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As the casual dining sector struggles to deliver, who is ‘tipped’ for success?

As the casual dining sector struggles to deliver, who is ‘tipped’ for success?

Strategy

Sep,2018

The casual dining sector is in a state of flux. Consumer tastes are ever-evolving, while delivery options are fuelling the at-home dining trend. Only the most nimble of restaurants will survive in an industry that must constantly anticipate, innovate and react to make the right decisions for the benefit of consumers and shareholders alike.

Evolving tastes and shifting challenges

A report from PwC has found that 47 percent of 18 to 34-year-olds have changed their eating habits over the past year in favour of a healthier diet. But what does ‘healthier’ actually mean from one generation to the next? The forever misaligned demographic of millennials view healthy as trend-driven food fads, such as a high-protein diet or vitamin supplements. Those of an older generation view healthier eating in more black-and-white terms of food having less fat.

Changing tastes are also evidenced in recent data from the Soil Association Certification, which revealed that growth in the organic sector has doubled again (up 5.6 percent) and menus are having to accommodate as a result.

And then there is the explosive growth of food distribution networks.

Delivering convenience

Eleven million of the UK’s digital population visited one of the top three food delivery sites via a digital device during March 2016 alone, according to consumer research by ComScore. Deliveroo is the darling of the current wave of delivery networks and carries a charming anecdote of how it came to be, as reported by Forbes:

‘Founder William Shu was the company’s first delivery boy when he set it up in 2013.

‘The former investment-banking analyst spent the year driving his scooter around the suburbs of Chelsea in Central London for roughly six hours a day. He wanted to get a deeper understanding of the logistical network he was building.’

The rapid growth of Deliveroo, starting with excessive losses, is not dissimilar to not-quite-taxi-company Uber, and the two companies are now going head-to-head as UberEats comes to fruition, having recently made its foray into London. Part of their offering at scale, which ties in with their tagline of ‘Crave. Tap. Enjoy’, is the instant delivery service – a curated menu of 4–5 daily specials, which can be delivered to you, curbside, in as little as 10 minutes.

The other major player is Just Eat, which has a stated aim of ‘depth of choice’.

‘Our purpose sits at the heart of everything we do and that’s to make food discovery exciting for everyone, whether it’s by giving our customers more choice than anywhere else, or by supporting our Restaurant Partners to get more out of their business.’

Just Eat has gone big on TV ad spend and recent rebranding; UberEats is relying on the brand equity built out of the Uber taxi service; and Deliveroo, with its recent rebranding, is going big on hiring and exploding its network, dressing the team in eye-catching uniform, like billboards on bikes.

The commonalities of these three are that they are technology companies, and their product is distribution. But how does that sit with the high street chain restaurants?

Does delivery present a threat or opportunity for restaurants?

There is opportunity, in that the consumer demand for delivery was not something that some businesses wanted to resource or operationalise (couriers, web and app builds, infrastructures, legal ramifications, etc.). But there is an inevitable threat to footfall as home and office dining becomes more pervasive. If Giraffe, Wagamama, Jamie’s Italian, CAU, Gourmet Burger Kitchen and Pho are offering the chance for their previous eat-in customers to stay in, what is the role for the restaurants themselves? Empty restaurants do not entice more custom through the door. They leave you with large staffing overheads and under-utilised, costly retail space.

Rahul Parekh, EatFirst’s chief executive and co-founder comments on the drive to deliver convenience but not at the expense of food quality, as meals undergo a journey on motorbike, bicycle, foot or hoverboard:

‘The greatest challenge to the dining sector, at all price points, is providing the convenience consumers want without compromising quality or the provenance of ingredients… Delivery is often an afterthought for conventional restaurants and the food often suffers.’

Deliveroo have an exclusivity deal with Pizza Express as a restaurant partner. Richard Hodgson, CEO of PizzaExpress, said, as reported by Business Insider:

‘It’s been our long standing ambition to deliver our much loved pizza to customers at home; however the challenge has been to find a way to deliver our products nationwide, to restaurant standard.

‘Deliveroo is a perfect fit for us, as they are dedicated to providing excellent delivery logistics to the restaurant industry.

‘They can deliver our hand-made pizzas and other dishes quickly and to an excellent standard; ensuring that our customers experience the same dining experience at home as they would in our restaurants.’

Will there be a (new) ‘tipping point’?

Will consumers ultimately ditch the eat-out experience in favour of enjoying the same quality restaurant cuisine from the comfort of home? Will the ‘tipping point’ become your front door rather than a restaurant table?! If so, how do you ride on that trend? How do you build awareness of your brand, product and experience, and how do you get those converging three factors into your home?

To that extent, it’s stick or twist. By building out data sources, points of contact and, above all, an ongoing dialogue with the consumer, restaurants can at least learn and anticipate the changing habits of their consumers, including ‘lapsed’ and ‘potentials’. Understanding and defining consumer segments will inform what to serve them (beyond the table) in communications, and leave you feeling as happy with them consuming your product in the restaurant or at home.

Know thy customer wherever they choose to know you

To truly know the consumer, restaurant brands must flow audiences into owned digital spaces. In other words, part of their strategy should be to use the reach of social platforms, email lists and other contact opportunities to drive diners to a destination where they can capture first-party data. Once you’ve got that, your relationship with your audience isn’t jeopardised every time platform owners change the rules, or a tech company interrupts the user journey with a menu interface, or the diner shifts their consumption habit. Also, significant insight can be gained from looking at social networks: 98 million uses of the hashtag #Foodporn on Instagram has to tell you something beyond the insatiable human compulsion to take photos of smashed avocado. Did you know that New York is the location where the most instances of bacon are snapped and shared on Instagram? Also, pizza, sushi and steak make up the top three most shared foodstuffs on the social network. Although I have a suspicion that avocado, smashed or otherwise, is giving them all a run for their money.

Use your email form sign-up opportunity wisely

Matt Hardy, CTO of Prophecy Unlimited, states:

‘A brand’s owned assets are increasingly becoming the only things they can rely on for long-term value, so every opportunity should be taken to give people a compelling reason to sign up to a contact database.’

A random sample of restaurants’ mobile web experiences reveals varied approaches to addressing an on-the-go audience.

Giraffe land the newsletter point front and centre and incentivise signing up to it with a free drink before they introduce deals and offers. You have to explore some way down Jamie’s front page to reveal why you’d want to join the Gold Club. Wagamama pair their sign-up box with a prompt to order takeaway or delivery; and Yo! Sushi hit you with an interstitial pop-up sign-up form, something Google are likely to penalise going forward.

Convenience matters

More than ever, the consumer is prepared to pay a double premium for the ultimate dining convenience: once to the source of food, and once to the deliverer of tasty morsels. Many high street restaurants are not set up to stomach the costs of bespoke distribution networks but equally do not want to miss out on revenue by not offering delivery, so they are obliged to outsource to algorithms and pedal power. Delivery networks are able to charge restaurants and consumers a premium for now, but there are signs that it’s not without a backlash. For instance, Uber and other ‘experience economy’ companies have already seen disputes over fair pay.

It is certainly an exciting time as a new world order settles in and consumer habits shift, but who benefits the most out of the technology couriers and the casual dining outlets remains to be seen. One thing we can say for sure is that the winners will be those building the foundations that best understand and predict outcomes. They will nurture consumer dialogue and capture data in owned spaces to truly understand what their consumer wants, and when they want it – be that on the high street, in the home, or during an office lunch break.

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