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Reviewing trends and forecasts: LEK Consulting

Reviewing trends and forecasts: LEK Consulting

We’re always keeping an eye on what industry commentators are saying about the delivery market and this time we’ve been reading LEK Consulting’s analysis of digital ordering and delivery and its recommendations for hospitality businesses. We thought it was worth highlighting this particular report, because as you’ll see, it’s something that resonates strongly with us!

Reviewing trends and forecasts: LEK Consulting

As we all well know, “online ordering has captivated a diner demographic increasingly pressed for time and harboring expectations shaped by the sophisticated world of consumer ecommerce.” The consumers who use these services is a growing proportion of the population: “A key segment is high-income households. Another is millennials: By 2020, those 21 to 36 years old will take up 70% of at-home delivery services.”

It is gratifying that they found that “more than half of delivery consumers now order food directly from the restaurant’s app or website. The next-biggest source of delivery orders is outside agents like Grubhub and Uber Eats.” This echoes our own research from last year, which demonstrated the customer demand for restaurant-own apps. When we questioned almost 500 consumers, 70% said they’d rather order direct from a restaurant, preferring that their money goes straight to the restaurant, not a third party.

The consultancy also pointed out the benefits of restaurants having their own platforms, which, of course, we support: “With an independent platform, restaurants can save on the roughly 15% to 30% commission that food ordering and delivery companies charge. A proprietary platform also makes it easier to update specialty items, broaden menus and communicate with consumers. By keeping fulfilment operations in-house, restaurants have greater control over delivery speed and the quality of the food that arrives.” This control is something that the Preoday platform offers in spades.

However, where we feel they have missed the mark is potentially scaring off restaurants with the cost burden of creating an app. According to them: “A food delivery and ordering application can cost as little as $60,000 or extend into the millions”. As our clients well know, this is not at all the case and we would encourage businesses who are thinking of introducing digital ordering to get in touch with our team to find out how manageable our monthly cost is to them.

The consultancy’s recommendation is that “restaurants mix in-house and third-party solutions to create a hybrid platform. By and large, this involves creating a proprietary app or website for pickup orders while using a third-party platform for delivery orders. The restaurants that take a hybrid approach typically form an exclusive partnership with their delivery provider.” For those companies who don’t have the infrastructure for delivery, or haven’t partnered with a third party delivery provider, this approach can provide the best of both worlds – their own branded service that customers can use and the convenience of delivery.

We look forward to LEK Consulting’s anticipated growth of the restaurant delivery market and the “preponderance going to digital orders” as they say!

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