Delivery Service Trials

Leading limited-service restaurant chains are trialing or launching new delivery service options in droves, often from a tech-based platform or through a third-party partnership, in order to boost sales and grow this convenience-fueled service. In the last year alone, Dunkin’ Donuts, Taco Bell, McDonald’s and Starbucks trialed delivery service, and Panera Bread Company, Burger King and Chipotle Mexican Grill expanded their delivery services. McDonald’s even applied to trademark the word “McDelivery.”

Technomic called out “foodservice everywhere” as a top trend to watch this year, noting that the demand for tech-enabled delivery is heating up. The driving forces behind this trend include restaurant and retail competition and consumer demand. Technomic research finds that the importance of delivery in creating a good value at foodservice locations skews to younger consumers and Hispanics, both increasingly important demographics.

In light of these developments, Technomic decided to trial three top-of-mind delivery services in Chicago. The results and analyses are below:

Postmates

Facts

Launched: 2011

Reach: About 80 cities in 18 states and Washington, DC

Availability: 24/7

Restaurant Brands (Chicago): Hard to determine exact number—homepage has a Featured section that lists about 40 brands, but users can search by a restaurant name or type of food to bring up more brand names. Featured national brands include McDonald’s, Burger King, Taco Bell, Dunkin’ Donuts, Starbucks, Chipotle Mexican Grill, Red Mango and Buffalo Wild Wings

Fees: Delivery fees start at $5 and are determined by the distance from pickup to dropoff and the capacity of the platform. A 9% service fee is also applied to the purchase price

Tip: Once the order is completed, users can choose to add a tip through the app

Time guarantee: An hour or less

Delivery method: Bike, scooter or automobile>

Postmates bills itself as an on-demand, 24/7 delivery service that allows its users to order a variety of items from local restaurants and stores to their door in under an hour. Foodservice options in Chicago comprise a mix of independent restaurants, regional chains and national chains along with retail options like Walgreen’s, regional grocery chain Jewel-Osco and local adult beverage retailer Binny’s Beverage Depot. Users can create an account and order through the company website or mobile app. The account allows users to store credit card information and delivery addresses and see past orders. Everything, including tip, is paid for through the app—delivery staff (called Postmates) are not allowed to accept cash. Once an order is placed, customers are assigned a Postmate who travels to the business and orders as any other customer would—nothing is premade, and Postmates don’t have pickup areas separate from the public.

Chipotle Mexican Grill Veggie Burrito Bowl

Chipotle Mexican Grill Veggie Burrito Bowl

Trial of Service

Meal ordered: Chipotle Mexican Grill—Veggie Burrito Bowl

Time ordered: 12:07 p.m.

Estimated time of arrival: 1:05 p.m.

Actual time of arrival: 12:37 p.m.

Delivery method: Bicycle

Cost: $18.14

  • Purchase price (what it cost at Chipotle): $7.69
  • Delivery fee: $6.75
  • Service fee: $0.69
  • Tip: $3.02

Benefits:

  • Much like the experience at Chipotle, the app allowed us to customize the meal by choosing a protein, type of rice and toppings
  • Entire Chipotle menu was available
  • Item prices matched in-store prices
  • App displayed a picture, name and rating for the Postmate carrier, making for easy identification
  • Postmate delivered meal directly to building lobby
  • Meal arrived faster than expected
  • Meal included cutlery and napkins
  • Receipt featured a $10 off voucher toward a future Postmates order

Challenges

  • With fees, price was nearly 140% more than what it would have cost in stores
  • During peak times, the company activates Blitz Pricing, meaning orders have a higher-than-normal delivery price. Customers must click through and accept the surge price before placing their order

UberEATS

Facts

Launched: 2014

Reach: Select neighborhoods in Los Angeles, Chicago, New York City, Toronto and Barcelona

Availability: Varies by market; Chicago availability is Monday–Friday, 11 a.m.–2 p.m.

Restaurant brands (Chicago): Two local, mostly full-service restaurant brands are highlighted each day, with brands rotating daily

Fees (Chicago): Flat delivery fee of $3

Tip: None—the website encourages customers to “tip” drivers with a five-star rating

Time guarantee: 10 minutes or less

Delivery method (Chicago): Automobile

UberEATS is an extension of widely used mobile transportation app Uber. If Uber users are in the coverage area (which, in Chicago, includes the Loop, West Loop and River North neighborhoods) during UberEATS operating hours, they can pull up the Uber app on their phones and see an option for EATS, along with Uber’s standard transportation options. They can then view that day’s menu and place their order using the same payment information stored in the Uber app for transportation purposes. The changing menu lists a handful of restaurants with one meal available from each. Unlike DoorDash and Postmates, UberEATS meals are pre-made and packaged in an UberEATS container, then loaded in an insulated bag (for chilled items) or an electric heated bag that plugs into the cigarette lighter in the driver’s car.

