Whether you call them virtual restaurants, app-based establishments or headless concepts, it’s impossible to deny the recent rise of delivery-only food businesses around the country.
Restaurateurs are desperate to stem the profit-letting in their struggling sector (especially in the fast-casual world), and this new round of digital-driven establishments solves a variety of perennial industry problems. Add to this the growth of third-party delivery companies, consumers’ increasing comfort with mobile ordering and the recent explosion of meal-delivery kits like Blue Apron, and conditions seem ripe for this idea to blossom.
But first, what are these front-of-house-free restaurants?
A few examples:
David Chang, of Momofuku fame, is the A-list name behind delivery-only Ando in New York City. It offers “second-generation American food” like bibimbap, fried chicken and cheesesteak egg rolls. Orders are accepted via the restaurant’s website or app and third-party services like Seamless. Delivery expanded recently to include more of Manhattan. The business came about as a partnership with Expa, a startup lab with connections to Uber.
In Chicago, home to several virtual restaurants with more on the way, Lettuce Entertain You Enterprises recently debuted Seaside, a delivery- and carryout-only operation that shares a kitchen with its Oyster Bah restaurant.
New York-based startup Green Summit Group expanded to Chicago, rolling out nine virtual operations out of one shared kitchen. Since its launch, Green Summit has raised $3.6 million and is anticipating $18 million in sales this year among all locations, according to the Chicago Tribune.
Even traditional family-dining brands are taking note of these ghost restaurants.
“I’m fascinated by some of the virtual kitchens that don’t have a brand, that are only supported by a kitchen,” Denny Marie Post, CEO of Red Robin Gourmet Burgers and Brews told Restaurant Business magazine earlier this year.
So, does the headless trend have legs?
In short, yes.
It appeals to the on-demand generation that’s grown up watching Netflix on the living-room couch. And it’s a good mesh with the gig economy that has given rise to third-party delivery services. States like Colorado, with legalized recreational marijuana, are expected to be primed for expansion of delivery-only concepts.
Even better for restaurant operators and innovators, these virtual establishments address nearly every foodservice-industry pain point.
They are cost-effective. Without the need to waste square footage on dine-in capabilities, these headless operations can run in a smaller footprint compared to traditional operators. There’s no need to hire a designer, account for parking space or spend money on decor and server uniforms (or servers for that matter). Rent is much cheaper for these locations since they can be built in warehouse space and in lower-rent districts. Lastly, the need to invest in costly renovations for service and seating areas is no longer required for these operators.
In Chicago, for example, Green Summit Group’s nine headless restaurants operate out of a shared 2,000-square-foot kitchen that was once home to a dine-in burger establishment.
These kitchens can also act as commissaries for food-truck or catering offshoots.
With so much attention focused on reducing operating costs and keeping labor expenses in check, this new approach will become very appealing to operators who leverage ordering and delivery services and avoid the dining-room distractions. By putting most of the focus on the food quality and preparation, the strategy is sure to deliver praise and strong reviews. Expect to see continued growth in the “ghost” restaurant space.
Tech companies are entering the food delivery scene in full force; here’s how to capitalize
The way people order takeout food has evolved.
Instead of using a phone to call a restaurant, many now use their phones to access apps like Facebook FB, -0.59% or GrubHub GRUB, +0.46% to place food orders. Even though it costs more than cooking at home, it’s still possible to save a few bucks for those nights you just want to order in, especially now that there are so many services available.
Tech giants Google GOOG, -0.88% , Facebook and Amazon AMZN, -1.07% have entered the food delivery races. A Google Maps for iOS update lets users “place an order” from restaurants in major cities with a button on its app, 9to5 Mac reported last week. Amazon expanded its one-hour delivery service for its Prime members to Brooklyn. Facebook jumped in last month with an option to start an order from a restaurant’s page.
“More restaurants are doing mobile ordering, and because of that the younger consumer is definitely engaging,”said Darren Tristano, president of Technomic, a food-service and restaurant research and consulting firm. “Today using your mobile device with either an app or the internet becomes a very good, strong option.”
