Category Archives: Fast Casual

Grub hub? Doordash? Uber? Postmates? Dispatch?- Stop wasting your time

 

Screen-Shot-2015-05-01-at-1.50.31-PM

OK.  I am going to upset a lot of people with this post tonight.  I’ve been at this for far too long and have watched our customers work way to hard to grow their restaurant companies.  And so, I’m throwing my hat into the ring on this 3rd party delivery issue.

As a restaurateur, are you feeling confused about your options of how to handle 3rd party delivery services?  Are you being bombarded by Doordash, Postmates, UberEATS and so many other providers promising you the moon?  Promising you more sales?

Well, good luck with all that!  It’s a shakedown!  None of these services are adding value or growing your sales.  It’s a ticking time bomb.

Read this article in the Washington Post last week, “Not All Restaurants Are Fans of Food Delivery Services“.  The author does a great job at demonstrating how restaurants are losing control over their brand and off-premise experience.

I applaud In n’ out Burger for taking a stand and suing these guys for misrepresenting their brand.

Need more?  Check out these employment reviews about Doordash one of the darlings of the industry.  That’s a whole lot of bad will right there.  These are the people that are delivering your brand to the consumer.  Do you really want your restaurant to be reflected this way?

Here is another guy, taking to Youtube to show how Doordash is messing him up.

Postmates?  No better.  Check out this reality.

And then there are these guys!  These heavy hitters are claiming that they are going to revolutionize the business.  Not a restaurant operator in the bunch.  Technology engineers that are pitching their “fast growth” stories to Wall street and getting billions of dollars in funding.  Do they have any appreciation for restaurant operations?

None of these companies seem to care about your restaurant operations.  If they did, they would appreciate how complicated they are making things for restaurants.   As a matter of fact, they are working hard to further disrupt your restaurant operations, and they are taking a piece of the action while they do it.  And because this is a technology play, people will get super rich in the process.  This has Dot Com all over it.  The business model is doomed.

Well, I am really concerned about where this is going.  It’s a runaway train and it’s going to create dismal economics for our industry.  A lot of restaurant companies are going to go out of business in the process.

Let me share with you that I have worked in restaurants for more than 20 years.  And I can tell you, delivery for takeout is (and always has been) a challenge.

Let’s work on an example:

  1.  Let’s take a transaction of $12.00 (sandwich, drink and cookie)
  2. If you are a GREAT operator, your gross margins are at best 35%.
  3. This gives you a gross profit of $4.20
  4. 3rd party delivery services are charging 18% – 25% as a commission.
  5. This equates to $2.16 to $3.00
  6. This reduces your gross profit to $2.04 – $1.20.
  7. Your realized gross margin is actually 17% – 10%, depending on your arrangement.
  8. If you look at the math, you will actually see that with this scheme, you are splitting 50% or more of your gross profit with these services.  It’s just not affordable.

Now, I can tell you from experience that with a gross margin this dismal, it is impossible to make any money on this transaction.  In fact, I might argue that you will lose money on this transaction and you are better off not taking the business.  This is steep discounting.  It’s not going to work.

So go ahead!  Ramp up your takeout delivery business with these 3rd party players and watch your profits fly out the back door.  Watch your customers walk out the door and watch as you lose total control over your takeout business.  BEWARE!

Here are some additional facts:

  1.  The customer is not yours.  The customer belongs to the 3rd party delivery company.  The orders are being placed in their database and systems.
  2. Depending on your agreement, the more you pay and the more transactions you allow, the higher your listing and more visible your restaurant is on their websites.  They will drive more “non profitable” business your way.
  3. Not one of these 3rd party companies is making any money.  They are ALL being funded by Venture Capital and Private Equity.
  4. The business model is not sound.  Neither restaurants or the delivery companies can sustain this model.
  5. Their valuations are starting to decline.

Conclusion:

If you want to deeply discount your products and quickly cannibalize your sales, sign up for these 3rd party delivery services today.  It’s a sure way to lose your money, and fast.  Oh, they will bring you a “ton of sales”.  Thats for sure.  But you will lose money on each one.  Good luck with that.

Delivery for takeout has always been a challenge because the cost of distribution is prohibitive.  Delivery for catering works because the order values make sense.  You can afford to absorb the cost of distribution when an order is a few hundred dollars.

Saying that, do you want this guy doing your catering delivery?  Seriously?

images-1

This topic is complex.  My recommendation for restaurants is that they should focus on the basics.  Do what you do well.  Focus on your core business strategies and don’t run head on into a technology gold rush.

