In this #snack, we will look at the rise of off-premise dining, how major brands are using it successfully and cover some areas to explore when using off-premise channels in your restaurant.
The National Restaurant Association published a report predicting that off-premise dining will become a huge driver of industry growth by 2030.
Advancements in technology and changes in consumer demand mean that more restaurants will be changing the way they deliver their products to consumers.
According to the report, the restaurant of the future will be smaller in size and a greater proportion of meals will no longer be cooked at home.
Both these factors will lead to a rise in tech-driven delivery, virtual kitchens, subscription services and advancements in drive-thru technology.
The findings of this 2019 report have only been accelerated over the past two years and restaurant operators need to be able to capitalise on these industry transformations.
What is off-premise dining?
Before taking a dive into the world of off-premise dining, let’s take a look at exactly what it is.
At a basic level, off-premise dining refers to meals purchased from your restaurant but consumed elsewhere.
Typically, there are five different types of off-premise dining:
- Takeout: Customers order ahead of time or on-premise. They pick it up inside the restaurant and take it away to eat elsewhere.
- Delivery: Orders are placed through a third-party delivery app or the restaurant’s own delivery platform. The food is delivered to the person through a driver.
- Drive-thru: The person drives to the restaurant and food is ordered and collected from a window in a designated lane attached to the restaurant
- Curbside pickup: Customers drive to the restaurant and a staff member comes out with their order.
- Ghost kitchens: Restaurants set up with just a kitchen, specifically for delivery only through a third party delivery app or their own delivery system.
Restaurants usually will run at least one or two of these services and delivery and takeout are the most common.
What are the benefits of off-premise dining?
Off-premise dining has a number of benefits for business. Due to the growing demand for delivery, there’s a big opportunity for restaurant businesses to profit from this growing trend.
Here are three main benefits of off-premise dining.
Demand is here to stay
Restaurant Business Online reported in 2019 that the “off-premise revolution” is one of the strongest growth areas in the industry. They found that 22% of consumers were ordering food for carrying out and delivery way more than they had in the previous two years – and this has only been accelerated by the pandemic.
91% of people surveyed in this Opentable study said they still want off-premise services post-pandemic. Clearly, this trend is not only growing – it’s here to stay. Restaurants will have to factor in this demand to take advantage of this opportunity.
Cut costs and bump up profitability
Customers now demand and expect flexibility in their purchasing decisions. When choosing where to eat, this is no different. This allows you to meet consumers where they are, while at the same time cutting costs in your own restaurant.
If you are just running a dine-in service you will need to turn over tables quicker and have more staff on your roster. By adding delivery and takeout and reducing dining space, it’s possible to cut down on both your real estate and labour costs. You are then far better able to cater to your customer’s flexible dining habits.
Check out our article on how the future restaurant is smaller but more profitable for more info on this.
Build a stronger relationship with your customers
During the pandemic, there was a huge increase in the flow of data between restaurants and the consumer. A lot of this was due to people ordering online and booking tables due to decreased capacity.
Deloitte recommended in a recent study that restaurants need to offer to take advantage of data to build better relationships with their customers. Data can be used to create loyalty programs and deliver a personalised experience that can help retain them longer.
Check out our article on restaurant data for more info on how you can use data effectively in your restaurant.
Examples of best-in-class brands using off-premise dining
With the pandemic having pushed customers toward digital avenues, the best brands in the business reacted by catering to these growing demands.
Here are three brands leveraging off-premise successfully.
Famous American QSR Chipotle has really leaned into digital in the past number of years. At the end of 2020, they opened their first digital-only restaurant, called the Chipotle Digital Kitchen. The first site opened in Highland Falls, New York and offers pick up and delivery only, with no dining area attached.
Customers order ahead of time for delivery or they can pick up their order from the location. With their digital sales exceeding $2.5 billion in 2020, the company clearly sees the potential of off-premies dining. They recently opened a second digital only location in Ohio.
Taco Bell has experimented with a couple of different concepts over the last number of years and the latest concept is called Taco Bell Defy. Based in Brooklyn Park, Minnesota, it’s expected to open in the summer of 2022.
The two storey building will have four drive through lanes underneath and no dine-in seating. Three of the lanes will be digital-only ordering and pick-up while a fourth lane will offer a more traditional face to face drive-thru lane.
In November 2021, Panera Bread launched a range of redesigned stores to cater for the changes in consumer demands. Each store is 20% smaller than its current locations and offers digital only ordering and pickup, dual lane drive-thru and reduced seating inside and outside.
Customers order through a Panera app, both on-premise and for delivery and pick-up. And while there is still a focus on providing a top class dining experience, Panera has recognised that off-premise is here to stay and is planning on significantly increasing its drive-thru services in the near future.
Areas to look at when adding off-premise dining to your restaurant
While it’s clear there’s a lot of benefit to adding off-premise dining to your restaurant, don’t just jump in without thinking.
Here are a couple of key areas you need to consider when adding off-premise dining channels to your restaurant.
Think clearly about what type off-premise channels you want to add. There are a couple of different factors to look at when planning what you want to add:
- Location: Is your location easily accessible for pick-up and delivery drivers?
- The dine-out experience: Think about your brand and the food you serve – can you keep the same quality experience for the customer at home?
- Preparation areas: Do you need to add a dedicated preparation space just for delivery and take out orders?
- Your ordering platform: Will you use a third party delivery service or your own branded app and platform? We will look at this more closely in the next section.
- In dining experience: Is it possible to reduce your dining capacity and still deliver the same great experience?
Third party delivery vs own delivery
70% of consumers prefer to order digitally when it comes to ordering off-premise delivery – so you need a platform in place to allow consumers to do this.
The fast growth of third party apps such as DoorDash and UberEats is a mixed blessing for the industry.
On the one hand, it’s offered restaurants a delivery infrastructure to plug into with access to a big customer base. On the other hand, they’re taking a bite out of profit margins and disrupting the direct relationship between the restaurant and the consumer.
Some restaurants are starting to move away from the third-party marketplace and establish their own delivery systems. Original Chop Shop, profiled here in QSR Magazine, has launched an internal delivery service with its own drivers, with the goal of eventually moving away from third party apps.
Create a consistent experience
The experience you create in your restaurants needs to transfer over into your off-premise experience also. There are three main areas to look at when doing this.
- Branding: Your delivery menu design and copy and packaging should be consistent with your in-dining brand experience. Use high-quality pictures of your menu items as this can increase conversion rates.
- Food delivery: As well as your packaging being on brand, it needs to deliver your menu items safely and keep maintain the quality of the food on the journey to the customer
- Menu optimisation: You may want to keep your delivery menu smaller than your dining menu. This gives the customer easier choices and makes turnaround quicker.
Off-premise channels are still growing post pandemic. Consumers now expect flexibility in all aspects of life and where they eat isn’t any different.
As a restaurant operator, you need to be able to cater to this new consumer flexibility. As in the report we highlighted in beginning stated, the concept of the restaurant will be transformed in the near future – so you need to be ready for this coming transformation.