Third Party Delivery Life or Death for the Restaurant Operator

The conversation surrounding food delivery continues to be a major concern for today’s restaurant operators as they wade through a number of new technologies providing third-party delivery solutions.

GrubHub is up by over 38 percent in sales. The online delivery marketplace has also acquired Tapingo, Eat24, and LevelUp, and recently partnered with Dunkin’. However, not far behind, DoorDash just overtook GrubHub in U.S. monthly food delivery sales. The ever-popular Uber maintains a steady 91 million monthly active users in over 20 countries and provides food delivery for 50 percent of the U.S. population.

Nevertheless, our research here at Foodable Labs shows that there are some beginning signs of fatigue in both the operator and the consumer in terms of sentiment toward third-party delivery. An analysis of over one million conversations about third-party delivery reveals a few key areas that consistently problematize the companies’ claims to convenience.

Top 10 Third-Party By Sentiment Rating

Source: Foodable Labs

The Fees hit both the operator and the consumer. Operators typically pay third-party companies 20 to 30 percent of the base cost of the ordered food. Depending on the delivery service, consumers may pay a yearly fee or pay fees for delivery from certain restaurants. In just this past quarter, there has been a sentiment drop of 3.6 points on the consumer side across the top ten delivery services. On the operator side, the drop is even direr: sentiment fell by 5.8 points.

The Data represents a constant battle between the operator and the delivery service: who owns a guest’s information, order habits, items, and frequency of purchase? The restaurants believe the guests’ data belongs to them because the customer is their guest eating their food, whereas delivery services want to leverage the data to the max with deals, app notifications, and constant marketing.

The Brand is a key area that hits home for every restaurant business. Because the restaurant loses control of the delivery, brand continuity often comes into question. Food safety and new packaging is a constant concern for restaurants to ensure they maintain each customer’s business and overall enjoyment of the restaurant.

The Jimmy John’s sandwich chain, one of the first restaurants to embrace delivery services, has refused since its beginnings to deal with third-party companies due to these issues. “We’ve been researching … what is best for our customers and our brand,” says Jimmy John’s Chief Marketing Officer John Shea. “In our exploration, we came to the conclusion that we do it better.”

The question still remains whether food delivery companies like GrubHub and UberEats can come up with a program to solve these issues. My take is that the industry is incredibly complex: businesses range from independent to franchises to emerging chains to Titans of QSR, and each business has different needs and complaints regarding the current model of third-party food delivery.

Some members of the industry are seeking the bottom line of profit, while others are looking for top-line sales and incremental lift. The brand also comes into play, and profit is always a factor. The guest connection could also change the entire landscape of food delivery over the course of the next few years.

A few brands are taking matters into their own hands. Third party delivery can deeply cut profits, so fast-casual restaurants like Modern Market and Panera Bread are investing in their own ordering and delivery platforms. This move is risky, as it could limit the company’s competitive potential. But the choice ensures that the restaurant can maintain brand continuity and better address customer concerns regarding the food delivery process.

Third party delivery providers have a fiduciary responsibility to grow the business and create stockholder value. And history shows that pushback from the community can be a deterrence to the growth of these companies. The real difference here is that the dynamics of the restaurant industry does not fare well for third-party deliverers. The real future for the third-party delivery companies lies in the development of their own foodservice brands —whether they are cloud and virtual kitchens, or full on commissary systems that can meet massive demand. In my video report from last November, I break down the idea of how third-party restaurant brand development is the real gold rush for likes of Uber and GrubHub.

Panera Bread Rolls Out Climate-Friendly Dinner Options

Lunch hotspot Panera Bread is adding dinner to the menu this summer. The sandwich chain is currently testing a menu featuring hearty meals available from 4:30 p.m. to 10 p.m. in Jacksonville, Florida, and intends to test the “dinner-centric” menu in nine additional locations in Lexington, Kentucky beginning next month.

