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VOL. 40 | NO. 49 | Friday, December 2, 2016

The war to deliver more to your door

Delivery services duke it for their slice of the pie – or sushi

By Vicky Travis

Print | Front Page | Email this story

First, there was pizza. Maybe Chinese food. But for most the only home food delivery option was round, covered in tomato sauce and cheese, and sometimes cold on arrival. Now, technology has changed the game to enable delivery of everything from sushi to burgers.

The boom in restaurant delivery services in Nashville is growing and whetting the appetites of even more entrepreneurs who compete for customers and restaurant partners.

Dozens of restaurant delivery services with catchy names – GrubHub, DoorDash, OrderUp, Delivery Dudes, UberEATS, Nashville Delivered Goods, Doorstep Delivery and more – are working to find their niche in a highly competitive market that seems to add new names weekly.

“If you look around the nation as cities grow there’s always new little niche markets that pop up,” says Bill McDowell, Middle Tennessee State University’s Wright Travel Chair of Entrepreneurship.

“A certain number will be able to get in and figure out the market, and others will come in who copy it and won’t be successful.

“It’s really about who has the bandwidth to make this happen.”

McDowell, restaurateurs, delivery service owners and customers don’t see this as a trend, but as a way of life.

Why here, why now?

Nashville Delivered Goods owner Shawn Stewart stands outside Nolan’s Place in Nolensville which is one of the restaurants around town that uses their delivery service.

-- Michelle Morrow | The Ledger

Restaurant delivery is not new in New York, Los Angeles and other bigger cities.

But Nashville-area restaurants started to feel the surge about three years ago. Population growth, traffic headaches, busy lives and user-friendly websites or apps fuel the fire.

“Our lives are so full, but we want to feed the kids well and not McDonald’s anymore,” explains Craig Clifft, owner of Cabana in Hillsboro Village. Cabana partners with OrderUp to deliver its food.

“I don’t want another pizza. So now, you can get anything you want. If I want steak, I could get on my phone and order it, and they deliver it within an hour.”

Alex Kown, owner of DoorDash in Nashville, launched locally in July after starting in 2013 at Stanford University.

“Apps became a thing, and the smartphone brought about on-demand service,” Kown says.

“People are increasingly willing to pay for convenience. Less and less people cook, they are busier and busier, and we have a lot of local restaurants that are affordable.”

“We’re having phenomenal growth because we’ve figured this out. We offer a great experience for the restaurant and for the consumer,” Kown adds.

“There’s a need for it here now,” adds Shawn Stewart, owner of Nashville Delivered Goods, who started his franchise about five months ago. “We’ve had so much repeat business and there is so much potential. We started seeing profit after the first month.”

“With the influx of a younger workforce who see Nashville as place to relocate, that brings in ideas,” McDowell explains. “It’s here to stay.”

Crossing generations

Kathryn Samuel, manager of PJ Mineo’s Pizza & Wings in CoolSprings, talks to customer Nicole Billoups, who’s picking up an order for lunch. Billoups also drives for Uber and Uber Eats.

-- Michelle Morrow | The Ledger

Early adopters of restaurant delivery may have been millennials, but other generations have also jumped in.

The client really is “anyone with a computer that eats food,” Kown says.

“It could be families, a disabled person, a single dad, a busy mom,” Stewart adds.

“It was perfect one day when I wasn’t feeling well,” says Desiree Yates, 32, who used Stewart’s service to bring her lunch from Mama’s Java in Nolensville. “It’s a brilliant idea.”

Yates said she’ll probably use delivery every couple of months and possibly when she’s babysitting so she doesn’t have to pack up the kids and bring them out.

Busy workplaces also see the benefit.

“My director is in California, so a lot of conference calls are on their time, and sometimes calls are back to back,” explains Rachel Eller, who works at Experian Health in Franklin.

“My busiest time of day is lunchtime and beyond.”

Several to-go orders line the warming shelf waiting to be bagged at Cabana’s. Craig Clifft says they’ve had to invest in sturdier containers because deliveries have picked up so much and they want to ensure their food will arrive to the customer intact.

-- Michelle Morrow | The Ledger

She and coworkers order through Delivery Dudes regularly to avoid the Cool Springs lunch crush of traffic, keep on working and get a good sandwich, wings, sushi or something new.

Price war?

Restaurant owners and delivery service owners see a win-win relationship.

“If these services keep popping up, eventually there will be a price war on who gets the business. All are going to fight for your business,” points out Kathryn Samuel, general manager at P.J. Mineo’s Pizza and Wings in Franklin.

“We say now, ‘What are you going to do for me?’ I think a few will rise to the top and the rest will go away.”

Restaurants pay a percentage of delivery sales, sometimes 20 percent, to the delivery service. In turn, the restaurant’s reach expands.

