Why Millennials are Still Willing to Pay a Premium for Food Delivery

We know that the Gen Y crew is using delivery services in massive numbers. So, what can restaurants do to hold onto sales? Or, better yet, grow those sales that are being driven around in the backseat of a Prius?

In some segments, delivered meals are hovering around 30% of top-line sales versus 10% just two years’ ago. The conversation is real and there are only semantic distinctions between sales within the brick-and-mortar and those that are on the road.

But why?

Looking for insight, go to the source. It’s not always having the answers, but merely asking the right questions.

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Shutterstock

What is it about delivery?

It's all about convenience, duh!

From skipping traffic to getting food from A-list restaurants but avoiding the crowds, leisure time is in the balance.

“I prefer the privacy of eating at home after a stressful day, knowing the bathroom is clean, and the amount of time [delivery] can save me,” says Samantha, a 23-year-old in Portland, OR, when asked about her decision to stay home.

“Delivery apps allow us to see all of our food options in one place without searching through Google maps or Yelp.” Solo diners chime in, as well. “I want to enjoy food from my favorite restaurants without having to leave my apartment. I’ll also [order] on work trips if I’m running low on time,” says Jacqueline, a 26-year-old recent transplant from Houston, TX.

Collective dining is still witnessed in the wild by the ubiquity of sharing plates and communal seating. Some have a better time than most can dream, so they stay home - together.

“[We] don’t have to worry about finding a place that everyone likes. We can all order from different places and it will come right to us. My one friend, she gets Chili’s delivered to her house!” says Abby, a 23-year-old in New Castle, DE.

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Shutterstock

Why not go to a restaurant for a meal?

The digital natives appreciate being unplugged from their surroundings. Interaction, though, is what happens behind a screen. So uninterrupted time matters. Abby jokes, “I don’t like servers constantly bothering me; if I want a refill or if I need something, I’ll let them know. Or I can just get it myself.”

Samantha, chimes in, “Crowds, wait times, not being asked for my ID respectfully - or being asked for it before I even order anything - is super annoying. Sometimes I feel like waiters and waitresses assume that we won't tip well because we are young and we receive poorer service than others.”

“I don’t like dining in [a restaurant] when I don’t want to deal with people or would rather [...] eat at my own place,” says Celine, a 25-year-old in Newark, Delaware.

The cost of dining on site has an expense that can be buffered by avoiding the restaurant. “Two pints of beer in Portland [Oregon] are equal to the cost of a six-pack. So for the cost of having drinks for two, you can buy beer for a week. When you order food in you also have your at-home entertainment, like Netflix or Hulu, which is also a big factor, and you drink whatever you want to,” says Samantha.

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Shutterstock

Are the costs that ride along with the order an issue?

“Costs can be a problem depending on the restaurant, with many online sites such as Uber Eats, GrubHub, and Seamless; they add extra [fees] for delivery and have more out of pocket for a tip, like spending $25 on a $15 meal,” says 23-year-old Jamil.

Samantha adds, “Certain apps do not explicitly tell you the delivery fee price until you are about to click 'buy.' I think they do this so you are too decision fatigued to go back and pick something else, but we always do. Especially if it’s a place we have never tried before.”

Does the charge sway the decision? Apparently not. “I’m content with paying delivery costs, especially if it’s a restaurant I frequent,” says 26-year-old Fortuna.

While some delivery services put quite a pinch on operators to pay 30% of a sale, the customers placing the orders are an adaptable breed. “It’s still usually less than what you would tip a waiter. It’s still more convenient to stay in. I’d rather pay the delivery fee,” says Abby.

Is the trend going to last a thousand years into restaurant life? We only know as much as the tweezer-wielding cooks and the baked-Alaska chefs that redefine what’s hot and what’s not.

Until then, pack it to go and don’t forget to staple the dupe onto the environmentally friendly bag loaded with Brussels sprouts, fish tacos, and quinoa bowls. So, yes, Netflix and Chill is a real thing for millennials and it’s often paired with food delivery.