In a news release, Panera Bread also noted the company’s goal to continue to provide customers with healthy options for themselves and their children — including for dinner. “Panera’s craveable new dinner options are helping to meet guests demand to eliminate the trade-off between good for you and ease. Like all Panera menu items, all offerings are 100 percent clean with no artificial preservatives, sweeteners, flavors, or colors from artificial sources.”

The meals are still designed to be quick. Sara Burnett, the vice president of wellness and food policy for Panera, emphasized that the company is endeavoring to balance the ideals of fast and healthy for busy individuals and families. “People are often challenged by the dichotomy between convenience and quality,” she says. And the chain does not want its customers to “have to trade one for the other, especially dinner on the go.”

By sales, Panera is the tenth-largest chain in the United States. And dinnertime purchases provide, on average, about a quarter to a third of the company’s sales. According to Panera’s chief growth and strategy officer Dan Wegiel, customer feedback suggests that the light soups, salads, and sandwiches currently provided by Panera Bread make for a healthy, but unsatisfying dinner.

The new dinner options include more sizable and satisfying meals, including flatbread pizzas, bowls, and meatier sandwiches that still utilize popular Panera flavors. New vegetable sides have also been added.

One noteworthy addition is the Chipotle Chicken & Bacon Artisan Flatbread, featuring smoked pulled chicken, chopped bacon, garlic cream sauce, fresh mozzarella and fontina, red grape tomatoes, fresh cilantro, and the chain’s classic chipotle aioli.

With food production contributing up to a quarter of the world’s total carbon emissions, chicken is becoming an increasingly preferred protein option for restaurants and customers alike. When compared with plant-based foods, animal-based food production necessitates a much larger carbon footprint.

Beef production uses, on average, about 20 times the land that plants necessitate, and results in at least 20 times as many carbon emissions as the average plant. And cows, goats, and sheep alike emit the highly potent greenhouse gas, methane.

For concerned meat lovers, there is a more carbon-friendly option than beef. According to a study conducted by the National Health and Nutrition Examination Survey examining the average daily eating habits of over 16,000 participants, chicken is a drastically better option than beef when it comes to carbon.

Of any type of meat, beef has the heaviest footprint, regardless of how it is cut. Chicken, in contrast, has one of the lightest footprints of animal proteins. Chickens are a surprisingly efficient source of protein, requiring far less fertilizer and land acreage.

Diego Rose, the lead author on the study and a researcher at Tulane University, stresses that every person needs to be proactive in combating climate change. “Climate change is such a dramatic problem,” he says. According to Rose, the only way to curb destructive increases in global warming is to curb the global beef, goat, and lamb consumption. “All sectors of society need to be involved.”

In another study using the U.S. Healthy Eating Index, Rose found that people who maintained a healthy diet typically have low carbon footprints. Plant-based diets consistently correlate with improved personal health and positive environmental effects.

Panera Bread does offer a plant-based menu for climate-conscious consumers. The menu includes sandwiches, bowls, soups, and a number of fresh smoothies. According to Noel White, the current president and CEO of Tyson Foods, plant-based and alternative protein menu items have been “experiencing double-digit growth.” Tyson Foods just added a plant-based brand to its product line.

Panera’s Wegiel maintains that the chain is looking toward the future. “We stepped back about a year ago ... to say, ‘Over the next five years, where are we going to grow? Where are we going to get most of our value creation?’”

In regards to growth, Panera Bread has already added to its menu options this year: the chain successfully expanded its breakfast menu with new egg wraps, bakery items, and a remodeled coffee program. Restaurants and fast food chains like Taco Bell have instituted similar menu updates to boost sales.

At present, the majority of Panera’s delivery orders occur around lunchtime. And the chain has rebuffed any suggested partnerships with third-party delivery services: Panera Bread handles all delivery needs itself. With new dinner options, the company may need to rethink its delivery strategy in order to accommodate an increase in evening orders.

This post is brought to you by Tyson Foods. To learn more, visit The Modern Chef Network.

Panera Bread Names New CEO

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Shutterstock

The fast casual bakery cafe chain Panera Bread has announced late last week that it has appointed Niren Chaudhary as the company's new Chief Executive Officer and President.

