Is On-Demand Delivery Threatening the Catering Business?

[Editor’s Note: This is a sponsored post.]

mobile ordering.jpg

Several new trends infiltrated the restaurant space in 2015: real estate hikes drove out city chefs to suburbia, composting got creative, operators began to question no-tipping policies, classic cocktails resurfaced with a modern twist, and veggies became a star of the plate. But one of the biggest disruptors this year was the significant shift of on-demand delivery services. 

From Postmates to DoorDash and all the gaggles of upstarts in-between, it has become apparent — now more than ever — that consumers want on-the-go options, more control, and they want what they want now. What’s more, this growth will only increasingly continue to affect a restaurant’s control over a consumer’s dining experience. According to Foodable Labs data, online and order pickup are increasing at a rate of 34.2 percent, greater than dine-in over the past 18 months. What does this mean for the future of the restaurant experience?

“Off-premise sales for restaurants is the ‘final frontier’ for our industry,” says Erle Dardick, founder & CEO at MonkeyMedia Software, CateringInsights.com, and the Catering Institute. “Our real estate is underutilized. Clearly if we can solve the mystery of delivery for both takeout and catering, our sales will grow. Saying that, it is crucial for restaurant operators to appreciate the complexity and dynamics of off-premise consumption. The experience is completely different than in-store, and as long as we provide new solutions to our customers, they will come back over and over.”

Dardick says that the “channel differentiation” between takeout and catering is a critical success factor for any off-premise program.

According to the MonkeyMedia team, annual data over the past few years has consistently shown restaurant brands growing their catering business by more than 20 percent on average year over year.

Erle Dardick | Photo Credit: LinkedIn

Erle Dardick | Photo Credit: LinkedIn

Foodable sat down with Dardick, also author of “Get Catering and Grow Sales!,” as he ramps up for the Catering Institute’s Restaurant Catering Leadership Workshop in New Orleans on March 9th and 10th. Below, we discuss the challenges and effects of on-demand apps and mail-order food companies, how Millennials got us here, and what trends he predicts will drive sales for operators in the next 24 months. 

Foodable: People are eating away from the restaurant more and more because of so many choice factors being introduced. Are we training a nation willing to start catering more office lunches versus dine-out office lunches? 

Erle Dardick: Catering will continue to rise in our industry and across all foodservice sectors. This phenomenon is because catering out of restaurants is a consumer solution that people want. It makes their lives easier. The more our industry can do to bring new and exciting solutions to this marketplace, the more our customers will purchase. 

Foodable: We now live in an on-demand culture. How is catering trying to deal with this shift? Will there ever be a Postmates for catering? Is that even scalable?

ED: The "on-demand" culture is certainly having a positive impact on restaurant catering sales. Occasion-based feeding is become more commonplace as time-starved consumers scramble for quality, freshness and convenience when feeding their guests.  

Third-party delivery services have always been around for restaurant catering. However, as an industry, we really have to ask ourselves how we want to represent our brand when it comes to catering. There will be an ongoing debate for years to come regarding who should "own catering deliveries.” Restaurant operators must keep in mind that when it comes to catering, the transactions are high risk in nature due to their size and feeding dynamics. Delivery is an important point of contact with the consumer, and brands need to consider it carefully.

Foodable: Mail-order food companies, such as Blue Apron, are heating up. Can an operator turn this into an opportunity or is it essentially hurting the business?

ED: For the first time in the history of our industry, technology is putting control into the hands of consumers. As such, the commissary-based model of restaurants will evolve rapidly. Chef-driven menus available through "non-retail" restaurants such as Blue Apron will become more and more common. The advent of retailing on the Internet allows consumers to order any experience from any online retailer.  

This will continue to hurt traditional restaurant sales. A BIG advantage that our industry has is that we have an incredible amount of real estate and existing brick-and-mortar locations. Driving more business out the back door will be the way forward to maximize the efficiency of our organizations.

Foodable: In your opinion, how has the rise of the Millennial affected online ordering, delivery, and takeout trends? 

ED: Millennials are growing up in the on-demand culture. They want fresh, fast, convenient, and high quality. They want to purchase from purpose-driven companies. Their purchasing power is substantial. They are clearly influencing the way our restaurant industry operates and brands that don't adjust to the needs and wants of Millennials will continue to slump in their performance as they lose relevance. Off-premise experiences is relevant to Millennial purchasers.

Foodable: What two trends do you see driving sales for operators in the next 24 months?

ED: The trends that we will continue to see over the next 24 months will be an investment in technology and growth in off-premise sales including takeout and catering. The operators that succeed in this will appreciate that both these channels must be available for pickup at the restaurant and for delivery.

Foodable: Why was it important to you to start The Catering Institute? 

Erle Dardick: I am so incredibly lucky to be able to work in an industry that is so diverse and exciting. I love the scale of our industry and, for me, it has always been about the people. I have always been passionate about education and I believe that in order to do catering properly out of restaurants, we must develop and invest in our people. The Catering Institute is all about the application of the framework of the 5 Pillars of Successful Restaurant Catering, which will continue to make it easier for restaurant and foodservice operators to feed their customers where they live, work and play.

Foodable: What do you hope attendees take away from this experience? 

Erle Dardick: My hope is that attendees of our Restaurant Catering Leadership Workshop will walk away with a fresh and useful perspective that they can immediately apply to their off-premise business strategy. In addition, new relationships will be formed through networking and supplier relationships will be forged to help with program development.