
That’s good news for the industry. And though millennials have lead the charge into delivery, they aren’t the only ones taking advantage of the services restaurants are now providing. NPD Group reports digital ordering now accounts for more than half of all delivery visits. Additionally, between 2012 and 2018, the industry saw a 20 percent jump in delivery sales, and a 10 percent increase in delivery visits overall, so delivery is helping brands increase traffic and check sizes. NPD Group says this traffic was driven by growth in the industry’s use of digital ordering platforms, which now make up 52 percent of all delivery transactions.
The trouble, however, is that as off-premises dining become more ubiquitous, simply having delivery and takeout options is no longer a differentiator. And because consumers are so used to having choices about where they eat restaurant food, not giving them the option to dine at home or at the office is quickly becoming a liability. This makes it crucial to not only offer delivery and take out service, but to get each step of the process right from ordering infrastructure to delivery methods.
Of course, Italian concepts have long been associated with delivery and takeout through the pervasiveness of the pizza industry. But now, with new software and partnerships, it’s possible for all restaurants to find an off-premises dining model that satisfies business needs without creating a giant headache for owners and operators.
Here are three methods restaurants are using to capitalize on the off-premises dining trend and how they can be used effectively in the Italian segment.