The fans of the hit 2000s show “Gilmore Girls,” which is returning for a four-episode revival on NFLX, +0.43% later this month, may find this familiar — main characters Lorelai and Rory Gilmore hardly ever had a home-cooked meal on the show, opting instead for takeout and delivery for nearly every meal. Though that is somewhat of an exaggeration of real life, Americans do spend $1,100 a year on average ordering food online, according to turkey company Butterball, which surveyed 1,000 people last year. One in 20 ordered every one or two days, and 25% ordered delivery or takeout at least once a week, the study found.
Online orders may soon beat phone orders. About 904 million online orders were placed in May 2015, up from 403 million in May 2010, while 1.02 billion phone delivery orders were placed in May 2015, down from 1.39 billion in May 2010, according to research firm NPD Group.
The interest from tech companies and restaurants may be the popularity from delivery startups, such as GrubHub, Seamless some of which these tech companies are using on the back end to see their deliveries through. Ride-hailing app Uber has been on the delivery scene since 2014, though it launched its stand-alone food delivery app earlier this year. These services give those at home or at work takeout options from local businesses without having to eat in, or step into, those establishments.
Americans’ annual expenditures on food away from home jumped 7.9% from 2014 to 2015, according to Bureau of Labor Statistics, while food at home expenses jumped only 1.1% over that same period. The change doesn’t necessarily mean more people are ordering takeout, but that prices are going up, said Warren Solochek, president of food service practice at the NPD Group.
“If you’re working from home, restaurants have to do a lot more to incentivize people to go to a restaurant,” Solochek said. “I can order from GrubHub or I can go to the refrigerator, and guess what, I have most of my meal right there.”
Still, there are ways you can save, even when you do grab for your phone. Here are three:
1. Look for deals: Check food delivery sites or do a quick web search for promo codes before placing an order. Amazon is offering a $10 off code to its Prime members for its one-hour restaurant delivery and other services like Seamless and GrubHub periodically provide discounts for users, such as during the presidential election. Some sites also have first-time user deals.
2. Avoid additional fees: Double check your bill total to ensure you know exactly what you’re paying for, since some sites may tack on additional fees. Uber announced late last month that even its UberEATS service in certain cities would be subject to surge pricing, when there are more orders than drivers. The company said in its announcement the extra fee will appear as a separate line item before checkout and on the receipt.
3. Participate in referral programs: Seamless gives back to those who refer their service, in the form of $7 for every friend. In fact, both parties win — those referred get $7 off their first order and once they try the service, so will the one who recommended Seamless.
A Chicago startup plans to feed on the food-delivery boom with a search engine that makes comparing costs and delivery times easier.
Bootler (at gobootler.com) launches Tuesday in Chicago with a platform that allows users to compare menu items, prices, delivery times and fees, and order minimums across a variety of services. Users can add booze to their orders through the company’s partnership with on-demand alcohol delivery service Saucey.
Founder Michael DiBenedetto says customers who use Bootler don’t have to hop from one delivery site to the next to find what they want, then evaluate costs and other information.
The site currently includes Delivery.com, GrubHub, DoorDash, Postmates and EatStreet, with plans to add Uber, Amazon, Caviar and Eat24.
“It’s a very saturated market,” DiBenedetto said.”We think it will work because of how many companies are in the space. We’re driving more awareness and traffic for all the players in the space by arranging them all in one spot.”
Users can search by restaurant or food category then see the total from various delivery services, including menu price, taxes and delivery fees. They can then click through to their preferred service to complete the order.
Using Bootler is free to consumers. The company plans to get a cut of the delivery services’ take.
One-stop shopping for online food and alcohol ordering seems a natural with the growth of restaurant delivery services, said Darren Tristano, president at research and consultant firm Technomic.
“It was only a matter of time before somebody built a site that makes comparisons,” Tristano said. “It makes sense. We’ve seen it in other types of comparative places like with travel, with airfares and hotels and car rentals.”
