Ordering in trend has raised the stakes in the food supply chain
The dining in trend is hot and expected to keep on growing. A Cowen and Company study predicts that restaurant meal delivery will grow from $43 billion in 2017 to $76 billion in the next four years. That’s 176% growth by 2022. How can restaurant companies capitalize on it without compromising food quality?According to Eater.com, the most popular order-in item when it comes to delivery is not that classic, pizza. It’s chicken, followed by Chinese, then pizza. | Click To Tweet
What’s driving the trend?
The same study by Cowen and Company revealed that people ordering in cited “supply-side” factors, such as the availability of delivery options from restaurants, and the multitude of third party delivery services that make it easier to order in. Mobile apps have no doubt also helped, putting restaurant food at our fingertips 24/7.
Andrew Charles, restaurant analyst with Cowen and Company thinks this trend has a long way to go before the market is saturated:
“When you look at digital penetration, delivery is now 8 percent of the restaurant sales. We think it’s going to go to 12 percent in 2022, that’s a small move compared to other industries that have seen much, much higher digital infringement.”
How Does This Trend Affect Restaurant and Food Companies?
Companies that are not yet taking advantage of the growth in ordering in should fix that as soon as possible. Cowen and Company expect this trend to see 12% compound annual growth, and most of this (about 80%) is new demand, not merely a shift from eating out to eating in.
Companies should also ramp up their food supply chains to deal with this demand, and their ensure food safety and high standards do not lapse under the strain.
Restaurant and food service companies can take steps to accommodate the dining in trend:
- Decide whether to manage their own in-house delivery service, or partner with a third-party service like GrubHub or UberEats.
- Establish a presence in channels where their customers and prospects are and consider targeted advertising with online ordering offers;
- Develop their ability to take and process orders from anywhere: Phone, email, online, mobile apps, curbside and walk-ins;
- Gain a clear and item-level visibility to their supply chains to help mitigate food safety issues and better respond to problems when they occur;
- Start to think omnichannel and explore ways to more efficiently meet multi-channel demand from sources that make the most sense.
Strive for Total Supply Chain Visibility and Focus on Quality
As the food supply chain picks up speed, and orders come from anywhere, and go anywhere, even into meal kits for the home, food safety is more of a concern. Visibility across the supply chain, from pasture to plate is the ideal. This enables companies to monitor for potential food quality issues, and manage them if and when they arise.
Companies should also learn from other industries how to handle the omnichannel challenge. Bernard Goor, vice president of consumer goods, retail, and food service at One Network Enterprises, sees the omnichannel distribution model from other industries starting to make inroads in foodservice.
“The foodservice segment is beginning to see the impact of omnichannel distribution in the same way that electronics and fashion have. Food orders can come to the kitchen from the waitstaff or by phone, web, or an app. In some cases, those orders can be fulfilled from more than one location, too.” (Inbound Logistics: Dining In is the New Dining Out )
Thinking omnichannel across customer demand channels and the supply network is vital. Visibility into incoming orders, and inventory across possible distribution points, enables companies to efficiently match supply to demand, faster and at lower cost.
If you’re interested in how restaurant supply chains can be better organized to handle this growing trend, I recommend you read Digital Transformation for Restaurants, which looks at how restaurant companies can become more responsive to customer demand, maintain quality, and at a lower cost to serve.
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