Delivery orders of fresh spring rolls and pad Thai practically flew out of the kitchen at Twin Cities restaurant Sawatdee during the pandemic, with dining rooms closed or socially distanced and people growing tired having to cook for themselves.
Yet even now with restrictions lifted and life pretty much back to normal, takeout and delivery are still major parts of owner Cyndy Harrison’s business.
“It used to be that most of the sales were in-house, but we had a really good takeout business and a very small delivery business,” she said.
That’s flipped, as people grew to enjoy the convenience of dining remotely just as they did working remotely. Third-party delivery from the likes of DoorDash, Grubhub and Uber Eats climbed to 30% of Harrison’s business last month, with takeout at the same level, overtaking dine-in business at her three locations.
In April 2020, sales of meal delivery from the major services grew 162% year-over-year and 59% compared to the previous month, according to Bloomberg Second Measure. The industry is still growing now, albeit not at the pandemic intensity, with sales growing 6% year-over-year in November.
“A lot of pandemic habits fell off, but delivery is not going away,” said John Rankin, senior director of operations for Tennessee-based Charter Foods, a franchiser of Long John Silver’s, KFC and Taco Bell.
In response, fast-food chains have opened new locations with smaller or no dining rooms. They’ve also added exclusive drive-thru lanes for mobile orders and offered lobbies where delivery drivers can easily find orders on heated racks and check them for accuracy before leaving.
“We look at things a lot differently because that piece of the business is continuing to grow,” Rankin said. “In some places, dine-in has never been the same. Mobile ordering outpaces the number of people who want to come in.”
Take-away meals
Third-party delivery barely made a dent in restaurant analytics company Delaget’s 2019 sales. Delaget has a portfolio of 22,000 locations of brands like McDonald’s, Pizza Hut and Taco Bell.
But that third-party delivery grew to 10% of its sales last year and is on track to reach 13% this year, gradually cutting into drive-thru sales, according to the St. Louis Park company.
Counter sales are at less than half of 2019 levels across Delaget’s clients as consumers drive-thru and eat in their cars or order delivery to their homes, jobs and even hotels while on vacation.
“We’ve changed the way we’re eating and interacting with the restaurant,” Delaget chief executive Jason Tober said.
Delaget also is seeing the average ticket price shoot up as delivery orders come in for larger groups and as consumers customize their online orders. These same patrons also don’t seem to mind paying higher third-party prices or convenience fees.
The average delivery order rose to $21.08 this year from $20.37 in 2022.
“That’s driven almost exclusively by delivery,” Tober said. “These platforms allow for increased menu pricing as well as the opportunity for digital upsells.”
A DoorDash survey earlier this year of 1,505 consumers from around the country combined with the company’s aggregate data found ordering delivery or takeout from restaurants is more popular than dining at them. French fries topped the DoorDash list last year of the top five most-ordered foods with burgers, tacos, salad and pizza following.
The trend has led some fast-food chains to change the way they do business, including more emphasis on fulfilling delivery orders.
“One thing that’s so important is they have a new constituent: that DoorDash driver. How do they interact with a DoorDash driver?” Tober said.
Delivering the goods
Border Foods, which operates 245 Taco Bells in 10 states, opened Taco Bell Defy last year in Brooklyn Park. It has no indoor seating but promised delivery times as fast as two minutes.
Third-party delivery was less than a percent of the business in 2019, and Border Foods President Aaron Engler saw it take off when the pandemic started.
“We’ve continued to see the growth in 2022 with a 36 percent increase,” he said. “This year, we’re expecting 17 percent growth. We’re expecting the trend to continue with a 6 percent to 8 percent increase next year.”
Border Foods, based in New Hope, has remodeled the vestibules of some locations with heavy traffic from third-party delivery drivers so they could quickly come in and find orders rather than wait in drive-thru lanes, which gave the appearance locations were busier than they were.
At her Sawatdee locations, Harrison now has two staff members assigned to preparing delivery and takeout orders during rush periods. If a dining room’s full during a concert night at nearby U.S. Bank Stadium, for instance, she sometimes turns off the apps altogether to avoid a backlog of orders and hungry, disappointed customers.
When customers order from her website, she pays the third-party app no fee, though the diners still pay their share of the delivery. Millennials and Gen Zers who order delivery frequently often hold monthly subscriptions, she said.
The fees to the restaurant can reach up to a quarter of the order when customers order via a third-party app.
“I know for us, third party is really important for our business,” Harrison said. “I have multiple locations, so we can negotiate a fee that we feel is reasonable. I know other places that don’t have as much revenue on the apps and can’t negotiate.”
Delivery isn’t always the right fit for upscale concepts, such as high-end establishments like Parasole Restaurant Holdings’ Manny’s Steakhouse in Minneapolis, which discontinued delivery when customers resumed booking tables.
“Steaks don’t travel well,” Parasole Chief Operating Officer Donna Fahs said.
Thai, Italian, Indian and Chinese cuisine, however, does. And she sees the trend going strong at the company’s Good Earth locations, which offer healthy foods from some of those cultures and beyond.
Fahs recalled a recent trip to visit her daughter in Chicago when her grandchildren asked nightly, “Where are we ordering from tonight?”
“That says it all,” Fahs said. “And she grew up in a home where I cooked!”
