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

Some restaurants have good reasons for no delivery

By Vicky Travis

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Not every restaurateur is a fan of the delivery trend. “Major players are really trying to penetrate markets, but the question is, “Is this a service to the consumer?” asks Randy Rayburn, Nashville restaurateur for 30 years.

Rayburn owns Midtown Café at Broadway and West End and has an interest in Cabana in Hillsboro Village. For 24 years, he owned the landmark Sunset Grill, which he closed in 2015.

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

“If the food is bad, then it reflects on restaurant, not on the deliverer,” he adds.

Rayburn is not alone.

Culver’s Restaurant, a burger chain, decided not to use any delivery service for that very reason, according to a report in Nation’s Restaurant News. The potential for more revenue wasn’t worth risking a loss in fresh-off-the-grill taste.

The delivery business could hit $70 billion, according to the same publication.

Delivery traffic jumped 9 percent between 2012 and 2015, the magazine reports.

Since quality is the main concern for restaurants (and delivery services, too), some controls are in place. Anthony Fowler, director of operations at Nama Sushi Bar, allows delivery only within a two-mile radius of the restaurant on Elliston Place to ensure quality.

When restaurants agree to trust a delivery service to take their food to a customer, they also pay the delivery service a percentage of delivery sales. Sometimes that’s about 20 percent.

“The issue becomes if I’m paying 15 percent-25 percent fee to a delivery service and the customer is paying a delivery fee. Is this profitable?” Rayburn asks. “If you’re losing money, you lose more.

“If it’s costing 20 percent of sales, then maybe, if food cost and labor isn’t too high, you still might be profitable.”

Like other restaurateurs, Rayburn thinks some delivery services will rise to the top.

“Ultimately, there will be consolidation of these services, and two or three of them get to IPO,” he predicts.

GrubHub, a leader in the industry, saw its stock jump 70 percent this year, Investor’s Daily Business reports.

Meanwhile, Domino’s, which is often credited with making pizza delivery ubiquitous among pizza chains, is now testing drones.

In August, the company tested drone delivery in New Zealand because the country’s laws allow businesses to use drones for commercial activity, Fortune.com reports.

And … wait for it.

“It’s not a pie-in-the-sky idea,” says Don Meij, Domino’s Group CEO and managing director. Apparently, pie will be in the New Zealand sky shortly.

Even Baskin-Robbins is testing delivery in Los Angeles and Chicago, Nation’s Restaurant News reports. Baskin-Robbins and sister company Dunkin’ Donuts, which started testing delivery last year, used DoorDash for the test.

Amazon Prime Now – available in Nashville and 16 other large big cities – promises one-hour delivery times for Amazon Prime members.

More food for thought.

In the future, “virtual” restaurants will focus solely on delivery and eliminate in-house dining, predicts Matt Maloney, GrubHub CEO, speaking recently at the New York Times Food for Tomorrow conference.

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