NRN editor and restaurant operations expert Ron Ruggless breaks down what you should be watching in the industry this week. Connect with him on the latest operations trends and news at @RonRuggless and firstname.lastname@example.org.
At a traffic light in Dubai, competing delivery motorcycles stop during the evening rush, outfitted with carriers for NKDPizza (Naked Pizza in the United Arab Emirates) and McDonald’s.
Changes in restaurant delivery are barreling down the road — and some dangerous curves might be ahead.
Some observers say technology disruption will soon hijack restaurant delivery the way it has shaken up the traditional taxi business, where newcomer alternatives like Uber and Lyft have shaken the core of a centuries-old mode of travel and business. And restaurant chains are putting the pedal to metal when it comes to driving their delivery decisions.
Miami-based Burger King has been rolling out its BK Delivers program domestically, adding in July such cities as Kansas City, Mo., Atlanta and Fresno, Calif. The domestic delivery test started in 2012.
Competitor Oak Brook, Ill.-based McDonald’s expanded its delivery program to more cities in Australia this summer after testing it for orders of $25 or more since November in the Sydney area.
Many brands have had delivery programs abroad for years, wrote Elizabeth Friend, a consumer foodservice analyst with Euromonitor International.
“Delivery service in emerging markets allows leading chains to reach the widest number of potential consumers unhindered by time or mobility constraints,” said Friend, citing as evidence a slogan McDonald’s once used in Asia: “If you can’t come to us, we’ll come to you.”
She added, “However, as leading fast-food chains come to rely more heavily on delivery in emerging markets, they’re also coming to see it as a potential growth driver in other world regions.”
Urban areas of the United States, with compact, dense populations, have long had a variety of restaurant food delivery options. But now less populated areas are being eyed by delivery services.
TechCrunch reported Wednesday that a new Baltimore-based technology startup, OrderUp, had raised $7 million more in funding to build its food delivery network into less densely populated areas.
“Consumers love the convenience of ordering online. Yet, outside the major metropolitan markets, it’s shockingly difficult to find online food delivery options,” Tige Savage, managing partner at Revolution Ventures, told TechCrunch. “OrderUp allows restaurants in small towns nationwide to cost-effectively join the digital age through an innovative ordering and delivery model. Restaurants love it and consumers do, too.”
OrderUp “is bucking that trend with a food ordering and delivery service focused specifically on smaller towns — and it’s already profitable,” wrote Ingrid Lunden in the TechCrunch article.
OrderUp, formerly known as LocalUp, says it serves 35 markets and plans to use its funding, now totaling $8.25 million, to expand delivery into smaller markets. The company said it now fills 10,000 food deliveries each week.
This week’s OrderUp funding was led by tech-funding powerhouse entrepreneurs Steve Case, formerly of America Online and now of Revolution Growth, and Tim O’Shaughnessy, the co-founder of LivingSocial.
“OrderUp’s business model is flexible so restaurants that want to use our technology and/or OrderUp driver partners can; some only want a piece of the solution,” Jeffrey said. “We work with restaurants that have their own delivery operation and want help reaching more consumers; restaurants that currently have their own delivery operation, but want to offload it completely; or restaurants that have never delivered before.” OrderUp takes “a small commission” on the transactions.
Delivery people work on a contract program, similar to such services as Uber, Lyft and Postmates, a courier-type app for iOS/Android that features local restaurant menus in major cities like San Francisco.
The Postmates service was reviewed among other delivery options by Anna Roth of SF Weekly earlier this year.
“This is San Francisco in the Great Age of Disruption, and of course a number of new companies are trying to improve upon the delivery experience,” Roth wrote. “Some are basically courier services, fetching food from any restaurant you're craving at the moment. Others eliminate the middleman and employ chefs to create healthy meals that you order through your phone.
“It's still early days,” she said, “but perhaps in a few years that call to your local Chinese restaurant will be a thing of the past.”
Contact Ron Ruggless at email@example.com.
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