Dish Up Highlights: Improving Profitability With Native Channels

At Dish Up by Deliverect, a virtual event that brings together the food technology community to discuss these and other concerns, we provided valuable tips and insights to assist restaurants and dark kitchens achieve success. Our recent session on Improving Profitability featured esteemed professionals like Bernie Huddleston from Uber Direct, Melina from DIG., and Costas Niarhos from Deliverect, who shared their expertise and experiences.

We discussed various challenges in the session, including improving profitability and developing a native sales channel to succeed in a highly competitive market. We also delved into critical topics such as third-party delivery services, restaurant technologies, and how to integrate them to boost restaurant revenue. Here are the main highlights from the session.

The Current Economic Climate And Its Impact On The Restaurant Industry

As we navigate through 2023, the restaurant industry faces many challenges and opportunities. Many restaurant owners are adopting a growth mindset, with nearly 75% of operators expressing optimism about business conditions returning to a "new normal" and focusing on sustaining growth in the coming year​​. The food service industry is forecasted to reach $997B in sales in 2023, driven partly by higher menu prices. However, rising costs, especially for food, remain a significant issue, with 92% of operators citing it as a challenge. The industry's workforce is expected to grow by 500,000 jobs, surpassing pre-pandemic levels, and competition is projected to intensify, with 47% of operators expecting a fiercer competitive landscape than the previous year​.

Melina Hsiao, Director of Product & Technology at DIG., summarized the current economic climate in the restaurant industry, stating, "Restaurant costs have skyrocketed across the board, from food to paper to rent, everything has seen an upward trend… the new normal post-COVID has brought with it an increase in delivery services, which incur their own set of costs."  

Adapting to the digital era is now more critical than ever for restaurants. The sector has seen a significant shift towards technology and innovative digital solutions, focusing on contactless technology and aligning with new customer expectations​​. Online ordering systems and delivery apps continue to be integral to the industry, with many establishments investing in their integrated apps and platforms to maintain a close connection with customers​. Contactless payment, once a gradual trend, has become the new normal, with more than half of global transactions projected to be contactless in the coming years​. Restaurants are also implementing online table reservation systems for better management and insight into customer behaviors​.

New digital tools are helping streamline operations and enhance customer experience. For instance, digital kitchen 'boards' or Kitchen Display Systems (KDS) are improving back-of-house operations by displaying orders based on priority and tracking delivery times and inventory​​. Automated inventory management software minimizes food wastage and promotes environmental sustainability, aligning with the global sustainability push​. Lastly, QR codes are replacing traditional menus, enabling customers to access online menus, order, and pay for their orders by performing a simple scan​​. As these trends indicate, the restaurant industry is not just surviving but thriving by harnessing the power of digital innovation.

In addition, according to Bernie Huddleston, Sr. Director of Central Operations at Uber Direct, the restaurant industry's labor shortages are highlighted in today's market:

"Many (restaurants) experienced labor shortages in the last year, resulting in reduced hours of operation and an inability to support multiple platforms or meet incoming demand due to understaffing."

During this insightful talk about "how restaurants can improve profitability," our guests highlighted various restaurant technologies, the challenges owners face in adopting them, and the growing importance of native sales for generating revenue.

Boosting Profitability with Native Sales Channels: Leveraging Restaurant Websites for Success

Aside from apps, several restaurants promote direct sales through their websites, dubbed native channels, to re-establish direct contact with customers.

A native channel (A restaurant's online ordering website) allows restaurants to provide additional alternatives to clients, such as order customization and unique promotions, resulting in a more personalized and exclusive shopping experience. This method is gaining popularity since it gives restaurants more control over the client experience and allows them to stand out in the market.

Native channels serve the purpose of expanding sales channels and boosting profitability. However, in order to achieve success in this arena, a comprehensive and well-crafted strategy is essential.

What Are the Advantages of a Native Online Ordering Solution for Restaurants?

• Greater control 

A restaurant's online ordering website gives businesses more operational control over everything from order handling to delivery, allowing them to provide a better customer experience.

• Personalization

It allows restaurants to adapt orders to customers' preferences, offering customization options.

• Improving customer experience

Some restaurants aim to recreate the in-store experience through the channel, providing additional details and services for a unique and satisfying food ordering experience.

Improving Native Sales Channels: Essential Factors to Keep in Mind

According to the panelists, and as Hsiao emphasized, "...Figuring out how to create that same experience in your digital ecosystem is key." This highlights the importance of researching various components to maximize the effectiveness of the native channel.

Five key elements to consider to maximize the native channel include:

1. Investing in the native channel

Successful restaurants demonstrate conviction and invest in their native channel. This involves implementing marketing strategies and in-store promotions to make the food ordering experience unique and satisfying.

2. Offering something new and differentiated in the market

This can be through menu innovation, the presentation of creative dishes, or introducing of distinctive dining experiences.

3. Personalization and design

Providing custom options and collaborating with designers and technology convey the restaurant's identity.

4. Integration with platforms

Deliverect is crucial for efficiently coordinating orders. We integrate third-party delivery services and other touchpoints, improving a restaurant's efficiency and reach.

5. Delivery partner (Deliverect Dispatch)

Deliverect Dispatch —powered by Uber Direct— adds value to restaurants by ensuring timely deliveries and visibility to restaurants and customers. It also includes reporting tools and logistic services to ensure reliable deliveries and customer satisfaction. Moreover, it integrates with Deliverect, optimizing operational costs.

"The partnership between Uber Direct and Deliverect allows the upfront cost to be as minimal as possible."

—Bernie Huddleston, Sr. Director Central Operations, Uber Direct.

Leveraging Deliverect for Native Channel Growth

When a business creates its own sales channel, it faces a costly and prolonged learning curve, something many restaurants need help to afford.

As Hsiao from DIG. told us during their development process for the channel, they had to invest a lot of time in testing and working with various APIs and integrations. However, in the end, they found the right technologies for their business in Deliverect and boosted their business without worrying about technical issues.

"Taking advantage of different opportunities and channels without worrying about the technical lift to get it off the ground provides tremendous value."

— Melina Hsiao,  Director, Product & Technology, DIG.

Closing Thoughts

During the conversation with Hsiao from DIG., the reflection was raised regarding the challenges that large restaurants with multiple branches may face when managing their native channel across different states or cities due to labor restrictions and logistical aspects. "The more geography you increase, the harder this problem becomes," stated Hsiao, emphasizing the complex logistics associated with expansion. In this sense, she highlighted that having a globally present system like Deliverect can be highly beneficial.

The virtual event Dish Up by Deliverect highlighted the need to build a local sales channel to boost restaurant revenue and profitability. Restaurants may exert greater control, personalize client experiences, and develop their offerings by integrating restaurant technologies with platforms such as Deliverect and Uber Direct. 

This event also highlighted the ease of direct sales via restaurants' websites, referred to as native channels. A well-planned strategy for this channel may lead to enhanced efficiency and reach, cost savings, and, eventually, higher profitability, proving it to be a win-win for restaurants and customers.