How Digital Delivery Puts the Restaurant Value Chain Up for Grabs

How Digital Delivery Puts the Restaurant Value Chain Up for Grabs

          
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How Digital Delivery Puts the Restaurant Value Chain Up for Grabs

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    Diners have a new definition of convenience, and restaurants need to respond.

    Convenience has long been a driving force in the restaurant business—and historically, the most widespread brands with the best-situated locations held an advantage. No longer. From the consumer’s point of view, thanks to the rapid rise of digitally enabled food delivery, convenience is no longer a matter of location. Internet-based delivery services and restaurant meal aggregators are rewriting the restaurant rulebook as they bring convenience to the customer’s front door at the click of a mouse or the tap of a smartphone screen. Digitally enabled delivery allows consumers to access any type of food for any occasion—on demand.

    Potentially even more disruptive, though, is a parallel shift in diners’ expectations. As digital ordering and delivery have become mainstream, new (and a few incumbent) players are reconditioning consumers and redefining the market. Consumers are coming to expect new levels of ease and near-total transparency in the process of ordering, receiving delivery, and providing feedback—regardless of whether they are interacting with a restaurant brand or a third party. Meanwhile, brands are losing access to their customers and their customers’ dining decision-making.

    The restaurant value chain is up for grabs. The restaurant brands—or third parties—that provide the easiest, most transparent experience across a range of needs or demands will likely own the consumer. Those that can master the “last-mile” economics at scale will have a huge advantage in physical delivery. When the industry reaches a new equilibrium, in which ease and convenience play an even greater role than they do today, brands must offer consumers a compelling value proposition, rooted in the needs that drive diners’ choices.

    We are still in the early days of this upheaval, but three things are already clear:

    • Consumers’ demand for convenience and their rising expectations for ease and transparency will continue to fuel food delivery, producing what is likely to be the most substantial market disruption ever in the restaurant industry.
    • The disruption has profound implications for brands, regardless of whether and how they choose to participate in delivery.
    • Every company needs to develop a responsive strategy now or face the likelihood of enduring stagnating sales and market share as the delivery trend accelerates.
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