In today’s on-demand world, convenience is more important than ever. But what happens when the trend envelops the hospitality industry, one that’s quite literally defined by welcoming guests?
As food and beverage–delivery mobile apps like GrubHub, DoorDash and UberEats continue to grow in popularity, higher-end restaurants are grappling with how to bring their caliber of service into customers’ homes—even for these service-based businesses, the trend has been difficult to ignore. Those who’ve adapted, however, are enjoying the benefits of an added revenue stream.
Once upon a time, if restaurants wanted to provide carryout or delivery services, they took the orders and dispatched drivers themselves. These new app-based businesses are now providing the labor, potentially making deliveries more efficient and more profitable for restaurants.
According to a Gallup poll this past July, 84% of U.S. adults say they order delivery or takeout at least once a month. And according to mobile market data company App Annie, the number of meals ordered on mobile devices rose 130% in the two-year period from 2016 to 2018. Over the same period, global downloads of the top five delivery apps increased 115%. A March 2018 report from Cohen Financial, a real-estate firm that analyzes industry trends, predicts that restaurant deliveries will increase at more than three times the rate of on-premise sales between 2018 and 2023, led by digital orders.
“There’s really been a big shift,” said David Rekhson, principal of Chicago’s DineAmic Hospitality, which offers all nine of its restaurants on the Caviar app and is seeing month-over-month growth on delivery orders. “People definitely want to stay home and eat, so being able to provide a restaurant-quality experience in their home is a major priority for us.”
Putting fine dining on wheels
DineAmic is one of many companies that have had to reshape their operations to capitalize on the increasingly important revenue stream while minimizing growing pains. To avoid pelting their cooks with an influx of to-go orders, the group reconstructed their kitchens to include designated stations for delivery orders, and added employees to expedite them.
Los Angeles’ Mozza Restaurant Group established an entirely new takeout and delivery-only concept, Mozza2Go, adjacent to their Pizzeria Mozza, Osteria Mozza and Chi Spacca. Beverage director Sarah Clarke said they created it about five years ago to satisfy demand without placing added burden on their dine-in only restaurants.
“Now it’s just so commonplace everywhere to have everything delivered,” Clarke said. “So I think we definitely need it, partly to be relevant, partly because it’s good for sales.”
By featuring a menu that’s mostly limited to the pizzeria’s items, Mozza2Go also addresses one of the biggest issues posed by delivery: maintaining the integrity of the food during transit. Especially for serious dining destinations, handing off a dish to a delivery carrier, essentially a third-party contractor who’s outside of the organization’s control, can be problematic.
“Obviously if you’re at [Chi] Spacca and you have a particular temperature on your steak, that doesn’t travel well,” Clarke said.
San Francisco–based Bacchus Management Group employs the same solution, offering abbreviated menus at two of their eight participating restaurants with more intricate cuisine, Wine Spectator Grand Award winners Spruce and the Village Pub. There, customers are limited to just a few items better-suited for travel, like salads and burgers.
“We always think about all of our restaurants, even those higher-end restaurants, as being rooted in their neighborhoods, and we want to be able to take care of the people in the neighborhood,” said founding partner Tim Stannard. “I think it’s just an opportunity in our case … for people to use the restaurants in more and different ways than they have in the past.”
That challenge has stopped certain restaurants from participating, like Del Frisco’s Double Eagle Steak House’s 16 locations. “It’s nothing against the apps, rather than delivery not providing the best medium for them to present their food,” a representative of the chain told Wine Spectator via email.
What about wine?
In some states, such as California, Minnesota, Illinois and Florida, customers can also order wine through these platforms, creating the added challenge of ensuring that the third-party carrier serves it exclusively to adults.
Chicago-based group Lettuce Entertain You Enterprises cautiously evaluated the security of each platform’s wine-delivery process before offering bottle lists for particularly wine-centric concepts such as Restaurant Award winners RPM Italian and RPM Steak.
“Whenever it was integral to the dining experience and we could guarantee safe service, we bundled them,” said wine director Richard Hanauer.
Still, brands like RPM and Bacchus Management Group say delivery orders account for a very small percentage of overall wine sales, finding that guests prefer to pull from their own stash rather than order bottles for delivery.
Are guests still coming in?
Restaurants also have to decide if the increased sales are worth the added costs in operations, employees and delivery companies’ fees. In high-demand markets, delivery company fees typically range from 25 to 40 percent per order. As more customers order in and don’t visit, profit margins start to shrink.
But the fine-dining restaurant owners interviewed for this story report that, so far, they are reaping the benefits of the business model as a supplementary revenue stream. And they say that isn’t decreasing dining-room guests. Fine dining has been the top performing segment in the restaurant industry in the past two years in sales growth, according to restaurant industry research firm TDn2K.
Restaurants with significant atmosphere and service elements can maintain foot traffic in the dining room, where guests are also more likely to opt for wine. That means more opportunities for profits and less money lost to fees.
That would be good news for wine-and-food lovers who fear dining out’s doomsday is imminent. Even for restaurants expanding into delivery, dining-room service remains the top priority, as delivery can only provide a fraction of the experience to which these establishments are dedicated.
“We would so much rather have a guest come into our restaurant, have the dish plated, be able to engage with the sommelier,” Hanaeur said. “All of that is stripped away [with delivery].”
B&B Butchers & Restaurant owner Benjamin Berg, whose menu is available on the app Favor, echoed this sentiment. “While it adds a layer of convenience for certain evenings, people also need and want to get out of their house and eventually want the experience and entertainment of dining in the restaurant,” Berg told Wine Spectator via email.
These restaurants are about far more than cuisine, and consumers are still willing to show up for that added value. “There’s something about going to a fine-dining restaurant,” Stannard said. “There’s a certain level of that experience that can never be replicated on an app.”