Too bad for self-delivery at the restaurant
In June, Gene Lee, CEO of Olive Garden’s parent company, Darden Restaurants, explained that the company had tested its own delivery and didn’t like it.
“We will tell you that we have tested by making our own delivery. [was]really ineffective and it wasn’t that additive, ”Lee said, according to a transcript on the financial services site Sentieo. It should be noted that Lee also doesn’t think about third-party delivery.
But the self-delivery commentary is notable in light of recent news, broken by my colleague Heather Lalley, that Panera Bread, the fast-casual bakery / cafe chain, has ended its self-delivery service. – a service that she created with great fanfare, just as the delivery profession was emerging.
The self-delivery of restaurants has not yet taken root outside of the chains that have inherited it. The end of Panera’s service probably means no one else will anytime soon.
The pandemic, in fact, has done surprisingly little favor for restaurant chains. While pizza chains have flourished, for example, the Jimmy John’s sub-chain – which prides itself on “freaky fast” delivery – saw system sales drop 8.5% last year, according to data Catering company sister company Technomic.
This is likely due to other factors less influenced by delivery – like, you know, the pandemic – but given the surge in sales in traditional delivery chains, the drop is surprising nonetheless.
Sales of Panera Bread also fell by 10.5%. Bakery / coffee chains have struggled last year in particular. In fact, Panera has generally been ahead of many others in her space.
Panera isn’t the first channel to attempt self-delivery and ultimately decide to end it. Burger King pioneered a self-delivery idea almost ten years ago now called BK Delivers and finally ended that testing long before the current wave of third-party delivery began. Operators we spoke to who tested the service hated it.
Granted, several chains do their own delivery outside of the United States, where delivered food is actually more popular – McDonald’s, for example, has a long history of its own delivery services in some international markets.
But it’s less achievable here, apparently.
Panera was one of the first to embrace delivery in 2016, when it started delivering sandwiches and soups to customers even before most chains even considered third parties.
The idea back then, according to operators we spoke to over the years, was that it made it easier when you were controlling employees. If there were not enough deliveries, these workers could be used elsewhere.
In 2019, however, Panera started using third parties, and as Lalley noted, the company gradually ditched self-delivery and it’s now like everyone else.
Aggregators, apparently, make things easier, both for customers and for restaurants that use delivery. Third-party services employ delivery drivers and can deliver food even when it is ordered on restaurant apps or websites.
It should also be noted that the competition for drivers is getting fierce – there are plenty of opportunities for people who want to make money by driving things from place to place. This makes it difficult for restaurants to hire people who want to make deliveries.
But the biggest problem comes from what Gene Lee said. It was ineffective. While delivery has exploded in recent years, and especially during the pandemic, it is only a fraction of a typical restaurant’s overall sales – compared to the bulk of sales at, say, Domino’s. As such, it makes more financial and overall sense for most restaurant chains to bring in third parties.
Could that change later? Certainly. But for now, we’ve probably seen the end of the great restaurant self-delivery efforts.