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Key Questions to Ask when Pivoting to Delivery

If you run a foodservice business, pivoting to a delivery operation may seem like a no-brainer thanks to COVID-19. However, you want to make sure you can do so while maximizing profitability and protecting your reputation.

Successfully pivoting a dine-in foodservice operation to take-away or delivery can seem simple on the face of things.

That’s hardly surprising when you consider the lower overheads and the keen demand for delivery and take-away food stoked by social distancing and the COVID-19 rolling lockdowns.

But there’s a little bit more to it than you may expect. Before embarking down the delivery road, here are six questions you should be asking of yourself.

 

What can I charge for my delivery meals?

The average price for an Australian take-away dinner in 2019 (excluding the cost of delivery) was $15.20 per person.

While increased demand may increase prices, you’ll probably still be looking at very thin margins whenever you target the value end of the market.

Alternatively, you could look at charging more for greater luxury, quality or convenience (but less so choice, as that will add extra costs to an expanded menu).

If you’re going to work with a third-party delivery service provider, also consider the impact of their charges on your margins. 

Whatever the case, you need to safeguard quality. If the margins don’t make sense, you’ve got to look at a way of competing that doesn’t damage your reputation.

Which leads to the next question…

 

What should my delivery menu look like?

In many ways, your menu is your brand. So it’s understandable if you don’t want to deviate from it too much when considering delivery.

The problem is that sticking too close to an existing dine-in menu may adversely affect your margins or damage quality.

French fries or chips, for example, are synonymous with delivery. But like any fried food, quality on delivery is dependent on how long the food sits after leaving the fryer. So those gourmet loaded fries your business is known for may have to be redesigned into a side dish with a better shelf life.

Find out more

 

How can I make my kitchen more suitable for home delivery?

Most existing restaurant or café kitchens will work for a delivery service if space can be found for accommodating a packaging process. Obviously, a la carte kitchen set-ups may prove more cumbersome to quick food production but most if not all the equipment you’ll need before packaging will be there.

As long you have key equipment for food production, like a food storage refrigerator or blast chiller, the missing ingredient is most likely to be space.

The best time to discover the limitations of the space is after you’ve formulated a delivery menu on paper. Try creating the key dishes at speed in the space you have so you can refine the processes and find out where problems arise.

An existing restaurant or café kitchen does have its obvious cost downsides, such as the power costs on the dining space that’s not being used or the rent on the high footfall location.

If you do have the option, you could investigate setting up a cloud kitchen in a space with low overheads but still within the prime area for demand.

You could also look at sharing costs by sharing a space as part of a multi-brand co-working space.

This can be a smart way to go if you can connect with like-minded foodservice business owners who are also looking to deliver. With no physical dining space dictating the customer experience, multiple restaurants can pool their resources while still delivering separate and seamless food services.

Before COVID-19, shared cloud kitchens were already becoming big business with platforms like Zomato and CloudKitchens offering infrastructure services to food entrepreneurs struggling with traditional set-up costs.

 

Can I produce food quickly enough without affecting quality?

On a regulatory level you’ll need to prove that you’re using safe practices in the business, which means figuring out how quickly you can produce and deliver food to your customers without risking food safety. See the Australia New Zealand Food Standards Code - Standard 3.2.2, page 53.

But on a practical level, when was the last time you were satisfied with a food delivery that took more than 30 minutes to arrive?

Start by using 30 minutes as your default target and look at where you can save time by, for example, using a process like blast chilling or further refining the menu or your delivery area.

 

What other costs do I need to factor in?

Staff:

While you will need less staff, such as dishwashers, it might be more cost-effective to retain waiters as delivery drivers than signing up with an aggregator or third-party delivery service that will take a large slice of your margins.

Packaging:

The value of quality insulated packaging cannot be under-estimated, especially with food that needs to maintain temperature between 5° C and 60° C. Good packaging is also about presentation because it’s one of the few opportunities for your brand to make a physical impact with your customers.

Equipment:

You probably won’t need to reinvent your kitchen at the equipment level, but once you’ve found a rhythm and can start analysing your long-term prospects you may be able consider ultra-scalable production equipment like blast chillers.

Mandated in the EU thanks to their positive impact on food safety, blast chillers also allow food service businesses to rapidly chill and warm food without losing fragrance, texture, taste or nutritional value.

 

How can I manage change?

The ultimate question here is: what type of business do you want in the long-term? In the short-term, pivoting to delivery may provide you with vital wins but it may also potentially change the perception of your brand (for better or for worse).

It’s for this reason you need to dust off and maintain your business plan. It’s a vital thought document for plotting the milestones of your business. However, it’s also a record you can show investors and lenders that while your business is quick on its toes it’s no fly by night operation.

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