Category Archives: Catering Operations

What I learned about restaurant delivery from Silicon Valley -Take control of your restaurant operations today!

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What an interesting week it has been for me!  A few days ago, I marked my 20th anniversary in the foodservice industry.  I’ve loved every year of it.  I love the work we are doing in this incredible industry.  My team is focused, powerful and winning.  Our customers are happy and we still “jump to the pump” for our customers.  We win on service.  We are a passionate group of people and our strategies are making our customers more money.

Takeout, Delivery and Catering is our niche, and we are very good at it.  I am very proud of my team today.

In 1996, when I became a partner at Tony’s Deli & Catering Company, I had no idea that I’d be meeting with the most interesting and innovative technology companies in Silicon Valley some 20 years later.  As we all know, these technology companies are innovating marketplaces for consumers to order from their favourite restaurants, (UBER, Postmates, Amazon, Google, Yelp), and these companies are also working on solutions for solving the logistics challenges of delivery for restaurants.  Thing is, with this kind of change, it’s bound to be painful.  Why?

Because all this technology is completely disconnected from a restaurants off-premise operations.  Now, before you say that’s easy to solve for by yourselves, you’d better stop.  It’s not easy at all.

That’s what inspired this blog post today.  Because my journey of 20 years in foodservice has not been easy.  It’s been arduous, painful, slow, uphill the whole way.  I’ve been so lucky just to have the support of incredible people to allow me to continue on this quest to help restaurant companies conquer the takeout, delivery and catering channels.  And now, we are just getting going.

We have an end-to-end business solution that provides our industry with the business framework, strategy, curriculum, training, certification and software that it needs to take control of off-premise restaurant operations.  It’s what we are.

With more than 6000 restaurants using our software, and the world’s largest brands implementing the strategies outlined in our business framework, our industry is finally beginning to understand what we are doing.  And its amazing!   Our customers use our ideas and our tools to execute a full 360 degree view of their takeout, delivery & catering operations.  What’s even more beautiful, is that through our API, our technology is open to be able to accept order from all other order channels.

This gives our customers all the “plumbing” that they need to guarantee flawless execution of all orders.

Restaurant operators are faced with a barrage of order channels in today’s environment and what’s even making it more complicated, is that the markets for services continues to segment.  So, as consumers become more demanding and want specialization, and the markets become more competitive, only restaurant operators that are able to offer new consumer solutions to their brand loyalists are going to win.  So, where takeout and catering begin and end will become more and more important every day.  For everyone.

Trust me, I know.   The restaurants I am visiting these days sometimes have to up to 9 different order channels and they are all showing up on tablets in the back of the restaurant.  What’s even worse, is that takeout orders and catering orders are all lumped together.  It’s a mess. The operations are disconnected from these orders, and this is where it’s gets even more complicated.  These companies are all running towards integrations with POS and other systems, but it won’t work.

And so, you might ask yourself why these technology companies are interested in the work we are doing at MonkeyMedia Software, The Catering Institute and Catering Insights?

These companies are beginning to understand that in order for this system to get more efficient and for these partnerships to work, the operators need systems  and processes that allow them to scale and provide a consistent, reliable and predictable experience.  That is the only way that these companies will win.  Only if restaurants win.  Because then, customers are happy.  Flawless execution is key.

And so today I am encouraged by what I see.   The energy, enthusiasm and investment pouring into takeout, delivery and catering is super exciting for me!

My team is more focused then ever.  The business framework of the 5 Pillars of Successful Restaurant Takeout, Delivery & Catering is shifting the perspective of not only operators, but also supply chain partners that really want to appreciate the business strategy and strengthen their understanding of what restaurant operators are going through.

Becoming true partners.  And so, I am honoured that these companies want to work with our organization to further improve the industry.  To benefit from our ideas, our concepts and most importantly our perspective.

My organization has been focused on a single idea for 20 years!  As a restaurant operator, you must first understand your business strategy before you unleash the digital ordering channels that are going to keep on growing.  This strategy lays deep in the foundation of your brand, and it must be core to the vision.  It is directly connected to your product offerings and the subtleties of daily behaviours of your people.  It touches every part of your business.

Catering needs to be core to your DNA, and then takeout will get easier.

From there, you must invest in a framework and only then, you must invest in an IT stack that allows you to have best of breed solutions for all parts of your technology ecosystem.

And so, I am proud today to be standing in Silicon Valley with a life’s worth of work which is only now being appreciated by so many very smart people that are investing heavily into takeout, delivery and catering.

They understand that restaurants need the strategy of the 5 Pillars as well as an IT stack that allows them to handle the order flow and business logic of ALL digital channels.

This is what we have become.  A platform for our industry to execute takeout, delivery and catering orders at scale.

I could not have dreamed this up.  It happened only because our customers are winning with these ideas and tools.

Give me a call or shoot me an email.  I’d be happy to explain more.

 

 

UBEReats kills off instant delivery – April 19, 2016

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Hello everyone.  Sorry I have been remiss with posting.  I’ve been running hard with our growth at The Catering Institute, MonkeyMedia Software and Catering Insights.

Saw this article today:  UBER kills of Instant Delivery

As we all know by now, delivery and logistics for getting our food to consumers is a challenge.  I have always maintained that the business model for off-premise sales is evolving to a place where our restaurant community MUST understand the right business strategy behind takeout, delivery and catering.

As operators, our restaurant community is being bombarded with 3rd party delivery companies who claim to be the “next best thing” for the restaurant industry.  These companies are being funded with millions and millions of dollars of VC capital, and they have spent ALOT on sales and marketing.  Their objective?  To see if they can ramp up adoption of their technology and services by consumers.  This in turn, would provide them with enough business leverage to “squeeze” restaurateurs and force them to list their brands within the delivery companies ecosystem.

I have known for years that the business model for delivery ONLY works with large occasion group orders.  And so, when it comes to these types of orders, I argue that the consumer solution that restaurants need to focus on is “Catering” and not large scale “Takeout”.  Why?  The reasons lie in the subtlety of the business strategy.  

The differentiation between your “takeout” products and your “catering” products is a key component to achieving success with your off-premise business strategy.  If done properly, menu optimization is a critical step towards designing a consumer solution that your brand can scale.  A platter of sandwiches is a completely different product than a single sandwich in a bag, for example.  To continue, a fruit platter requires a completely different manufacturing, assembly and packaging process when compared to making individual fruit cups.

To this end, I am a BIG believer , that because of the inherant risks that come with large value orders, restaurant companies are far better off ramping up and controlling their own deliveries for the catering channel.

This brings up the big question for our community.  How do we manage “delivery for takeout orders?”

Well, one answer might be, focus on defining your catering program and the differentiation between takeout and catering.  Then, when your customers want delivery, drive them to your catering channel for easier and a more predictable experience.

How do you make this paradigm shift in your organization?  Listen to these wise words from Fred LeFranc, the founder at Results Through Strategy.  He specializes in helping companies to make this kind of shift in their thinking.

Your customers and your operations will thank you for it.

Who is driving your off-premise business strategy?  UBER?  Door dash?  Postmates? ….. I hope not.

Let’s talk catering!

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

 

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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?

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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, then 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 last mile yourself.

My two cents.

 

 

 

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