Delivery Sales

Definition:

Delivery Sales refers to the total revenue generated from orders that are placed by customers and delivered to their location, typically through a restaurant’s own delivery service or third-party platforms like UberEats, DoorDash, or Grubhub.

Delivery sales include food and beverage purchases made by customers who opt for the convenience of eating off-site.

In recent years, delivery sales have become an essential part of restaurant revenue streams, particularly for quick-service restaurants (QSRs) and fast-casual establishments, as well as full-service restaurants adapting to changing consumer preferences.

Why It Matters:

• Convenience and Accessibility:

  It allows the ability to cater to customers who prioritize convenience, allowing them to enjoy a restaurant’s offerings without having to visit in person. Expanding into delivery can help a restaurant reach new customers who may not visit the physical location, increasing overall sales and brand reach.

• Revenue Growth:

  Delivery sales have seen significant growth, especially with the rise of third-party delivery apps. Restaurants can capitalize on this trend by offering delivery, which can supplement dine-in and takeout sales.Tracking this can help restaurants understand their revenue mix and make strategic decisions about investing in delivery infrastructure.

• Expanded Market Reach:

  By offering delivery, restaurants can reach a broader customer base, including those who may not be within walking distance or prefer to dine at home. This expanded market reach allows for increased brand visibility and revenue opportunities.

• Operational Challenges:

  While these sales offer growth opportunities, they also present operational challenges such as packaging, food quality during transport, and the costs associated with third-party delivery services. Understanding these dynamics helps restaurants manage costs and ensure a seamless delivery experience.

Characteristics of Delivery Sales:

• Third-Party Delivery Services:

  Many restaurants rely on third-party delivery services like DoorDash, UberEats, and Grubhub to handle the logistics of delivery.These platforms provide exposure to a wider audience but charge service fees, which can reduce profit margins.Managing your sales effectively involves balancing the benefits of reach with the costs of using these services.

• Direct Delivery:

  Some restaurants opt to manage their own delivery service to avoid third-party fees and maintain control over the customer experience. Direct delivery allows restaurants to keep a larger portion of the sales revenue, but it requires investment in drivers, vehicles, and delivery management systems.

• Menu Engineering:

  A strategic approach is used in the restaurant industry to design a menu that maximizes profitability by analyzing the popularity and profitability of each menu item. Restaurants may adjust their pricing for delivery orders to account for packaging costs and potential delivery fees, ensuring profitability.

• Packaging and Branding:

  Successful sales depend on packaging that keeps food fresh, hot, and intact during transit. Effective branding on packaging can enhance the customer experience and encourage repeat business.

Example in Action:

A local burger chain saw increased delivery sales after partnering with a third-party delivery app.

However, they noticed that profit margins were affected by the platform’s service fees.

To address this, the restaurant implemented an exclusive promotion for customers who ordered directly through their own website, offering free delivery on orders over $25.

As a result, they increased direct delivery sales by 20%, allowing them to retain more profit while still meeting the demand for convenience.

Additional Resources & Related Terms

• Food Sales:

  The total revenue generated from selling food items in a restaurant or food service establishment. Delivery and takeout sales are often tracked separately to understand the different channels of off-premise revenue.

• Off-Premise Dining:

  This encompasses all food consumed away from the restaurant, including delivery.

• Online Ordering:

  Many delivery orders are made online, making this a closely related term.

• Third-Party Delivery:

  Third-Party Delivery Services are external companies that partner with restaurants to handle the logistics of delivering food to customers.

Conclusion:

Delivery Sales have become an integral revenue stream for restaurants, particularly in the era of convenience-driven dining.

By offering delivery, restaurants can reach new customers, increase sales, and expand their market presence.

However, managing the costs associated with delivery, especially through third-party platforms, is essential for maintaining profitability.

With careful attention to menu optimization, packaging, and balancing direct and third-party delivery channels, restaurants can make the most of this growing segment of the industry.