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Restaurants test the price of convenience

October 19, 2018 GMT

As local restaurants are learning, delivery service can be difficult and expensive. But they might not be able to afford to go without it.

Outfits with national reach like UberEats and Grubhub continue to mark their territory in the industry, and giants like Milford-based Subway are getting involved, announcing last week it would be partnering with four providers in its latest initiative to drive up sales.

“It’s clear that consumers want delivery options, and brands, including Subway, are responding,” said Michael Lang, senior director of global convenience for Subway. “Today’s guests are more connected than ever, and they are thinking about what they want to consume and order hours before they consider a brand or enter a Subway restaurant.”

Food delivery is staking a greater claim in the of the $800 billion restaurant industry as customer channel their dining habits through apps. According to a survey provided by Subway from Technomic, the delivery service is expected to grow 12 percent in the next five years.

But while international chains can be well suited to reap the benefits of the shifting market, local business owners may find it harder.

Give and take

When Victor Mathieu and his team at Stamford’s Fiesta on Main began using UberEats, he said they were able to increase to-go business, but there were other issues, including quality control.

“The Uber drivers and delivery weren’t able to get into our location,” he said. “By the time they were able to deliver it to the customers, it was cold or wasn’t fresh the way that we would want someone to have.”

While the service offered exposure, Mathieu said the restaurant couldn’t control how their customers were receiving their orders through a third-party delivery. The only way to ensure that would be to provide delivery themselves — something that would cost much more than partnering with a service.

“We’re kind of in this halfway space, of when it’s on Uber or GrubHub, we have enough business to support delivery, but when we are trying to do it ourselves business just isn’t there to support having a sole delivery driver,” he said.

With customers’ demand for delivery services growing, local owners face the need to meet that demand at the potential cost to their bottom line.

Along with monthly payments, delivery services take a cut of the profits of orders ranging anywhere between 10 and 30 percent of delivery service fees. For Sandra Williams at La Signature Cheesecake in Bridgeport, UberEats takes 30 percent.

“That’s a lot, and that’s why I am reconsidering,” she said.


Some industry observers said they don’t view delivery services as a sustainable option in the long run.

“The margin is really slim in the food industry to begin with, so for a small restaurant what it’s doing is slowly eating away at their profit margin,” said professor Tuvana Rua of Sacred Heart University.

While the idea is that a local spot would draw in business by piquing interest from customers ordering from home, Rua said that interest most likely wouldn’t transfer into a future trip to the restaurant, where real profits can be made.

That same can be said for large fast food chains. The decision to partner with food delivery services could be an effort to regain customers that have been choosing other restaurants featured online, Rua said.

“It’s helping with exposure, but at the same time, if I experience a place through delivery that doesn’t meant I have that place in mind next time I want to go out and eat,” she said.

Just another tool

As competition to attract customers grows, experts don’t expect delivery services to overtake the in-house experience that restaurants still offer, but rather see it as a tool of the evolving landscape.

“It’s just nature of the world we live in today,” said Scott Dolch, chairman of the Connecticut Restaurant Association, adding that accessibility remains a key component in most industries.

Many businesses including the food sector are looking to bolster convenience for their customers, and much of that is focused online.

“It’s just another new thing, technology, that people are looking for an opportunity to get something without having to spend the time to drive to even a Subway, but having it brought to them,” he added.