It could be difficult to get consumers who already order from particular sites to steer first to an aggregator, though, Tristano said.
It “will be interesting to see if they can get consumers for a few dollars’ or a few minutes’ savings,” he said.
DiBenedetto said he started working on the website in June.
“I’ve wanted to order from one restaurant and it didn’t have what I wanted, so you end up having three or four tabs open until you find one that delivers what you want,” he said.
The site began operating beta in December, he said.
It’s never been easier for consumers to get things delivered. So why not coffee?
Imagine a piping hot coffee delivered to your office or home at the proverbial “click of a button.” For consumers, it’s perfect. For the coffee companies attempting to provide these services, it’s a bit more complicated. But two of the major chains, Starbucks and Dunkin’ Donuts, are ready to give it a try.
2015 was a big year for Starbucks, which added several services designed to be quick and convenient. In September, the company rolled out nationwide availability of Mobile Order & Pay through its apps, which allows customers to order ahead on the app and pick up in-store without waiting. In October, Starbucks announced a pilot project: It started bringing coffee and other items to employees of the Empire State Building through an in-house service, Starbucks Green Apron Delivery, which promised items “delivered by Starbucks baristas right to your office.” And in December, Starbucks officially debuted its previously announced partnership with start-up Postmates, allowing customers in Seattle to order delivery using the Starbucks app.
It’s not just Starbucks getting into the delivery game. In November, Dunkin’ Donuts launched two programs designed to “make it even easier and more convenient for people to run on Dunkin’ from morning to night,” announced a company press release. On-the-go ordering — which works with the company’s app in a similar style to Starbucks Mobile Order & Pay — first launched in Portland, Maine. Dunkin’ Delivery, meanwhile, first launched in Dallas as a partnership with the on-demand delivery start-up DoorDash, and both services have expanded into other cities.
Although fast-food and coffee chains have great convenience, the expectation by consumers to get food delivered is increasing.
But why coffee delivery? “Both ordering methods are simply new ways to… meet customers where they are in their day,” says Starbucks spokesperson Maggie Jantzen. Apparently, the most-asked-for service on the My Starbucks Idea blog was, “When will Starbucks just bring me coffee?”
According to Darren Tristano, the president of food industry research firm Technomic, “with the rise of on-demand delivery services like Postmates and others, many operators have researched the opportunity to outsource or build delivery services,” and that includes brands already known for convenience. “Although fast-food and coffee chains have great convenience — including in-store and drive-through options — the expectation by consumers to get restaurant food delivered is increasing,” he says, “and broadening across new segments.”
But anyone who has waited longer than expected for a food delivery, received a dish that had cooled in transit, or not received what was ordered, understands that delivery logistics are complicated. Unlike Amazon shipments, there’s only a brief window of time that most food items can be delivered before getting cold or spoiling, and some might say that the window is even shorter for coffee.
“The flavor and aroma characteristics of hot, brewed coffee drinks change quite rapidly as the temperature decreases,” says Nick Brown, editor of Roast Magazine‘s Daily Coffee News. “And while everyone drinks their beverage at a different pace, the most loyal of customers may have some sensory expectations tied to their favorite drinks. Time and temperature seem to be the two biggest obstacles here in repeating the experiences consumers have come to expect within the brick-and-mortar retail locations.”
“Given the number of locations that each brand has, it should be relatively easy to develop delivery options,” Tristano says of the logistics. “Challenges facing both operators will include peak time service, logistics in-house, and managing the delivery in a way that doesn’t impact the on-premise operation or the brand quality as products leave the store.”
Starbucks’s rollout of Green Apron delivery seems to take these concerns into consideration. The company used existing infrastructure for its Empire State Building delivery: The building already had a Starbucks café, and the company uses a separate kitchen for the Green Apron orders. There are more than 12,000 employees in the building, but they are all just an elevator ride away. Customers place orders on a fairly simple website. Orders arrive in approximately 30 minutes, according to the company. But Ashley Fleishman, a lawyer who works in the Empire State Building, reported coffee delivered in 10 minutes. And yes, “the coffee is still hot,” she says.
