WHY CHAINS MAY NOT KEEP ALL THEIR DELIVERY SALES AFTER THE PANDEMIC

For much of the past year, third-party delivery companies have had a captive audience. Customers, sitting in their homes either unable or unwilling to go out to eat and armed with more money from stimulus payments and not spending on things like movies or gas, ordered a lot of delivery from just about everywhere.  

What will happen with that delivery once that audience is no longer captive? For much of the restaurant industry, that’s a big question. They should be prepared for a decline—or a price war among delivery companies still jockeying for position in a market now dominated by three big players.

Most restaurant executives have pivoted over the past year to focus even more intently on delivery, not just as an immediate method for generating sales but as a permanent part of their business—casual dining chains like Brinker International and Bloomin’ Brands are developing virtual brands, for instance, while fast-food chains like Taco Bell and KFC are adding pickup lanes to new prototypes for delivery drivers.

And it’s reasonable to expect delivery to remain a business going forward, as convenience typically wins out in the restaurant business. A certain percentage of consumers definitely like having food delivered, and apps remain popular among the consumer base.

The problem, however, is that much of this planning was done during an era of false demand. Consumers over the past year have been stuck at home, ordering food, and paying for it willingly. Many restaurant chains in the process have been upcharging menu items that are delivered. Chipotle has added a 13% charge, for instance, but many chains have quietly increased their prices on third-party delivery items even more than that.