Third-party food delivery services are taking the restaurant world by storm. According to Technomic, off-premise sales make up 44% of all restaurant sales, and 25% of all off-premise orders are for delivery. There are many growing players in the third-party food delivery industry, but Grubhub, Doordash and UberEats have a dominant share of the market overall. Major food/beverage chains are also jumping on board: Starbucks is now expanding delivery to more U.S. stores through its partnership with UberEats, and Taco Bell is offering delivery nationwide through Grubhub.
Unsurprisingly, third-party delivery apps are most popular among college students and young adults. Some factors contributing to the fast growth of these services are consumers demand for more convenience and a “seamless” online ordering process and experience.
Restaurants can experience several benefits from hiring a third-party delivery service, such as increased exposure to a new market, wider trade areas and less need for in-house drivers. However, some restaurants are still hesitant to put their food in others’ hands due to the commission fees, mixed results from customers and long delivery times. The question is, do the benefits outweigh the drawbacks?
Restaurants that don’t partner with third-party services could be losing out on business. But before restaurants decide whether or not they want to incorporate it into their strategy, they are using location intelligence to help measure the actual impact that these apps are having on their day-to-day business and foot traffic.
Here’s how:
Identify Trends
Using location intelligence and analysis, restaurants can identify foot traffic trends overtime at their restaurants as well as competitors restaurants. It can help measure the average foot traffic restaurants see on a monthly basis and how it varies month to month. Using this method, restaurants can see if they may be losing traffic or gaining foot traffic, with declines possibly due to competitors restaurants leveraging third-party delivery apps. In a recent analysis of a representative sample of restaurants in Texas, Skyhook found that 92% of them had declining traffic over a 7 month period, which could be the result of less people eating out and more people ordering delivery.
Location analysis can also be used to determine if delivery expands their addressable market (trade area). For instance a customer may only drive 4 miles to go to a restaurant, but could order delivery from a restaurant 10 miles away. Discovering this information can open a restaurant up to a wider customer base and more potential customers.
Identify Driver Activity at Nearby Restaurants
Location can not only identify the impact on your business, but competitors as well. If competitors in your area start to partner with delivery services, your restaurant could be losing customers. Location analysis helps identify nearby restaurants that utilize delivery services and understand driver patterns, like when and how often drivers visit these restaurants. By studying both consumer visitation patterns and driver activity you will better understand the competitive dynamics of each restaurant location.
Here’s an example of a driver’s pattern:
The Bottom Line
Restaurants should weigh the advantages and disadvantages of using a third-party delivery partner. Location intelligence is useful tool and data source to help paint a complete and data-driven picture of the affect they are having on a restaurant. These insights help inform restaurants to make educated decisions for the best outcome for their business.
Identifying third-party delivery trends isn’t the only location intelligence use case for restaurants
Check out our restaurants page for more information on how it can benefit your business.
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