Off-premise sales have been a source of growth for restaurants since the end of the recession. As an example, as of the end of August, year-to-date same-store sales growth for to-go sales has been 9.1 percent, which shows an acceleration of an already strong performance in recent years. Average to-go same-store sales growth over the last two years was 3.4 percent.
As a consequence of this rapid growth, the percentage of overall sales that off-premise represents has been growing for both limited service and full service restaurants. The percentage of total sales that is represented by off-premise sales increased between about 1.0 and 1.5 percent during the first six months of 2018 compared with the same period the previous year for most industry segments. However, for fast casual the increase was a considerable 3.1%.
Why are off-premise sales so important? According to recent TDn2K study looking at top performing companies over the last 2 years, most restaurant brands are seeing faster growth in to-go sales than dine- in sales. For those top performing brands based on their overall same-store sales growth, however, the rate at which they are increasing to-go sales is three times larger than for the rest of restaurant brands.
It is clear consumers have an increasing demand for efficient and convenient food options. Off-premise activity aims to address this growing need but is not without its challenges. Operators must weigh in on several factors when determining how, if at all, to implement an off-premise strategy.
Whether working with a third-party vendor, or sending out a to-go order, ensuring food quality is consistent with dine-in orders can pose struggles for operators. Menu options are abundant for customers; however, many types of cuisine simply don’t travel as well as traditional delivery food items like pizza or fried rice.
For some, the solution to keeping food quality consistent is through limiting available items or creating a separate menu for off-premise sales. This does not always strike the right balance with customer expectations, however. A brand known for burgers and fries, for example, doesn’t have a lot of options to choose from if they want to provide a limited menu. Instead, operators might opt to adjust their product packaging.
Fine-tuning or revamping to-go packaging overall helps keep “hot food hot” and “cold food cold.” What works will vary for each brand depending on the type of cuisine served but includes tweaks such as adding ventilation for fried items to maintain crispness, or sustainable packaging that also allows for reheating. Modifying to-go packaging is not always the least expensive option, but in the long term could bring more return in terms of happy, repeat customers.
As a response to increasing demand for online ordering (42 percent of consumers say they choose one restaurant over another based on the ability to order online according to the National Restaurant Association 2017 Restaurant Industry Pocket Factbook), many brands have focused on addressing ways to meet these customer needs. Innovation in mobile technology as well as self-order kiosks with facial recognition provide operators a wide variety of options, however, implementation is not always cut and dry.
Inconsistencies from using multiple platforms can cause delays and potential mistakes in the ordering process. Proper training is essential for restaurants to make sure employees can handle an influx of orders across multiple channels. A POS that integrates all types of orders is ideal, and a worthy investment for operators looking to grow off-premise sales.
Delivery isn’t always the first choice for operators looking to boost off-premise sales. As reported in their last earning report, a casual dining operator increased off-premise sales 13 percent in their most recent quarter. They have accomplished this without utilizing third-party delivery services and limiting internal delivery to catering orders over a certain amount.
For operators that choose to work with third party delivery services, relationships are the name of the game. Some brands choose to include training on dealing with delivery drivers to help make the process more efficient and ensure accuracy.
Brands choosing to manage delivery on their own face challenges in staffing and scheduling. Maintaining the right number of drivers during any given shift is quite the balancing act, and operators must also account for external factors such as weather or sporting events.
Streamlining the ordering process is essential for off-premise success. For some brands, this means hiring specific roles intended to handle to-go and delivery orders. Many brands choose to cross train current staff to handle dine-in as well as off-premise but must address wages and compensation for staff members expected to carry out a dual role.
Defining a clear work space for off-premise is essential for operators, and this often entails making modifications to the current layout. The challenge for operators is to evaluate the impact specific renovations will have on off-premise sales and capabilities and determine the potential for return if current dine-in space is altered to make room for off-premise activity.
For Consumers, Convenience is Key
Restaurants are competing with other expenditures, like auto payments, and internet bills. Yes, the economy has grown, and unemployment rates are low, but incomes have remained relatively flat or shown only modest growth. The key to maintaining market share in this current climate is meeting customer demand for convenience and efficiency. An off-premise sales strategy focus may bring solutions to many operators struggling to maintain guest counts and maintain market share.
Off-premise Sales Not One-Size Fits All Solution
A focus on off-premise sales is not a blanket solution for the industry. For brands based on the dine-in experience, for instance, off-premise is not always the best option. At the end of the day, operators must determine the strategy that best enables them to fulfill customer expectations and deliver on their brand promise.