Starbucks’s “Green Apron Delivery” service is designed for deskside deliveries within large high-rise buildings.
Green Apron Delivery partners are discouraged from accepting cash tips, says a company rep, but the company is working on adding digital tip options to the website. And although Starbucks did not share plans for expanding Green Apron, Jantzen describes the service as one “for customers within a designated high-rise building.”
The company has, at least, one new customer. Fleishman used to get her caffeine fix from her office’s Keurig machine. “I am not a religious coffee drinker,” she says. “So with Starbucks, I probably drink more than I previously did before delivery was offered.”
While the Green Apron delivery seems to focus on office delivery, “customers aren’t just in office buildings,” according to a Starbucks press release announcing the Postmates partnership in Seattle. “They’re at soccer games with their kids, at home with family, or gathering at the park with friends.” To get those skinny lattes to soccer games, Starbucks teamed with Postmates, a delivery company that has a love-hate relationship with the restaurant industry. (Postmates often offers delivery from restaurants without their consent.) Despite the complicated relationship with restaurants, Starbucks considers Postmates “an industry leader in the on-demand delivery space,” writes Jantzen. “They have the technology and expertise to scale this program with Starbucks.”
It’s safe to say Postmates is committed to the relationship: According to the company, they’ve designed a new carrier “so that we could ensure that the coffee would arrive the way it left the store.” Customers order through the Starbucks app, which has been modified to use Postmates’ ordering and delivery technology, the first and only food company app to do so. Users in Seattle and elsewhere can still order through Postmates directly, but having delivery built into Starbucks app allows customers to customize orders, the company said in a press release. For Postmates deliveries, Starbucks charges a $5.99 delivery fee.
Jantzen also says that Starbucks has “no additional plans to share in regards to other food delivery companies.” But it would not be uncommon for large chains to test our various food delivery options. For example, 7-Eleven is working with both Postmates and DoorDash in different cities. In terms of logistics, Slurpees have a lot in common with coffee — a delivery that’s just a few minutes late can be problematic.
Dunkin’ Delivery customers can order only through the DoorDash app — DoorDash has experience working with chains including Taco Bell and Kentucky Fried Chicken. The partnership probably made getting the program of the ground easier for Dunkin’ Donuts, but will most likely limit the information they can gather from their customers. For the partnership, DoorDash began deliveries at 7 a.m. or 8 a.m., a few hours earlier than the typical 10 a.m. start time, in order to serve breakfast. Breakfast and food in general is a growing category for many fast food companies, according to Brown.
“This strikes me as a relatively low-risk channel to explore, especially if the technology bears out.”
“While breakfast has been a strong suit, we’ve seen roughly one-third of coffee orders come after lunch,” says Prahar Shah, the head of business development at DoorDash. Office deliveries are popular. “We see three to four folks on a team doing the ‘coffee run,’ but doing it with DoorDash.” Dunkin’ Donuts’ Box ‘O Joe, which holds 10 cups of coffee in a box, are popular with the late-afternoon office crowd, says Shah.
This partnership has expanded from Dallas to Washington DC, Chicago, Atlanta, and Los Angeles/Orange County. And Dunkin’ Donuts is looking to expand delivery, with or without DoorDash. “As we continue to test Dunkin’ Delivery, we will look to explore options for other partnerships and integrations with the DD Mobile App,” writes Sherrill Kaplan, who works on digital marketing and innovation at Dunkin’ Brands.
“Both companies have made big strides in their app development and mobile ordering platforms, and it makes perfect sense that they would try to leverage that loyalty through a new channel,” such as delivery, writes Brown, the Roast editor. “This strikes me as a relatively low-risk channel to explore, especially if the technology bears out.”
It’s snowing. You don’t own a car. You’re lazy and hungry.
At least a dozen companies are ready to deliver prepared foods to your front door, and the market for restaurant delivery is set to expand significantly in 2016, industry observers say, driven by greater availability and consumers’ growing willingness to pay big money for convenience. But with demand rising, analysts say prices will increase as companies test exactly how much you’ll fork over for a hot meal.