If you want to do delivery, than do it yourself.  Do a good job.  Take good care of your customers and just do a good job.  Pizza operators have done that forever.  Just ask them.

Focus on a solid catering and takeout program and take care of the extra mile yourself.

My two cents.

 

 

 

Tagged , , , , , , , , , ,

Restaurant Catering Leadership Workshop in New Orleans – March 9 & 10, 2016

UnknownDuring 2016, I will celebrate my 20th year as the Founder and CEO at both The Catering Institute & MonkeyMedia Software.  We continue to grow.  Today, almost 6000 restaurants use our technology to power their takeout, delivery and catering operations.  We have processed billions of dollars of transactions and we have 10 of thousands of users.  I am so proud of my team and so grateful to do the work that I do each and every day.

At the Catering Institute, our training products also continues to evolve.  I am so grateful to our ongoing sponsors for their support which allow us to put these events on for restaurant operators.  PepsiCo Foodservice, Punchh, and Voice Teleservices to name just a few.

On October 13, 2015 we hosted our second Catering Sales Management Workshop in Dallas and the results were fantastic!  More than 150 attendees from 100 different brands gathered for a day of sales training and learning. Check out the video here.

 

I am proud to announce our next workshop topic in our series.  Restaurant Catering Leadership Development.

Our community needs an incredible amount of support when it comes to catering out of our restaurants and developing leaders remains a key passion and initiative forward for our organization.  I hope you will attend, or at least have someone from your organization join us in New Orleans.

Please join us in New Orleans on March 9 & 10th, 2016 for two full days packed with activities, learning and networking with some of the industry’s best minds when it comes to the off-premise business channel for restaurants.

To register for this intimate and limited attendance event, visit http://www.restaurantcateringleader.com or feel free to reach out directly to me at 604-831-7422 with any questions.

Early Bird Discount available until December 31, 2015.

 

Tagged , , , , , , , , ,

Want to grow your catering sales? Ask Your PepsiCo Sales Representative How!

PepsiCo Portfolio

For the last 18 years I have been helping restaurants to grow off-premise sales through MonkeyMedia Software , The Catering Institute and Catering Insights.  I am so lucky to do the work that I do.

My passion for this space came out of my own deli in Vancouver, BC where I spent many years as an owner operator.  I experienced success in providing more takeout, delivery & catering to my customers and ended up developing Monkey, The # 1 Cloud Platform for Takeout, Delivery & Catering.  Today we support more than 5000 restaurants in North America and we are growing nicely!

In addition to our software, The Catering Institute continues to develop fantastic curriculum to help restaurants implement the strategy of the 5 Pillars of Successful Restaurant Catering.  We are deeply committed to education in the off-premise space and we are so excited about what we are seeing happen with catering from our industry’s most important suppliers!

Allow me to explain.

To me, catering out of restaurants is going through the same market dynamics that drive thru did in the 1970’s.  Here is what happened:

1.  Markets shifted and innovation by restaurateurs came first.  It was just an idea.

2.  Technology caught up and made it easier for restaurateurs to grow drive thru operations.

3.  The largest supply chain companies in the world got behind the innovations and investments and pushed towards helping our community to grow more sales and profits in this channel.

These three key factors made it easier for restaurant companies to grow drive thru sales and the more we prevailed, the more consumers rewarded us with their business.

Fast forward to 2015.  It’s happening again!  But this time, the sales channel is catering!

The same dynamics are happening with the entire off-premise business opportunity, especially with Catering.

1.  Restaurants have been trying to cater for years.  Early innovation.

2.  Technology (like ours) is helping to make it easier to cater.

3.  Supply chain Partners are investing and helping

And so, as I sit here today contemplating why the largest supply chain companies in the world need to help our community, I call your attention to the great work that PepsiCo Foodservice is doing in the restaurant space.

You see, they are not only innovating fantastic products under their portfolio for takeout, delivery & catering, but in fact, they are diving deep into helping restaurant operators with their overall off-premise business strategy.  They are investing resources into helping their customers do more takeout, delivery & catering.

To me, this is what sets companies like PepsiCo apart from their competitors.  They are forward thinking and not just focused on selling more of their products to their customers.  They are deeply engaged in learning and completely focused on helping their customers to grow sales and increase profits by educating them to become experts at feeding their customers where they Live, Work & Play!

Want to grow your catering sales?  Call your PepsiCo Sales Representative today and ask them how!

Let’s talk catering!

 

 

Tagged , , , , , ,
Follow

Get every new post delivered to your Inbox.

Join 2,210 other followers

%d bloggers like this: