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Published in Economic Development
The third-party food delivery market featuring companies like Uber Eats doubled in size in the U.S. during the pandemic. The third-party food delivery market featuring companies like Uber Eats doubled in size in the U.S. during the pandemic. ILLUSTRATION BY KAYLEE VAN TUINEN

Restaurants embrace e-commerce as consumer habits permanently shift

BY Sunday, March 27, 2022 06:56pm

Before the COVID-19 pandemic, none of Davide Uccello’s four West Michigan restaurants offered an online ordering option. Today, at least half of his restaurant’s takeout and delivery orders are placed online.

“It has been a huge change for us,” said Uccello, who serves as chief financial officer and co-owner of Flo’s Collection with his brother, Dan Uccello. The restaurant group operates restaurants in Plainfield Township, Belmont, Greenville and Rockford. It plans to soon open a location in Grand Rapids’ Eastown neighborhood that will focus on delivery and takeout.

“It was luckily right before the pandemic that we launched online ordering. If we didn’t have online ordering, I do not think we’d be able to sustain taking all of the orders coming in,” Uccello said.

Restaurant owners adapted quickly to pandemic shutdowns in several ways, including adopting e-commerce solutions for the first time, said Richard App, retail retention and attraction specialist at the Grand Rapids Area Chamber of Commerce

“There are very few restaurants you go into now that don’t have QR codes for menus, online ordering and delivery services, whether they are doing it in-house or through the bigger platforms,” App said. “If they haven’t by now, they should.”

The Grand Rapids Chamber created App’s position in January 2020 in partnership with Downtown Grand Rapids Inc. and the city of Grand Rapids. During App’s attempts to bring new restaurants to the city, the first discussion often involves their e-commerce strategy, he said.

“Another thing I’ve seen with successful restaurants is their social media game has gotten a lot better,” App said. “They are posting specials earlier and that sways where someone is going to eat. E-marketing is more important now than I think it’s ever been.”

 

 

Delivery platforms

The food delivery market involving third-party platforms was already growing before the COVID-19 pandemic, and has more than doubled over the last two years in the United States, according to a September 2021 McKinsey & Co. report. The global food delivery market has more than tripled since 2017 and is now valued at more than $150 billion, the report adds.

Online ordering, takeout and delivery services became lifelines for restaurants during the height of pandemic shutdowns, though third-party services like Uber Eats and DoorDash charge restaurant commission fees that can range from 15 to 30 percent of the cost of a meal, cutting into restaurants’ already thin profit margins. 

Restaurant owners are finding ways to offer online ordering, takeout and delivery either in-house, with third-party companies or both as consumers grow more accustomed to ordering food online.

“We did a bunch of third-party integrations with companies like Uber Eats and Grubhub,” Uccello said. “While they’re not our favorite, unfortunately they have become a staple you need to have. They take 25 to 30 percent of our profit margin. We try to educate our customers about ordering through our website, but if you don’t use those third-party platforms, there is a whole customer base you’re not reaching.”

Third-party food delivery platforms were popular in larger cities before the pandemic but used infrequently in Grand Rapids, said Paul Lee, co-owner of All In Hospitality Group LLC, which owns Grand Rapids restaurants Donkey, Hancock, Royals and Winchester. Lee’s restaurants upgraded point-of-sale software before the pandemic that made it easier to integrate third-party platforms, making them better prepared for the increase in online ordering, he said.

“As soon as the pandemic hit, we were already doing it so we weren’t really playing catch up like a lot of other businesses had to do,” Lee said. “We already had the packaging in place too, but the hardest thing for us was to make the shift to a menu that would travel better for takeout.”

Customers are now eating at restaurants again, but many also are still ordering takeout and delivery because of the convenience, Lee said.

“We’re seeing online and takeout not go down as things open up, but stay steady,” Lee said. “It’s added business to full dining rooms. A lot of kitchens aren’t designed for takeout and it can be a struggle to do both takeout and dine-in.”

Lee’s restaurants turn off online ordering on the weekends if dine-in is busy, he explained. 

“What’s most important for any operator is you have to be willing to adapt,” Lee said. “The industry is changing so quickly that if you don’t adapt with it, you will become obsolete. If you rely on dine-in only, you don’t become convenient for a lot of people.”

Some new restaurants also are being intentional about planning for takeout and delivery as a big part of their business from the start.

Amid the rising popularity of carryout and delivery service, as well as the ease of working with a smaller staff, the Uccello brothers are opening a new restaurant in a much smaller space than their other concepts that will focus on takeout and delivery service. Franca’s Pizzeria, which is set to open next month in a former Papa John’s franchise at 1551 Wealthy St. SE, will not include dine-in seating. The location is named after the Uccello brothers’ mother.

“For one of our full-service restaurants, we need about 75 employees, but with this smaller carryout model we’ll probably need about 20 employees,” Davide Uccello said. “So due to us already having a hard time with staffing, this was a no-brainer.” 

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