The table for 2016 is set: Multiple startups are already competing fiercely for a still-small section of the restaurant market, and consumers are growing more aware of the options available to them via delivery.
Delivery accounted for 1.7 billion U.S. restaurant transactions in the 12 months that ended in September, or just about 3 percent of the 61 billion U.S. restaurant “visits” or transactions in the year that ended in September, according to The NPD Group.
Burger and sandwich delivery is leading the way in terms of growth, but all categories are growing except for pizza, said Bonnie Riggs, restaurant industry analyst at NPD. Delivery has seen steady growth in the last four years while business across the restaurant industry overall has been flat or down.
“For those consumers that want something different, now they have other options,” she said. “If it travels well and it’s unique or different, consumers are going to go for it.”
But expanding delivery services come with a unique set of problems: More delivery orders can mean in-store customers wait longer, or feel they’re not the priority, said Michael Whiteman, president of Baum+Whiteman International Restaurant Consultants. And if the restaurant prioritizes in-store customers, food intended for delivery can take longer to arrive and may rapidly decline in quality.
To avoid that, some restaurants have physically separated their delivery businesses from their in-store operations.
Chipotle Mexican Grill added a second assembly line in the kitchen of nearly all their restaurants nationwide to handle delivery and catering orders. These second lines account for an average of $500 in sales per day, co-CEO Montgomery Moran said on an earnings conference call in October, adding that he sees a lot of room for that to grow.
Panera took a more extreme approach: It’s testing “delivery hubs” that handle only delivery and catering. Executives say the new locations will help them catch the growing delivery market without harming customer service in its cafes. Darren Tristano, president of research and consultant firm Technomic, said he expects to see more brands dividing their businesses in this way as delivery grows in popularity, particularly among young city dwellers without cars and office workers who don’t want to step out for lunch.
Delivery has come a long way from the days when pizza and Chinese food were the only games in town. Technology has changed the market significantly in recent years. The evolution of online, and later mobile, delivery started in the early 2000s when GrubHub and Seamless were founded. In recent years, companies like Postmates, DoorDash and Uber have partnered with a wide range of new restaurants, from McDonald’s and Dunkin’ Donuts to high-end restaurants.
These third-party delivery providers allow restaurants to offer delivery without a lot of added costs, Whiteman said. But there’s a lot at stake for restaurants in deciding how delivery is managed. If a third-party delivery person grabs the wrong order or gives bad customer service, it reflects badly on the restaurant itself.
Another issue: Who owns the customer? As technology companies like Amazon and Uber jump in the delivery game, concerns are surfacing about the information that is provided to those outside parties. If, for example, a customer orders pizza every Friday from the same restaurant through Amazon delivery, Amazon would be able to market another company’s pizza or Italian options before their weekly order. In that case, Amazon would keep the customer but the original restaurant would lose them, Whiteman said. Amazon offers restaurant delivery in some cities through its Prime Now service.
And for customers, delivery fees are expected to get even steeper, Whiteman said, because the market is still growing at a rapid pace. In some cases, Technomic’s Tristano forecasts the combination of delivery fees, service charges and upcharges for meals reaching as much as $20-$30. Prices vary widely but in some cases delivery can double the price of a meal.
“It will be an interesting experiment in speed and convenience,” Whiteman said.
Restaurants will also have to deal with possible backlash from a difference between in-store and delivery prices, Whiteman said. Postmates, for example, charges a $5 delivery fee but also a 9 percent service fee, plus “blitz pricing” during peak times.
Increased demand is also expected to lead to consolidation as third-party providers including Uber, Amazon, Postmates and DoorDash fight to get a bigger slice of the market.
“There’ll be an enormous amount of collapse,” Whiteman said. “And they’ll hope to be acquired before they fall apart.”
But Paolo Lorenzoni, Uber’s Chicago general manager, thinks that the market still has a lot of room to expand before “chaos” ensues.
“Our perspective is that a rising tide lifts all boats,” Lorenzoni said. “And that rising demand for delivery will ultimately help all our businesses grow.”
Karen Robinson-Jacos and Laurie Joseph
Copyright 2015 The Dallas Morning News. All Rights Reserved.
Between killer work schedules, soccer games and sagging skill levels, many adults don’t have the inclination to prepare a three-course meal, or the time to sit in a restaurant and enjoy one. That helps account for the growth in “off-premise” dining, where a restaurant chef does the cooking and you enjoy the meal in front of your TV. Now technology, including apps that allow hungry consumers to order and pay in advance, is expected to make restaurant dining rooms even emptier.
Fiesta Restaurant Group
Addison-based Fiesta Restaurant Group, which operates the fast-casual chains Taco Cabana and Pollo Tropical, hopes to double its current off-premise business over the next 10 years and has hired its first corporate director of off-premise consumption. The new director, Willie Romeo, will focus on to-go, online ordering, catering, drive-through and mobile app orders.
Corner Bakery Café
Off-premise sales** at Dallas-based Corner Bakery Café have been growing about a percentage point a year. Next year, the 24-year-old company hopes to begin testing its first drive-through lane.
Plano-based Mooyah, which competes in the “better burger” space, is looking to boost its to-go business. The company has opened two locations with drive-through lanes but is not focusing on that model.
More than a third of working-age adults consider buying to-go food “essential” to the way they live, according to the National Restaurant Association.
Deliveries on the rise
At fast-food restaurants, more than 70% of the orders are eaten off-site. Figures from the NPD Group show that delivery orders, which account for the smallest segment, saw the largest percentage growth rate for the year that ended in June.
There’s an app for that
Restaurant chains including Plano-based Pizza Hut and its corporate cousin Taco Bell, along with Starbucks, Subway and others have rolled out apps that allow you to order, pay ahead of time, and just pick the food up on the fly. Look for more chains to launch their own apps or to partner with players like http://www.orderaheadapp.com (not available yet in North Texas) or MasterCard’s Qkr.
The bottom line
“The biggest thrust for operators has been in the catering area to promote off-premise sales opportunities. Most of the growth in takeout has been in independent restaurants that have changed their business model to accommodate takeout opportunities for their customers. Also, there have been a lot of delivery discussions from brands such as Uber and Postmates.”
Darren Tristano, executive vice president, Technomic restaurant research service
“We are seeing that currently on-premise visits are growing while off-premise is holding steady or declining. That partly has to do with generational differences. Millennials are cutting back on restaurant visits. They were more inclined to use off premise. Baby boomers are now heavier restaurant users and they have a tendency to eat on premise.”
Bonnie Riggs, restaurant industry analyst, NPD Group
“‘What’s for dinner, Mom?’ was sometimes the scariest question I heard all day. With healthier restaurant options and technology that helps meal-pickup-time fit your schedule, restaurants can grow revenue and reduce the strain on the dining room during peak periods.”
Following the success of ride-sharing businesses, a handful of companies are pushing into Central Florida as on-call food-delivery services for restaurants that don’t have their own drivers.
Groupon-owned OrderUp launched Tuesday in Orlando with a fleet of about 60 drivers bringing food from restaurants to homes and businesses. Two local companies, Doorstep Delivery and Munchem, are also trying to find their place amid growing national competition from app-based services.
The services use an independent-contractor model, dispatching drivers to pick up orders at restaurants and then drive the food to its destination.
“You’ve always had the takeout-taxi model, but what we are seeing now is the younger generation who is very mobile-device-enabled,” said Darren Tristano, executive vice president of restaurant-research group Technomic.
The industry is more crowded nationally, with companies such as Postmates, GrubHub and Uber’s own restaurant delivery service, none of which has launched in Orlando.
Restaurants have been eager to get in on the trend, hoping to expand into delivery without hiring drivers. Chipotle, Olive Garden and Publix’s deli-sandwich counters are experimenting with the services at select locations locally.