Café Ba-Ba-Reeba! Bento Box of Tapas Favorites

Café Ba-Ba-Reeba! Bento Box of Tapas Favorites

Trial of Service

Meal ordered: Café Ba-Ba-Reeba!—Bento Box of Tapas Favorites, which included patatas bravas, four bacon-wrapped dates and a chicken-and-sausage skewer

Time ordered: 12:25 p.m.

Estimated time of arrival: 12:31 p.m.

Actual time of arrival: 12:36 p.m.

Delivery method: Automobile

Cost: $11.84

  • Purchase price: $8
  • Tax: $0.84
  • Delivery fee: $3

Benefits:

  • Quick—Café Ba-Ba-Reeba! is over three miles and a roughly 20-minute drive from Technomic’s office—it would have been impossible to go to the restaurant, pick up the meal and be back at the office in the same amount of time it took UberEATS to deliver the meal
  • Value—Tapas Bento Boxes aren’t available at Café Ba-Ba-Reeba!, meaning non-UberEATS customers would have to have ordered each tapas separately for a total cost of $21
  • Meal included utensils and napkins

Challenges:

  • Must order restaurant’s featured meal (can’t order something else from the menu)
  • Can’t customize order
  • Tapas and sauces weren’t labeled

DoorDash

Facts

Launched: 2013

Reach: San Francisco, Silicon Valley, Oakland, Berkeley, Los Angeles, Orange County and San Diego, CA; Dallas and Houston; Chicago; New York City; Boston; and Washington,

Availability: varies by market; Chicago availability is Monday–Wednesday, 10:30 a.m.–10 p.m., Thursday–Friday, 10:30 a.m.–11:30 p.m., Saturday 10 a.m.–11:30 p.m. and day 10 a.m.–10 p.m.

Restaurant brands (Chicago): 405 local and national restaurant independents and chains

Fees (Chicago): Flat delivery fee of $5.99

Tip: Appreciated but not required

Time: Aims for under 45 minutes

Delivery method (Chicago): Automobile or bicycle

DoorDash bills itself as an on-demand delivery service that connects patrons with local businesses. It offers customers a variety of fare from a mix of local independent restaurants and national chains in less than 45 minutes. Users can create an account and order through the company website or mobile app. The account stores credit card information, delivery addresses and past orders. The first delivery is a flat $1 fee. The food order, delivery fee and optional driver tip is paid for electronically, and then the delivery order is tracked from the order’s initial receipt to the delivery complete confirmation. The driver (or Dasher) calls the recipient upon arrival. There is no minimum order size.

Chick-fil-A Chicken Deluxe Sandwich

Chick-fil-A Chicken Deluxe Sandwich

Trial of Service

Meal ordered: Chick-fil-A—Chicken Deluxe Sandwich, with pepper Jack cheese and bacon, plus a Chocolate Chunk Cookie

Time ordered: 11:56 a.m

Estimated time of arrival: 12:48 p.m

Actual time of arrival: 12:25 p.m

Delivery method: Bicycle

Cost: $12.38

  • Purchase price: $9.45
  • Tax: $0.99
  • Delivery fee: $1
  • Tip: $0.94

Benefits:

  • Quick—food was delivered in less than the predicted delivery time. The nearest Chick-fil-A is a 50-minute round-trip walk from the Technomic office, compared to this 29-minute delivery
  • Convenient—bicycle driver was able to walk into the office lobby and deliver the food by hand
  • Quality—food was removed from a temperature-insulated container upon delivery. The sandwich and cookie were both warm, as desired
  • Tech-friendly—user-friendly mobile app with delivery status updates

Challenges:

  • Inaccuracy—sandwich did not contain the bacon that was paid $1.50 for
  • Value—item prices did not match in-store prices. The DoorDash food subtotal came out to $9.45, while the Chick-fil-A receipt’s subtotal (included with order) came out to $6.12
  • Napkins were not included

Going forward, restaurant operators will need to consider if they’re better served by developing and using a proprietary delivery service or partnering with a leading delivery service provider like one of the ones profiled in this blog. Operators who partner with third-party delivery providers benefit by not having to develop a separate delivery business and invest in delivery vehicles and additional staff, but they risk upsetting customers through added delivery fees and higher costs. Further, to remain competitive and drive repeat business, these leading delivery providers will need to address their own challenges and figure out how to balance value with quality, speed, accuracy and other factors. Expect delivery service to only become increasingly vital to the foodservice industry, and those providers and operators who are able to develop a service that meets customer expectations of value and quality will have the greatest chance of success.

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Lauren Hallow

Lauren Hallow is Associate Editor, Concept Analysis at Technomic Inc. She writes content for the company’s ConcepTrac monthly newsletter that covers emerging restaurant chains. Lauren also hosts Technomic’s quarterly Hot Concepts webinar and provides concept-related content for company databases, custom reports and press queries.

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Jill Failla

Jill Failla is Editor of Consumer Research at Technomic Inc. in Chicago. She currently provides menu analysis and trend forecasts for the firm’s Consumer Trend Reports series.

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