Foodstuff: Delivering the Right Result
In the late 80s I went across to New York City for a short and intense weekend of partying, staying with friends in Greenwich Village. On night three, everyone was pretty bombed out and I had a flight back to London the following day. “So,” my host said, “What’s it gonna be? Chinese gross-out, Mexican gross-out or pizza gross-out?”
It turned out that many of the local eateries offered home delivery. I was awestruck. Like so much else in NYC in the 80s – this seemed like evidence of a higher and way cooler civilisation. At that time the order was phoned direct to the restaurant and the ‘delivery boy’ would run round the corner and up the stairs to your apartment. The food when it arrived was not great, but the thrill of having it delivered was.
Fast forward 35 years and delivery through loss-making unicorn-apps is now a key ‘channel’ for many chains and independents in the UK and worldwide, albeit a channel which feels like both an opportunity and existential threat.
Pre-pandemic, what had started as an experimental minority sport for chains, had already grown steeply and shareholders were beginning to worry about margins and the potentially negative impact on customers actually dining in the restaurant. There was even some evidence, that consumers who ordered from your brand at home dined in less. The feeling seemed to be that this was a relatively easy way to add like-for-like growth, but at what long-term cost?
We all know what happened in the pandemic, with a colossal surge in demand and many groups doing delivery for the first time. For a spell, operators learned to love delivery, after all it was keeping their teams working and generating low-margin sales at a time when there were few other options. And QSR brands small and large found a simple, permanent and profitable new revenue channel, with the customer experience risk for counter-service operations less significant. Butchies, the fried chicken business I am involved with, tripled in size during the pandemic, driven by our partnership with Deliveroo.
Meanwhile, I understand that internal research carried out by one of the big delivery firms points to an uneasy customer. When asked what emotion people sat on the sofa at home most associate with delivery, the answer was guilt. Guilt about the riders not having a proper job. Guilt that local restaurants were being over-charged. Guilt re packaging. And, yes, guilt re over-ordering and the resulting food waste and unhealthy weight gain.
Now, I think the worm is turning again and I hear operators asking whether the delivery service they have is really the delivery service they want. For smaller players there is the certainty that their higher percentage fees are funding lower fees for McDonald’s. Then there’s the perceived risk that the aggregators will acquire or start their own brands to compete with existing platform members. Deliveroo have made the first tentative steps in this direction with the launch of Pizza Paradiso in Swiss Cottage this year.
More importantly, there is something scary, Orwellian even, about sending a delivery to a customer when you have no idea who they are and have no way of building a relationship with them.
Belatedly, I must declare that I have a (small) dog in this fight. I recently invested in and joined the board of a new player in the market, Foodstuff, which offers an ethical-sustainable delivery service for independents in six cities and rising. Fees are significantly less than from the big players (offset by a higher basket size), all delivery vehicles are zero emissions and riders get a real job with benefits and the real living wage. Eventually we see Foodstuff being a community for independents with a range of aggregated services being offered as well as access to customer data and tools to use it. In our biggest city, Bristol, 75% of our restaurants have now gone exclusive with us for delivery.
Our experience at Foodstuff is that independent restaurateurs have chosen one of the toughest ways to make a living in Britain because they want to be just that: independent. Quality indie eateries are run by community of people who often feel strongly about staff welfare, the environment, ethical business and so on.
And for the aspirational foodie, we have tried and tasted a list of 30-50 restaurants in each City. There is no sh*t on the app, no scrolling past garages and supermarkets. Some consumers are using Foodstuff as a way to explore the hot indie food scene in their City, with the resulting interplay between customer and indie quickly going viral, engendering strong brand awareness growth for both our restaurant-partners and our app.
Meanwhile, back with the delivery giants, there is a pitched battle going to break Deliveroo’s dominance in London – the UK’s big prize – with Just Eat very much ‘on a charge’. And operators are applying entrepreneurial ingenuity to working out how to drive delivery customers into dine-in and click & collect. Yes, there is a hidden guerrilla flyer-war going on in those hot brown bags. And a blessed few continue to thrive without using home delivery at all – I gather Loungers, so often the outlier, ran a trial in lockdown but quickly dropped it.
Finally, we all watch on mystified as Domino’s and its baby brother Yard Sale go it alone with their own in-house delivery systems with nice, liveried riders promoting them in their locales – what the hell are the rest of us missing?
As an optimist I believe we have the ingredients in the market for a better form of delivery for group operators and that this will evolve naturally in what is (thank the Lord) a competitive market. Perhaps vainly, I’d like to think that in a small way Foodstuff is pointing the way. But we must all tread carefully: the market is moving fast, and it is very much breaking things.