Customers use the delivery services’ apps to place food orders, which are relayed to restaurants. The delivery service then picks up the completed orders and delivers them.
Third-party delivery services usually cost $4 to $6 per order, and customers are expected to tip the drivers. The delivery service often takes a cut of the total bill from restaurants, too.
Doorstep has about 300 partners in Central Florida, while OrderUp started with 31 partner restaurants. Munchem takes orders for any restaurant in which it can find a menu.
“These days everybody expects on-demand service,” said Andrew Brown, co-founder of Orlando-headquartered Doorstep Delivery. “People expect what they want, and they want it brought to them.”
Doorstep Delivery is the oldest of such local third-party restaurant delivery companies. It started in the Orlando area seven years ago without smartphones or an app, using dispatchers taking orders on a notepad and calling them into restaurants.
Brown said the rapid pace of technology has pushed the company to redevelop its model, leaning heavier on Web and mobile ordering. Doorstep is revamping its app to allow real-time tracking of delivery drivers, a feature popular with other services.
It is in 19 markets, mostly in Florida but also places such as Charlotte, N.C.; Dallas; and Denver. Nationwide, it has about 600 drivers and about 60 locally.
Gator’s Dockside has been working with Doorstep Delivery for about five years. It had considered its own delivery drivers but decided to go with a third-party company.
“When you figure 150 orders a month per location is probably average, I would say it’s definitely worth it as a business to try to reach those people,” said Gator’s Dockside director of operations Joe Foranoce.
OrderUp says its drivers can make up to $25 an hour during peak periods. The company, as well as others, does background checks on drivers and issues them a car magnet and “hot and cool” bags to keep food at temperature.
Delivery times aren’t guaranteed, since restaurants prepare food at their own pace. But the services are designed to have drivers arrive at the restaurant as soon as food is ready and hit the road.
Moises Almaraz, 20, took OrderUp’s first delivery Tuesday from Church Street Tavern in downtown Orlando to a nearby office building.
“I hope to make about $20 an hour,” said Almaraz, who recently moved from Naples after earning his associate degree and hopes to enroll at the University of Central Florida. “I’m just looking to earn some extra money before I go back to school.”
The independent-contractor model has been used by ride-hailing companies Uber and Lyft, requiring drivers to pay for their own gas, maintenance and taxes.
Another Orlando-based service, Munchem, launched to customers earlier this year with an app.
The service started in the Dr. Phillips neighborhood and has expanded to downtown and the UCF area. Munchem has seven drivers and is hiring more.
“We’ll deliver from pretty much any restaurant that we can get a menu for,” said Andy Kordalski, a spokesman for Munchem. “The ones that want to work with us are great, but we don’t necessarily need to partner with them because we’ll make the order and pick up the food ourselves.”
By Georgina Gustin • firstname.lastname@example.org > 314-340-8195
25 March 2012
St. Louis Post-Dispatch
Copyright 2012, St. Louis Post-Dispatch. All Rights Reserved.
It has become a pattern. Students from Washington and St. Louis universities start calling in. Bar patrons in the Delmar Loop wander through the door. Sweet-toothed couch potatoes with a craving for something buttery and warm pick up the phone.
“It starts around 9 p.m.,” says Tamika Moore. “We call it cookie-emergency hour.”
Moore and her partner in life and business, Ernest Dixon, had a simple idea: Bake fresh, made-to-order cookies, and then – most importantly, perhaps – deliver them right to peoples’ doors. (With milk if requested.)
They launched their business, Dough to Door, last August on a cross street off the Delmar Loop, at first walking up and down Delmar Boulevard giving samples. Soon the delivery orders started coming. Now the business bakes and sells “thousands of dozens” of cookies a month, Moore says, many in the critical “cookie-emergency” window between 9 p.m and 2 a.m.
“Late-night is big for us,” Dixon said. “We see some weird situations. That’s the fun part.”
The Dough to Door business model strikes directly at the butter-loving heart of anyone who has ever been enveloped by the smell of baking cookies – and needs one right away. The “munchie” market segment – late-night revelers who want a little something after their indulgences – was actually a formal target identified in the company’s business plan.
