Business Models for Off-Premise Sales (Sponsored Post)
7 Min Read By Texas Restaurant Association
No matter the type of restaurant you own, the type of food you serve, or the usual customers who walk through your door, you need to focus on making your off-premise sales a keystone aspect of your restaurant business. Restaurants are unique, and as such, need a unique approach to off-premise sales. Luckily there are a number of different business models. And, there are many restaurants out there that have found creative ways to put their own spin on these different business models. Strengthen your off-premise sales business model now to get as much benefit as possible for when dining rooms are fully re-opened and diners feel safe to come inside.
Benefits of Off-Premise Sales
According to founder Noah Glass of Olo, online orders on their platform doubled each year from 2017 to 2019 — before the pandemic. And in 2020, Upserve reported a 783% increase in online orders. The trend towards off-premise dining existed before the pandemic and has only been strengthened by the pandemic.
Now that diners have tried off-premise dining, they want to keep it. Diners will come back to restaurants as it becomes safer to dine inside, but many diners are still going to demand the convenience and choice of off-premise dining.
It’s clear that customers like it, but what about restaurants? There are many who have been able to make it a new revenue stream within their business.
One of the benefits of online ordering and off-site dining is that ordering is more accurate. Previously, diners would call in to the restaurant to place their order. Whether it be a misunderstanding, smudged paper, or too-loud restaurant noise to hear the customer’s order, orders got mixed up. With online ordering, the customer has time to check and review their order for accuracy before submitting it.
Online ordering systems have built-in upsells. You can set your online ordering system to send a pop-up to customers to add an appetizer or alcoholic beverage (if your state allows alcohol to-go sales) and potentially increase the ticket size. It happens automatically on every order.
Make Sales During High Volume Times
When your tables are all full on weekend nights, then that’s all the sales you can make. Or is it? Instead of focusing on turning tables faster, instead, focus on increasing your off-premise dining. If your kitchen has more capacity to put together dishes, you can increase sales even when your dining room is full. All you need is an off-premise business model that works for your business. The most common business models for off-premise sales include carry-out and curbside pick-up, drive-thru, and delivery.
Carry Out and Curbside Pick-Up
Carry out and curbside pick-up are off-premise dining options that work well for both diners and restaurants. Diners place their order online and then drive to the restaurant to either come inside and carry out their food or wait in their car for a staff person to deliver it. These business models allow customers to avoid paying delivery fees and saves your restaurant time and money.
How Customer Can Order
There isn’t a lot of variety in carry out and curbside pick-up. Where the variety and creativity come in is how customers order and how they’re notified that their food is ready for pick-up. Customers can order through your website, a customized and branded mobile app, or through social media such as Instagram and Facebook. These social media apps now include the ability to add an “order food” button to your profile or a sticker to your Stories. As well, your restaurant will need to create a back-end procedure for how customers are notified that their order is ready. This is most commonly done with a system that sends a text to the customer when their order is marked ready. Drive-Thru Drive-thru has been around and popular with diners for decades. The drawback for most restaurants is that adding a drive-thru requires costly construction and a major change to their physical property. If your restaurant already has a drive-thru or you have the space to add a drive-thru, there are a number of ways to better monetize your drive-thru. You can upgrade to digital menu boards, get a new speaker system for better sound quality, limit your menu offerings, and prominently display upsells on your menu board. Delivery The popularity of delivery skyrocketed, even before the COVID-19 pandemic. Diners loved the convenience of ordering food and having it delivered to their doorstep. Restaurants hated paying the fees for third-party delivery apps. But for some restaurants, delivery works and makes sense as a business model for off-premise dining. Restaurants have been getting creative and finding new ways to implement delivery and lower costs.
Third-Party Delivery Services
Third-party delivery services include apps such as DoorDash, UberEats, GrubHub, Postmates, and many more. These services charge restaurants a percentage of the order total to deliver the order to the customer. These services provide convenience to both the diner and the restaurant. But, some restaurants have been wondering if using a third-party delivery service actually increases their bottom line. To mitigate the cost of using a third-party delivery service, some restaurants are pairing up with a single service to lower their fees and costs. Other restaurants refuse to use delivery services and take their delivery in-house.
When a restaurant employs delivery drivers and delivers their own food, they have in-house delivery. This allows the restaurant to control the quality of the food and the customer experience better than when using a third-party delivery service. Restaurants maintain control, but creating in-house delivery requires an up-front investment in labor, technology, and operations. Last-Mile Delivery A creative combination of in-house and third-party delivery is last-mile delivery. Some restaurants have negotiated with third-party delivery apps and created a system where customers order on the restaurant website but the food is still delivered by a third-party driver.
One of the newest off-premise dining innovations in the last few years is a ghost kitchen. A ghost kitchen might also be known as a delivery-only restaurant, virtual restaurant, or shadow kitchen.
Ghost kitchens produce food from a menu and that food is then delivered to diners. Ghost kitchens have no dine-in capabilities. There are many variations to ghost kitchens. Some ghost kitchens are inside or within another restaurant but produce food from a different menu. Some ghost kitchens are a standalone food truck that purchases a menu from a restaurant or chef.
Ghost kitchens are popular choices for restaurants because they have minimal up-front cost to start. With minimal staff, no dining room, and minimal physical space needed, a ghost kitchen is a great way to start a first-time restaurant or test a new concept.
Tips to Improve Off-Premise Sales
No matter which business model you choose for your restaurant for off-premise sales, there are plenty of tips you can implement to improve sales and create a better customer experience.
Think About Packaging
One of the most important aspects of off-premise sales is packaging. When your customer receives their food, you want it to look delicious and still be hot. This is key to providing a good customer experience. Choosing the right packaging can make this happen. You want packaging that won’t steam the food or get too wet from steam during delivery or while waiting to be picked up.
Train Front of House Staff
Anytime there’s a change to procedures, the first step should be to train your staff. It’s important as you’re implementing or increasing off-premise sales that your front of house staff know where to send customers to pick up their order or where delivery drivers can wait while the order they’re delivering is being prepared. Listen to What Consumers Want While customer reviews can be a sore spot for some restaurant owners, they’re also a wealth of information. Customer reviews and spending habits give you data on what the customer wants and how best to provide that service. You might notice that customers don’t order bundles and platters for off-premise dining. If that’s the case, remove those from the menu and find ways to repackage them into higher-margin menu items.
Consider the Customer Experience
When your customer interacts with your restaurant for off-premise dining, most of the customer experience is digital. When designing your off-premise business model, be sure to consider the customer experience. Imbue your online ordering system with your branding and company persona as much as possible.
While off-premise dining was growing even before COVID-19, the pandemic brought it to the forefront of diners’ minds. Every day more diners recognize the convenience of off-premise dining. And they want more. Get creative when designing your off-premise dining business model to create the best customer experience possible that supports the bottom line of your restaurant. Learn more about how to grow your business at our yearly restaurant show, TRA Marketplace. Register to attend here: www.tramarketplace.com/attend
About the Texas Restaurant Association
The Texas Restaurant Association was formed in 1937 to serve as the advocate in Texas and the indispensable resource for the foodservice industry. Today, as a leading business association, TRA represents the state’s $70 billion restaurant industry, which is comprised of more than 50,000 locations and a workforce of 1.3 million employees. Along with the Texas Restaurant Association Education Foundation, the Association protects, advances, and educates the growing industry.