With restaurants continuing to struggle under the steep fees that third-party delivery services charge, leading delivery services continuing to operate at a loss, and consumers growing frustrated with the steep fees associated with their order, the food delivery business is straining at the seams.
For restaurants, one way to make the model more profitable is to charge consumers more for their delivery order. While consumers consistently report that they are willing to pay more for their food for the convenience of having it brought to their door, conflicts can arise when consumers feel deceived, saddled with fees they did not know they were paying.
Chick-fil-A, for one, is being sued “deceptive and untruthful” menu pricing on delivery marketplaces, Food & Wine reported Monday (Oct. 11). The plaintiffs, two New York City area customers, allege that, despite advertising a flat delivery fee, the restaurant actually inflated menu prices without communicating this information to consumers.
“Since the beginning of the COVID-19 pandemic, Chick-fil-A has moved aggressively into the food delivery business, exploiting an opportunity presented by Americans’ reduced willingness to leave their homes,” the lawsuit alleges, per a filing obtained by UniCourt. “Chick-fil-A omits and conceals material facts about the Chick-fil-A delivery service, never once informing consumers in any disclosure, at any time, that the use of the delivery service causes a substantial increase in food prices.”
Earlier this month, in California, Governor Gavin Newsom approved a bill to require third-party delivery services such as DoorDash and Uber Eats to show consumers an itemized breakdown of costs and fees.
Related news: California Bill Requiring Food Delivery Fee Transparency Awaits Governor’s Approval
Del Taco Brings in New Loyalty Users with Program Refresh
A month after launching its new loyalty app, Del Taco, a California-based, Mexican-style quick-service restaurant (QSR) chain with around 600 restaurants, shared on Thursday (Oct. 14) that the app is bringing a large share of new consumers into the fold, ones who had never interacted with the chain’s previous loyalty program.
“40% of the members coming into Del Yeah! Rewards are actually new members,” John D. Cappasola, Jr., the company’s president and CEO, said on a call with analysts. “(It) speaks to the motivation around that app not just being an offer engine. There’s reasons to be involved with the brand and engage with the brand …. (and) loyalty tiers is a big part of that.”
Research from PYMNTS’ Delivering On Restaurant Rewards report, created in collaboration with Paytronix, finds that 58% of QSR customers want to interact with loyalty programs through a restaurant’s app, and 74% of QSR customers want to be rewarded for the value of their spending.
See also: Two-Thirds Of Consumers Find Restaurant Rewards Impersonal
For Del Taco, the program also offers valuable insight into consumers’ preferences and behaviors.
“Del Yeah! Rewards also enables us to unlock our customer data to drive personalized and valued experiences by delivering unique messages and offers in a way that members are most apt to respond to,” said Cappasola.
Caribou Coffee Takes on Dunkin’ with Domestic Franchise Program Launch
As part of the recently formed Panera Brands, the fast-casual mega-group comprised of JAB Holding Company’s Panera Bread, Caribou Coffee and Einstein Bros. Bagels brands, Caribou Coffee is already seeing some significant structural changes. On Monday, the company announced that the chain is now opening up franchise opportunities within the United States, Previously, all of its domestic locations were corporate run.
This will bring the brand, which currently operates 314 company-owned locations nationwide and 135 domestic license locations, into competition with Dunkin’, the largest coffee franchisor in the country, even beyond the competition that already exists between the brands for consumers’ spending.
Central to the value proposition for franchisees is the brand’s drive-thru concept, Caribou Cabin, which launched in 2019. The drive-thru channel has grown more popular for coffee drinkers since the initial outbreak of the pandemic. In fact, The National Coffee Association said earlier this year that drive-thru ordering is up 30% since the start of 2020.
“With their strong business model and new assets like the new drive-thru focused Caribou Cabin, Caribou Coffee is bringing an exciting new vehicle to potential franchisees while meeting their guests’ desire for convenience,” Niren Chaudhary, CEO of Panera Brands, said in a statement.
McDonald’s Makes Play for Digital Ordering Consumers with McPlant Burger
McDonald’s announced Thursday (Oct. 14) that it is testing out a plant-based burger, the McPlant, in partnership with Beyond Meat. The test follows launches of plant-based options from the chain’s top competitors, with the plant-based market opportunity growing every year. A ResearchAndMarkets.com report estimates that the market will grow about 10% every year from 2020 to 2027.
Since audience for plant-based offerings skews young, with Gen Z-ers and millennials significantly more likely than their older counterparts to opt for meat-free meals, launches such as these present an opportunity for restaurant brands to grow their digital customer base. After all, PYMNTS research from our study “The Bring-It-to-Me Economy,” created in collaboration with Carat from Fiserv, finds that about three-quarters of Gen Z-ers and millennials are ordering food online, compared to just two-thirds of Gen X-ers and only 42% of baby boomers and seniors.
More details: Bring-It-To-Me Economy Ascends As Consumers Embrace Home-Centric Lifestyles
“We’re always testing new items and flavors, and this particular test will help us understand how offering a burger with a plant-based patty impacts the kitchens in our restaurants,” McDonald’s announcement stated.
The United States test of this menu item will begin in early November. McDonald’s has already begun testing it in Sweden, Denmark, the Netherlands, Austria and the U.K.
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