“It’s a legitimate marketing category,” Dixon said. “The munchie crowd generates a need based on something else they’re doing.”
But the strategy also taps into generational expectations and the American consumer’s growing need for getting what they want, when they want it. The custom delivery market, first pioneered by Domino’s Pizza in the 1980s, has surged in recent years, and now delivery options go well beyond pizza.
“Consumer expectations of delivery have changed,” explained Darren Tristano, a food industry analyst with Chicago-based Technomic. “There’s such an expectation of convenience now. It used to be very limited what you could get delivered, especially late at night.”
Tristano pointed to the expansion of Jimmy John’s Gourmet Sandwiches, which has grown from 354 restaurants in 2005 to 1,329 last year. Even Burger King, he said, is piloting delivery programs in some urban markets.
Cheese-ology Macaroni & Cheese, a few doors down from Dough to Door, now also delivers, seizing on the market for home delivery, which is particularly ripe in university areas.
“We wanted to do delivery because we knew more students would have access to our food if we did,” said Bill Courtney, Cheese-ology’s founder. “I went to the University of Missouri and I ordered pizza three times a week because there was nothing else to order.”
But the landscape has changed. “Any small restaurant coming into this area, especially the Loop, and with a college-likeable menu,” Courtney said. “They’re going to need a delivery service.”
Moore, Dough to Door’s “senior doughologist,” and Dixon, its “cookiemaster,” say they were inspired to start the business when they were home one night, craving something sweet but unmotivated to go out and get it.
“Honestly, it’s the American way,” Dixon said. “That’s why we think this has potential. We want things fast, we want them the way we want them.”
That second piece is key to Dough to Door’s business. Customers can select from five doughs, with three “mix-ins,” which range from traditional, such as chocolate chips, to more esoteric, such as Pretzel M&Ms. A baker makes the cookies based on the customer’s specific mix. (A minimum of 6 is required for delivery, and with a pint of milk, costs $8.75)
The open-ended options mean some customers chose some strange combinations. “We tell people: Mix at your own risk,” Moore jokes.
This on-demand approach is smart strategy, says James Fisher, chairman of the marketing department at St. Louis University.
“Dell didn’t make anything until they had a customer on the other end. That’s kind of what’s going on here,” he said. “You’re not building a product, hoping a customer will buy it. You get paid up front. And because there’s a better fit with the customer, you have the potential to deliver higher value.”
Moore and Dixon’s plan, however, is something of a hybrid – with a delivery business and a storefront where people can walk in and sit at a table. While 70 percent of their current business comes from deliveries, they are cultivating an in-house business that captures foot traffic. One plan is to start a weekly storytime session for moms and children where cookies and milk are served.
Creating a diverse clientele – one comprised of delivery customers and walk-ins – will be essential for success, says Clifford Holekamp, a senior lecturer in entrepreneurship at Washington University.
For Holekamp, Dough to Door’s calling card is its fresh-baked, artisanal approach.
“I would define this as being part of the whole craft movement,” Holekamp said.
“People are seeking higher-quality, more customized goods. People are desiring craftsmanship. They won’t pay a premium over time unless there’s something unique about the product. The delivery is a great service, but I don’t think its their secret sauce.”
photos by Erik M. Lunsford • email@example.com Washington University students (from left) Brendan Stone, Mike Merzel, Kyle Engelken, Burt Reynolds, Tim Elliott and Jake Bruemmer have some cookies Thursday at Dough to Door in University City. Ernest Dixon, the co-owner of Dough to Door, prepares cookies for delivery on Thursday at his shop in University City. Delivery, often to nearby college students, is 70 percent of the shop’s business. The exterior of Dough to Door at 567A Melville Avenue in the Delmar Loop area. The shop’s busiest time starts about 9 p.m. Talor Woolfolk dishes out trays of warm cookies Thursday at Dough to Door. The shop, which opened in August, custom makes a variety of cookies for its customers.