Is The Future of Dining Digitization? Allset CEO Thinks So!

We are living in a world with a live and thriving “on-demand” economy.

From having the choice to watch your favorite TV shows on your own time and schedule, to ordering meals and groceries through your mobile phone or online.

Companies seem to have finally figured it out…

Time is of the essence!

People seem to be willing to pay for their precious time to avoid time-consuming, mundane tasks. And with so many efficiencies taking place in different aspects of people’s lives, consumers are getting accustomed to speedy services so they can get back to what’s most important to them.

This phenomenon has us thinking… Is the future of dining digitization?

On this episode of On Foodable Feature, we learn from Stas Matviyenko, CEO and co-founder of Allset—a San Francisco-based application that aims to help restaurants provide a more efficient dining experience to guests who are short for time.

Watch the full interview to learn how this app can help increase a restaurant operation’s bottom line, how the technology integration would look like, and costs associated with the service!

Will Thrive Market Become Amazon's Biggest Competitor in the Organic Food Space?

The E-commerce giant Amazon made its plans known to conquer the organic food space about a year ago when it acquired Whole Foods.

While the tech giant was working to revive the organic grocery chain, Thrive Market, the online grocery store specializing in natural and organic products, was quietly and rapidly expanding across the country.

Now, Thrive Market has expanded with new categories and is offering membership perks to compete with Amazon.

Customers pay $5 a month to be a Thrive member and are given access to a marketplace of all-natural foods, beverages, wines, supplements and medicines at a discount, ranging from 25 to 50 percent off. Thrive offers free two-day shipping too.

So what does Thrive Market offer that Amazon doesn't?

It's all about the products and how they are sourced.

“Amazon buying Whole Foods has created a big opportunity for us,” said Nick Green, the co-founder and CEO of Thrive Market. “Whole Foods has been the standard bearer for natural foods and organic products, but the challenge it has had is that many people don’t live near one, and many people can’t afford it. When you think about the Amazonification of Whole Foods, Amazon bought it for the real estate, and it’s tried to make it more accessible for everyone. That means you’re going to see different products on the shelves.”

Thrive Market won't be losing sight of its standards. All products on the marketplace are ethically sourced and non-GMO, along with other requirements.

“Already, Whole Foods shelves have Honey Nut Cheerios and Amazon Echos,” said Green.

Although Amazon has introduced products like these to the Whole Foods stores, Whole Foods CEO John Mackey recently said that the chain will be keeping niche products on the shelves that aren't found at common grocery stores.

“Not only are we not decreasing local foods, we’re increasing them," said Mackey to "Well + Good" in November.

But Amazon has lofty plans for Whole Foods and it is bound to change what products the chain carries.

“Amazon doesn’t want Whole Foods to be a top-five regional or specialty grocer,” said Cooper Smith, principal analyst at Gartner L2 to "Digiday." “It wants it to be a top-five national grocery chain. That’s going to impact the products you see being carried. National brands are hitting the shelves and are in talks whereas they might not have gotten a foot in before.”

According to Green, Thrive Market grew its 2018 revenue by 50 percent compared to the year prior.

See what else Thrive plans to do in the next year to become Whole Foods' biggest competitor at "Digiay" now.

But Amazon isn’t just going after the on-the-go consumer with its grocery deliveries, its cashier-less Amazon Go stores are going to pop-up across the country offering food options. Watch The Barron Report episode below to see how these stores will make an impact on restaurants, especially those in the QSR and fast casual segment.

Whole Foods to Officially Exit Instacart Marketplace

Whole Foods

Whole Foods

Back in 2014, the organic grocery store Whole Foods partnered with Instacart to offer customers grocery delivery.

When the grocery chain was acquired about a year ago by the tech and logistics giant Amazon, it was only a matter of time until the grocery chain was going to exit the partnership.

Whole Food deliveries will no longer be available on the Instacart app starting February 10.

According to a recent “Tech Crunch” report, Amazon, which has its own grocery service Amazon Fresh, has negotiated to end the partnership with Instacart earlier than the company expected.

