Fresh off the announcement of its deal to deliver for YUM Brands’ Taco Bell and KFC, Stan Chia, COO of Grubhub, told the audience at the FOD Conference, that the restaurant industry is mirroring the rise of e-commerce for retail, and for the first time ever people are spending more at restaurants than on groceries.
“It’s a fun place to be,” he said about Grubhub’s market share. “Our goal is to connect restaurants and consumers.” Because YUM’s Pizza Hut is already a leader in pizza delivery, they won’t be doing much with that brand. “The channel is working for them, “ Chia said.
Even before its partnership with YUM, Grubhub was the leader in third-party delivery—a good 30 percent goes through them, according to surveys. They were the first movers in a significant number of markets because they initially only provided online ordering for self-delivery. They are now in more than 1,600 markets and growing.
Restaurants just getting into delivery have decisions to make, he said. “When (you’re) at a busy daypart, would you rather shut your restaurant off to online orders or would you rather give wait times of 80 minutes?” While it’s every restaurateur’s responsibility to ensure the experience for the guest is right, at the same time if the customer is willing to wait 80 minutes for his or her delivery, why not? he asked rhetorically.
There are always challenges with delivery, he acknowledged, but because the space is growing so quickly, people are making adjustments to make sure their food items are traveling well. For instance, he said, fast food operators are frying food in a different batter so it stays crispy longer, “or they leave it in the fryer longer so that it’s (extra) crispy.” The effect of humidity on fried foods, especially French fries, is another challenge being worked out.
Chains that have multiple restaurants in close proximity can send the order to the restaurant that can accommodate it the quickest. “If you have three restaurants close to each other, does it really matter which store it goes to?” he asked. (With a franchise that could be a little more tricky than independents, since the same owner may not have all three restaurants.)
However, as far as franchised concepts are concerned, Chia said, franchisors may not be able to require all their franchisees to remodel their kitchens to accommodate delivery, but they can use off-premise kitchens if needed.
When asked what Grubhub’s approach was to robots and drones, he said, “We look at innovation as what can you do for the restaurant and guest. If we make money for the restaurant, everybody wins. We’re not convinced that drones and robots save money or make it a better experience. So we focus on practical items.”
So what is the future of delivery? “It’s hard. It’s so locally regulated; in Chicago we can deliver liquor for our restaurants,” but other municipalities don’t allow it.
“Aspirationally I’d say we’d love to do it, but the practical answer is” every market will be different, he said.
But one thing we may be seeing, he added, is the idea of restaurant delivering two meals, one for now and one for the next day.