The restaurant industry veteran previously held the role of COO and President at the quick-serve chain Krispy Kreme International since 2017. Prior to that, he has had different executive management roles at Yum! Brands for 23 years.

"Niren is a recognized industry leader with an impressive track record of establishing brands and leading companies to achieve growth in markets around the world," said Oliver Goudet, Panera Chairman and JAB managing Partner and CEO in a press release. "He is passionate about serving the people he works with as well as his customers, and has shown a keen ability to develop growth strategies that appeal to consumer needs no matter where they reside. These qualities make him perfectly suited to lead Panera into the next phase of global growth in the US and abroad, while maintaining its mission of doing good in the world and serving food as it should be."

Chaudhary will be taking over Blaine Hurst's former role as he retires and transitions to the Vice Chairman of the Board of Panera.

"Blaine played a significant role in making Panera a leader in the industry including his tireless efforts to lead Panera through its omni channel journey including Panera 2.0, digital, delivery, catering, brand evolution and his commitment to diversity and inclusion," said Goudet. "To that effect, we are excited that Blaine has agreed to join JAB to help accelerate the technology transformation of our other food portfolio brands such as Pret a Manger."

Panera Bread started 30 years ago, making it one of the oldest fast casual brands on the market. Today, there are 2,300 Panera Bread stores In the U.S. and Canada.

However, now that the fast casual sector so saturated, the brand has much more competition.

In 2017, JAB Holdings bought the chain for about 7.2 billion with the goal of expanding the restaurant by focusing on quality and convenience. Panera has been ahead of the curve when it comes to incorporating technology with its popular mobile app and loyalty program, along with its massive employment of kiosks in the last few years. Last year, the chain launched its own delivery service.

Back in 2016, we spoke to Ron Shaich, the founder and former CEO about how he started Panera Bread and learned about his story as a game-changer in the industry who helped to build the fast casual movement. Check out the Fast Casual Nation documentary trailer below or watch the full film now available on Amazon Prime Video.

Is Fast Casual Dying? Emerging Brands Tell a Different Story

Despite major losses on the Nasdaq for national fast casual brands like Chipotle, Panera Bread, and Noodles & Company, fast casual emerging brands like Freshii, Corelife Eatery, and Sweetgreen are growing.

Based on Top 150 Emerging Brands Data

Based on Top 150 Emerging Brands Data

Foodable defines an emerging brand as a concept that finds itself at the beginning stages of development, whether it’s just launching or it’s working through the minutiae of scaling and expansion.

According to Foodable Labs, restaurant traffic overall has gone down 6.8 percent year over year, based on social media mentions of the top 1,000 chains, while emerging fast casual brands have seen an 8.2 percent increase in restaurant traffic.

Nasdaq claims that fast casual is a dying trend, but we believe this is just a shift in the trend.
Emerging brands can’t stay an emerging brand forever, eventually, they begin to scale and gain notoriety across the nation, if done right. National brands like Chipotle are simply seeing natural market forces.

They face greater competition as they continue to expand, as well as more challenges. Whereas an emerging brand is just beginning to build brand recognition. Emerging brands are more nimble when they’re smaller and face less scrutiny.

To learn more about what that exactly means for restaurants, be sure to watch the video above and download the Top 150 Emerging Brands Report.

Former Wahlburgers CEO, Rick Vanzura Shares A Valuable Leadership Lesson

Former Wahlburgers CEO, Rick Vanzura Shares A Valuable Leadership Lesson

"I was sure the purpose of that call was to fire me," said Rick Vanzura, Former Chief Executive Officer of Wahlburgers and Alma Nove restaurants, as he shared an anecdote about a time in his career as a consultant that taught him one of the most valuable lessons in leadership.

It touches on the importance of confidence, vision, and calculated action with clear intent with everything you do—especially if you’re a leader in your organization.

Vanzura recently made headlines when he announced his decision to step away as CEO from the famed concepts founded by the famous Wahlberg family. He says the parting with the Wahlberg brothers and the company was done in very good terms.

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