“A person familiar with the matter told TechCrunch that significant developments over the last 18 months forced Instacart to wind down its relationship earlier than planned. Whole Foods didn’t immediately respond to a request for comment,” writes “Tech Crunch.”

Instacart currently employs 70,000 people to shop and delivery grocery items for its customers. The service has grown wildly popular and has over 300 retailers on its marketplace including big-box retailers like Walmart and Kroger.

Its success has made it especially attractive to investors.

“The company raised $600 million at a $7.6 billion valuation in October, just six months after it brought in a $150 million round and roughly eight months after a $200 million financing that valued the business at $4.2 billion,” writes “Tech Crunch.”

However, this announcement means there will be layoffs. Instacart has said that 75 percent of 1,415 workers impacted have been given new roles. But there are 350 or so expected layoffs.

In a blog post, Apoorva Mehta, Instacart’s co-founder and CEO said that company is offering transfer bonuses to their Whole Foods shopping couriers and those that are being layoff will be given a separation package.

“We’re committed to taking care of all impacted in-store Whole Foods shoppers who choose not to, or cannot, be placed in a new role. For those shoppers, we’ll be providing a minimum of 3-months separation package based on your maximum monthly pay in 2018, as well as additional tenure-based compensation,” writes Mehta.

Do you think this is a fatal blow to Instacart? Will Amazon Fresh ultimately conquer the grocery delivery market? Or will consumers be more interested in using a service with many retail partners to choose from?

Read more about Instacart and Whole Foods parting ways at “Tech Crunch” now.

Amazon’s announcement to acquire Whole Foods rocked the food industry. Besides getting into the organic grocery market, Amazon has started to roll out Amazon Go stores. These convenience stores cater to the on-the-go consumer and are cashier-less. Many of which offer grab-and-go food options. These stores have become the most popular during the workweek, especially at lunchtime.

On this recent episode of The Barron Report, Host Paul Barron discusses how these stores are a threat to restaurants, especially fast casual.

Have Amazon Go and UberEats Become a Threat to Restaurant Operators?

Operators have always had to compete in the market with other concepts, but in today's market, there are a new set of power players ready to steal your customers.

Enter Amazon.

Amazon, like the fast casual segment, is catering to the on-the-go consumer with its cashier-less Amazon Go stores, many of which offer grab-and-go food options. These stores have become the most popular during the workweek, especially at lunchtime.

We recently analyzed the aggressive move Amazon is making in the foodservice industry. Listen to this episode of The Barron Report for more insights on if fast casual restaurants can survive this threat.

But there is one advantage that restaurants, namely fast casual restaurants, have over the Amazon Go stores– many have embraced the plant-based movement. According to Foodable Labs data, today's foodies can't get enough of these plant-based menu items.

Don’t miss our video breaking down this data about the plant-based movement below.

Amazon isn't the only threat operators need to be worried about. There is another shark circling to take a bite out of your business.

Third-party delivery services emerged as a solution that many operators desperately needed.

Since offering delivery has quickly become a guests' expectation, an operator has two options. One is to invest in significant funding to build a delivery program. However, this is easier said than done. It entails creating a system, investing in a platform to process these orders, hiring more staff to handle take-out and delivery orders, and then hiring reliable drivers to deliver these orders.

Or an operator can simply partner with a third-party delivery service, which eliminates most of the headaches. When you consider the operational and logistical challenges of offering delivery, its no wonder that operators across the country have decided to go the route of partnering with a third-party delivery service.

But now this has created a new problem.

One of the most popular delivery services out there is now UberEats. This company has quickly conquered the market. UberEats is currently offering food delivery for 50 percent of the U.S. population and has the lofty goal of serving 70 percent of the U.S. population by the end of this year.

As UberEats becomes more popular, the more the fees increase for the participating restaurants. Could this be correlated to the increase in restaurant closings?

Listen to the podcast above as The Barron Report host Paul Barron explains the data showing that third-party delivery growth may be tied to restaurant failures.