Red Robin dives in
But deciding whether to provide home delivery and not just rely on third-party vendors is a complex issue for most restaurants involving staffing and execution. Take Red Robin, which has 560 restaurants located in the U.S. and Canada. It is currently testing whether to introduce home delivery, though it currently relies on Grubhub, Amazon, and DoorDash, depending on location, says Jason Rusk, its Greenwood Village, Colorado-based vice president of Business Innovation.
“Because online ordering has shifted retail, restaurants are less of a destination. As more purchases are made online, our approach is go where the guests are, and that involves more catering and for families dining at home,” Rusk says.
Currently, “it’s capturing incremental sales” via its third party vendors, Rusk says. But Rusk emphasizes that by relying on third-party vendors, restaurants “lose control of the experience, including temperature and timeliness.”
Moreover, the customers see themselves as ordering from DoorDash, not Red Robin, and that reduces brand identity. “We don’t have visibility about data, nor is it integrated into our loyalty program,” he says.
Though Rusk says it has maintained positive relationships with its vendors, “if something is wrong, they [the customers] don’t blame DoorDash, they blame the restaurant, which may or may not be our fault.”
While home delivery appeals to a range of customers including baby boomers and GenXers, Rusk says millennials drive it. “It’s a culture they’ve been brought into; the convenience at the tip of their fingers,” he says.
Rusk adds most home delivery orders don’t include alcoholic beverages or soda, but often customers order additional food, knowing it can be immediately be stored in the refrigerator. Further, they “don’t feel guilty in front of servers,” he says. Customers prefer ordering home delivery from the full menu, without any restrictions.
In its April 22 first-quarter financial results, Red Robin reported an increase in off-premises sales of more than 40 percent from the previous year.
Determining whether Red Robin green lights home delivery is based on “figuring out how we can do it,” Rusk says. Will home delivery work in most locations? Might third-party delivery work in some locations, but not all?
It also has to contend with staffing since finding trained delivery staff has become extremely difficult based on competition from Amazon, Uber, Lyft, and third-party delivery services. It also must ensure it can grow the volume.
“You want home delivery to offer the same emotional connection that customers receive from their server,” Rusk says.