“Restaurants can have extra revenue from this,” Stewart says. “Delivery can bring in business they didn’t have before.”

Craig Clifft, owner of Cabana’s off Belcourt Ave packs up a to-go order for Door Step to pick up Tuesday night at the restaurant.

-- Michelle Morrow | The Ledger

“Delivery does raise profits for a restaurant,” adds Samuel, who has managed several restaurants and has been in the business for about 39 years.

“Delivery services are marketing for you. That percentage we pay is paying for marketing. Restaurants will use the one that markets them the best – the one who gives the most bang for the buck.”

“A restaurant gets its name out there,” Samuel explains. “Maybe someone uses the delivery service. Then, maybe one day they want to go out. When food had great delivery – we potentially get a new in-house customer.”

Sales are up

“I get a new delivery service soliciting at least once a week,” adds Anthony Fowler, director of operations at Nama Sushi Bar on Elliston Place.

He’s quite happy with Postmates and UberEats, but keeps solicits in a dedicated email folder. “Our overall delivery sales have increased – otherwise I wouldn’t be with them.”

Fowler estimates about 5 percent of his total sales come from delivery, which he initially held off using after opening in Nashville about two years ago. Nama, which began delivering about eight months ago, opened its original restaurant in Knoxville in 2004.

“I’m not a fan of opening a new concept and it being in a box,” he adds. “The biggest thing, once we decided to go with delivery, was retraining our staff how to continue our awesome presentation.”

Nama will open a new location in Brentwood, potentially by mid-December. Like the Nashville location, Fowler wants customers to experience the restaurant first in person, noting that if huge demand for delivery comes quickly, he may include it sooner rather than later.

Competition

Delivery services compete with app ease, restaurant connections and over-and-above service. No matter the new numbers, the delivery market is not saturated. Yet.

“There is enough for all of us,” says Nashville Delivered Goods’ Stewart.

Competition is hot with services working to find their own niche, loyal customers and expand their delivery areas.

“The difference with us is that we are locally owned and operated,” he adds.

“All of our drivers go through background checks and arrive in clean uniforms. We’re told all the time that they love us because we do things others don’t.”

“We have built a consumer app that people love to use and restaurants love to use,” DoorDash’s Kown explains. “It’s very customizable and flexible.”

“We work with restaurant partners every day to promote and to make the process seamless. If people compare, we do those basic things much better.”

Hot is hot, cold is cold

No matter how fast, how many drivers, how many restaurants offered, a good product is still the main thing.

“The biggest frustration has been presentation,” says Fowler of Nama. “You can’t sauce in a box, so lots of sauces go on the side.”

That means his service staff, often the bartender, must explain, “This is your cucumber salad. This is the dressing to pour on top.”

Then, it’s trusting the driver to relay that message to the customer. To keep quality high, Fowler limits the delivery distance to a two-mile radius from the restaurant on Elliston Place, something he can control on the app’s settings.

Not all restaurateurs are convinced that delivery is best.

“For us at Midtown, we started out with delivery years ago but we stopped because we didn’t have a dedicated person,” says Randy Rayburn, owner of Midtown Cafe. “You really have to be set up to do it properly so it’s a win-win.”

Rayburn, well-known for his successful Nashville restaurants over the last 30 years, thinks the food quality upon arrival is too much in question.

“Take a delicate fish dish. It’s continuing to cook once it’s in the container, so it’s way beyond medium rare once it gets there.”

He could see using separate menus for delivery, he says, but that’s a hassle.

Where’s the tip?

Winners in the world of delivery are customers, restaurant owners, delivery service owners and its drivers – who also may get tips.

But, at the restaurant, servers make sure all of the order specifications are met, do the extra work and get no tip. When a server’s base wage is about $2 an hour and they depend on tips for income, delivery orders are, well, not a favorite.

Low-to-no tips are generally true for any to-go order, said Mineo’s GM Samuel. But as delivery services ramp up, the issue may become something to solve.

At Nama, it’s almost always the bartenders who deal with delivery orders from two iPads behind the bar, one for Postmates and one for UberEATS. Bartenders put orders into the system, get it together and double-check the order to give to the driver.

“We have to compensate for that,” Fowler points out. “They do a great job, so we take care of them.

“It’s going to take some time. It’s exploding and no one has found the perfect equation. It will take a year probably.”

“Being in the industry as long as I have, I understand it,” Samuel says. “Servers are not tipped for delivery, so they would rather take care of their bread and butter at the tables.

“Somehow the delivery services should give a percentage to the servers, who feel very left out. Serving is a humbling job, and people don’t really understand that.”

“But, I also see the big picture and try to explain to servers that good service will come back to you,” she says.

“If a delivery customer’s meal was wonderful, they will remember when they do eat out.’’

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