In the last few years, off-premise dining has become so popular, but these days, pickup is surpassing delivery for diners. As prices continue to remain high, this shift could be a result of consumers watching their wallets, attempting to save a few dollars by skipping the delivery fees.
Because restaurants don’t typically add a charge for customers picking up, this strategy allows guests to continue to enjoy their favourite restaurants at home while avoiding additional fees – and that includes tipping. Tipflation and restaurant surcharges have made news in recent years, and about 30 per cent of consumers feel that tipping culture has “gotten out of control.” Studies show that only 13 per cent of diners leave a tip when picking up their order at a restaurant.
However, because restaurants make money from delivery, this trend could negatively affect a restaurant’s bottom line. In fact, Chipotle reported in late July that its delivery service revenue fell 15.8 per cent. Of the 60 per cent of customers ordering food from restaurants weekly, 80 per cent of those customers prefer picking up their order over a third-party delivery.
Studies show that this trend does not have to continue, with consumers considering delivery as a viable alternative – with the right incentive. Offering a five per cent discount on orders would entice 50 per cent of customers to choose delivery over pickup. Similarly, 55 per cent of people said that they would switch to delivery if restaurants could better estimate arrival times, offering a discount for late orders. 37 per cent of people said they would choose delivery if they received a gift card to apply towards their next order.
So, restaurants looking to encourage repeat delivery orders will need a strategy. Consider creating incentives that offer value for your customers while benefiting your business. For example, if it works for your business model, consider offering a free appetizer with their next order or visit. Your loyalty program also provides an opportunity for you to reach these customers by offering extra points for delivery orders. Conversely, you might use delivery to grow your membership, offering free or discounted delivery on their first order after they sign up.
As customers continue to save their pennies, restaurants will need to focus on a strategy that looks closely at what diners need, while maintaining their margins.
