With the growing popularity of meal-box services like Blue Apron and Hello Fresh, chain restaurants are starting to see a rising amount of competition, which has led to declining revenue. In an article for the Sacramento Bee, Clarus Commerce CEO Tom Caporaso says that restaurants need to innovate, with new technology like Ziosk, to keep up with changing consumer tastes.
As originally published in www.sacbee.com.
Shopping these days in the Sacramento region requires little more effort than answering the front door thanks to companies delivering everything from booze and smartphones to marijuana.
In the past six months alone, more than a half-dozen home-delivery companies have launched in the Sacramento area, offering on-site delivery of foods, hard alcohol, craft brews, handyman services and more.
That’s on top of already established players such as FoodJets and online retail giant Amazon.com.
“I probably sound like a hermit, but I can get all that I want with a smartphone or a computer and never walk out my front door,” said Donna Moore, a 45-year-old Citrus Heights homemaker. Moore uses roughly six area food or merchandise delivery services. “I’m very busy taking care of my kids and other kids, so I really like the convenience of getting things done without running all over the place.”
Experts say the nation’s rapidly growing home-delivery market is creating a massive, profitable segment that’s will continue to grow. Businesses that don’t start adapting now are likely to be left in the dust.
“Technology is evolving almost every day…and retailers need to adapt to the changes,” said Tom Caporaso, CEO of Connecticut-based Clarus Commerce, an e-commerce solutions provider that oversees FreeShipping.com. “With the proliferation of smartphones, everybody has a computer in their pocket, and it has opened up some amazing opportunities.”
Home-delivery operations recently launched in Sacramento run the gamut.
Last month, San Francisco-based UberEats joined the already diverse food-delivery segment, launching its online meal ordering and delivery platform, claiming more than 150 area restaurants signed on. Also in May, San Francisco-based PlateJoy, a personalized nutrition service provider, announced a partnership with Instacart, which kicked off its grocery-delivery service in the Sacramento area in March.
Need a libation? Bay Area startup Hopsy started delivery-to-your-doorstep services in the area in mid-February, featuring regional craft brews. Los Angeles-based Saucey launched in the area in December 2016, locking in partnerships with area stores selling alcoholic beverages.
Two companies touting hookups with local handyman and home chores providers via computer or smartphone landed in the Sacramento area this spring. San Francisco-based TaskRabbit and Nashville, Tenn.-based Takl Inc. provide access to services that include house cleaning, appliance repair and gardening chores.
“With so many apps available to busy people in crowded metro areas, this trend of more and more home-based services is going to continue,” said Peter Schaub, a New York-based marketing and branding expert. “I don’t think there’s any limit to what businesses can bring to your doorstep.”
Caporaso agrees: “It’s almost endless the kinds of services that can happen … It feels like we’re in the middle of these changes, but I think we might actually be in the early stage.”
There are consequences, however.
Retail giant Amazon.com’s ability to deliver thousands of products to homes has prompted a dramatic shift in the industry, with hundreds of traditional brick-and-mortar retail stores closing doors. Legacy retailers Macy’s, Sears and Kmart have been particularly hard hit.
In the chain restaurant segment, Clarus Commerce says same-restaurant sales fell 1.1 percent in this year’s first quarter compared with 2016; same-store traffic dropped 3.4 percent. Clarus said that’s the worst performance since the recession and it believe home-delivery food services are partly to blame.
Caporaso does not believe that chain restaurants are facing a crisis as serious as that being experienced by brick-and-mortar department stores, but he does believe there are economic consequences of fewer restaurant visits: “The problem is that with in-store dining, a lot of revenue is made on drinks and desserts. That doesn’t happen with home delivery.”
Caporaso says chain restaurants need to enhance their own home-delivery options, such as allowing customers to place orders before arriving at restaurants and more devices at tables that enable customers to quickly pay the bill and leave the restaurant.
He cited Ziosk tablets as a recent, positive tech innovation employed by restaurants. Chili’s Grill & Bar introduced the freestanding Android tablets in its restaurants, including outlets in Sacramento, in 2014. Using a tabletop tablet with a 7-inch screen, customers can peruse menu items, order desserts and drinks, and pay their check. The tablets designed by Dallas-based Ziosk also offer family-friendly video games for a small fee that’s added to the check.
“The good news is that when you put an idea out there, consumers are going to let you know pretty quickly if it’s working or not,” Caporaso said. “The feedback is almost instant. (Restaurants) have to look at it as a positive thing.”
The Washington, D.C.-based National Retail Federation believes consumers’ increasing interest in home delivery is creating change and opportunities.
“Home-delivery services are actually increasing opportunities with restaurants and retailers. It’s actually opening a new channel, or business stream, for companies that did not have the capability of doing it on their own,” said NRF spokeswoman Ana Smith. “… Millennials particularly like that instant gratification. They’re more willing to pay that extra fee and enjoy a meal at home.”
Smith said retailers “will continue coming up with unique strategies” to utilize home-delivery technology and “get in front of Generation Z,” but she added that brick-and-mortar sites will not vanish.
“It’s definitely ever-evolving…but even Amazon is moving to brick and mortar. They want to continue to be a big player in this game.”