One of the biggest questions that promises to play out in the larger world of restaurants — whether quick-service operations or others — is who will ultimately own their customers, and whether those businesses can get them back once they are lost to third-party delivery services and aggregators.
How all that will play out was a big part of a recent PYMNTS discussion featuring Karen Webster and Dan Rodgers, president and founder at QikServe, a company that provides self-service offerings for the hospitality industry.
That company recently made its own play to have more of a digital and mobile role in the restaurant world, buying Preoday, a firm that focuses online ordering technology, increasingly important — even table stakes — to every operation from global fast-food chains to local fish-and-chip lunch counters.
Consider just a few mobile-focused data points to get a better sense of that point. According to PYMNTS research, mobile ordering is more popular than ever, with 60 percent of United States consumers ordering delivery or takeout once a week. The volume of orders placed via mobile apps grew 130 percent between 2016 and 2018, too, and mobile orders now represent approximately 60 percent of all digital food orders. Such services are particularly popular among millennials, who are growing up and moving toward their peak earning years. As well, about 40 percent of food orders are eaten on-premises at this point, which is largely a byproduct of the mobile order-ahead trend.
“It’s a really exciting time for technology, and I think it’s still got a lot of value to bring,” Rodgers told Webster when offering his view of the larger landscape.
Deeper Trends
Within all that growth, however, other storylines emerge — trends that are already proving challenging to restaurants, but could also lead to new opportunities.
As Rodgers told it, many restaurants were “caught napping a bit” as new technology, including self-service kiosks and online ordering technology, exploded into the mainstream. “It’s opened the door for the aggregators to start coming in,” he said. “And when they come in, they own the customer at that point.” The risk is even wider than that. As Rodgers pointed out, a particular restaurant’s competitors are also on those platforms. And in some cases — he used recent changes at DoorDash as an example — the bigger restaurant operations are paying to promote their brands on those delivery platforms, and that can serve to further smother the smaller restaurant businesses.
Such moves look likely to continue even as consolidations take place, and some observers — Rodgers among them — voice skepticism about whether those third-party delivery services will be able to keep making robust amounts of revenue in the coming few years. “The U.S., in particular, is a huge land grab” when it comes to those services, he said during the PYMNTS discussion. “It speaks to the low barrier to entry when it comes to that type of service.” But nothing ever really lasts. “The revenue models are unstainable,” Rodgers said.
In fact, he and Webster talked about how the rise of travel aggregators in the hotel space — and all the related innovation and disruption there — can serve as a sort of rough guide to developments in the restaurant delivery space. “The fees will continue to get suppressed as the market consolidates,” Rodgers said. But that comparison goes only so far.
“What restaurants don’t have is the logistics,” Webster pointed out. “Hotels have the rooms. It’s different with travel aggregators.”
Next Steps
No matter the similarities and differences, those restaurants that intend to thrive in this new decade — this generally applies to quick-service restaurants (QSRs) when the conversation is about online delivery services and aggregators — will have to focus more and more about customer ownership. Sure, delivery platforms can fulfill some interesting and pragmatic roles — for instance, drumming up business for restaurants during non-peak hours. “But the minute (those services) capture the customers, those customers fall out of that restaurant’s ecosystem. And trying to get that customer back is really difficult.”
That puts more weight on the task of providing restaurants with their own tools to provide digital experiences and services, more ways for them to acquire and hold onto their own customers. “That’s a huge challenge,” Rodgers said. “The horse has somewhat bolted there. (Restaurants) never saw what was coming.”
But so many worthwhile journeys begin with small, considered moves — and that can be the case when it comes to restaurants in this digital, online ordering, mobile order-ahead age.
“They can start to address that by focusing on their own digital ecosystems,” Rodgers said. “They will have to [do] something to get their customers back,” he said, “whether through loyalty or rewards or something like that.”