After COEX Insights | Off-Premises Foodservice: It’s Here
At IFMA’s Chain Operators EXchange (COEX) a panel of foodservice experts, mediated by Nancy Kruse of the Kruse Company, weighed in on the challenges their brands have faced in adapting their business model for delivery. This popular topic left the crowd wanting more. Below you will find additional insights from the panelist based off the questions you asked through the IFMA Event App.
Best in class delivery restaurant chain? Who? Why?
Anne Readhimer, Senior Director, Fresh Food Innovation at 7-Eleven: In my opinion it goes to one of the pizza guys – Pizza Hut or Domino's. I don’t have current data to back it up, but they have been in the game the longest and have the systems behind it well established.
Wiley Bates III, Global Executive Chef at Pizza Hut: I agree with the above but would also add that the value of new aggregators, the likes of Uber Eats, would have helped to round out the discussion for those who are newly entering the delivery business. I would assume this to be the lion share of business in the audience.
What will traffic look like in 10 years—on prem vs off prem %?
Anne Readhimer: I do not have a crystal ball for a number, but I imagine a steady increase in off-premise.
Wiley Bates III: There are a few good articles out there from Mckinsey Institute Research that speak to new and old models and with projected growth patterns of each. I researched them prior to the COEX event. Moreover, for a heritage brand like us, we would not disclose or provide trajectories that would give other benefit in an already saturated commodity market.
How do you see consumers reacting to “cleaner” menu offerings and delivery? Are they apt to order healthier items for at-home consumption or are they less influenced by “healthy” call-outs since they’re not eating amongst other influencers?
Anne Readhimer: Consumers in general are looking for cleaner menu offerings. Cleaner does not always mean healthier though. A simple example: 80% lean ground beef from an organic cow will have the same fat content as 80% lean beef from a traditionally raised cow. Micro nutrients could differ, yes, but hopefully you get my point. My personal opinion, restaurant visits have historically been more of a “treat” occasion. So, if consumers might be using restaurants differently over time to make their lives more convenient, as an alternative to cooking/grocery versus as a treat, I would think you may see more healthy items being ordered over time.
Wiley Bates III: So very well articulated above but net-net in the QSR category, most consumers are looking for value, indulgence and products free from ingredients they cannot pronounce. As consumers continue to rely on social media as their avenue to health and wellness, it is my belief that foodservice companies must match the Hyper aggressive bloggers by providing transparency and pro-actively providing the sound bites vs what is happening in the marketplace today.
As operators have developed a separate menu strategy for catering and off-premise in the past, are you considering delivery items a separate menu strategy or is the strategy moving forward to incorporate delivery logistics in mind for new core menu items?
Anne Readhimer: We will consider delivery logistics for new items.
Wiley Bates III: Our situation is unique due to delivery being very embedded into our DNA. The go forward strategy for QSR players with our heritage is to gain efficiencies and seek repeatable models that could positively impact our business both in top-line and bottom-line results.
How do you find margins on delivery vs in store consumption? Are any of you charging a higher menu price for delivery vs in store dining to offset 3rd party delivery commissions?
Anne Readhimer: Menu pricing is consistent. We are passing the delivery fee onto the customer.
How do you balance quality expectations of patrons -- is it ok to serve inferior quality delivered vs in-house quality? And how do you manage those expectations with the consumer so it doesn’t impact overall brand.
Anne Readhimer: We currently only deliver a portion of our menu we deem acceptable in transit.
Wiley Bates III: From a QSR perspective, especially in the Pizza category, brands need to take a deeper dive into brand perceptions (both implicit and explicit) while seeking qualitative and quantitative input from consumers in an effort to understand the sequential importance of what matters most to least. From there building a communication strategy that promotes brand building whether it be internal or 3rd party delivery in a targeted way to those consumers who seek the benefit of delivery.
Have you restructured your product development team or changed your innovation process to accommodate delivery models?
Anne Readhimer: No. We are supporting it more though.
Wiley Bates III: With this being steady state for us we have not.
Take a deeper dive into the topic and watch the Executive Video Summary