Demand for deliveries dramatically changing restaurant industry in Northern Nevada and beyond
This is the seventh in a series of stories centering on the Northern Nevada Business View’s content focus for September — “Food & Beverage/Restaurants.” Look for this story and others in our September print edition (which publishes August 27).Read more in our Food & Beverage/Restaurants series: Part one: Reno pizzeria employing disabled persons receives national recognition Part two: Print, TV and radio … oh my! Restaurants turn to social media to boost business Part three: Bars, eateries reap benefits of organic marketing from photo-happy Instagrammers Part four: Appetite for healthy, vegan options among Millennials, Gen Z shaking up food industry in Northern Nevada Part five: Local food advocates work to bring more urban farms to Northern Nevada Part six: Reno-Tahoe food hub advancements help foster farm-to-table dining Part eighth (final installment): From bitcoin to Bluetooth, Reno restaurants are savoring the tech boom to create efficiency ========================================= DOORDASH ... AND BACKLASH
Tech startup DoorDash announced that on Aug. 1, it was launching in Reno-Sparks and was planning to offer delivery from more than 800 local restaurants through its mobile app.
The news has been met with mixed reviews, however, as several Reno-area eateries have taken to social media to lambaste DoorDash for listing them without permission.
The main concern, according to an Aug. 6 report from the Reno Gazette Journal, is that if DoorDash messes up an order, customers may blame the restaurant, rather than the tech company, thus negatively impacting the restaurant (some of which, again, did not ask to be listed).
The issue is further complicated if a restaurant doesn’t offer delivery in the first place, yet is listed on the third-party website as a delivery option.
Door Dash, through a representative, provided a statement to the RGJ that reads, in part: “For the majority of our merchants, being on DoorDash offers not only an additional influx of customers and revenue but also presents an additional marketing opportunity. For those not interested in being on DoorDash for any reason, we immediately remove them from the platform upon their request.”
RENO, Nev. — Mark Estee would prefer guests grab a table to enjoy the lobster rigatoni, with lemon cream, garlic and summer squash, served at Liberty Food & Wine Exchange, his artisan eatery in downtown Reno.
Many hungry costumers, however, want their rigatoni, sandwiches, salads — everything — delivered to their front doors. So much so, those restaurants have to dedicate valuable time, manpower and sometimes even space to fulfill those orders.
“We’re here. We prefer to see people in here, face to face,” said Estee, seated in his downtown Reno restaurant on a Tuesday afternoon. “But if they don’t come, they want to get that convenience. We want to be able to give them the opportunity to go on one of those (food delivery) sites and order it through us.”
UberEats. Grubhub. DoorDash. The eruption of mobile ordering apps has led to food delivery sales seeing a sizable uptick nationwide. In fact, in the last five years, revenue from deliveries across America jumped 20 percent, and the overall number of food deliveries saw a 10 percent bump, according to the NDP Group, which monitored food delivery trends from 2012 to 2017.
Consequently, as more and more food orders head for consumers’ front doors, restaurants are seeing fewer and fewer diners walk through their own. NDP reported that total restaurant industry traffic was flat as of May 2018.
What does it all mean? The demand for deliveries — whether it’s from a sit-down eatery or a barbecue chain — is dramatically changing the restaurant industry in Northern Nevada and beyond.
“Delivery has become a need to have and no longer a nice to have in the restaurant industry,” Warren Solochek, NDP’s senior vice president, said in a statement. “Restaurants need delivery in today’s environment in order to gain and maintain share. It has become a consumer expectation.”
‘You have to really pay attention to it’
Restaurants in Northern Nevada have noticed the pivot. George Heinemann is the general manager of Redwood Rotisserie and Grill, at the corner of Plumb and Keitzke in Reno, which creates dishes anchored by chicken and tri tip roasting on in-house spits — then sends up to a quarter of the food right out the door. Delivery makes up as much as 25 percent of the restaurant’s business.
In fact, Heinemann said he’s already noticed a base of UberEats regulars. The restaurant partnered with the food delivery company back in November 2017.
“When they first ramped up, it was somewhere in the 15 to 20 percent of our sales,” Heinemann said. “Now, some days it actually eclipses 25 percent of our sales. We’re surprised. I thought it would be OK. But the numbers are probably about double what we originally thought they would be.”
Despite the uptick in mobile app orders, Heinemann said Redwood Rotisserie has not seen its restaurant traffic and sales slow down because of it.
“That was our first concern,” he said. “And we sort of said, you know, we think we have our costumer base that likes coming to the restaurant.”
Having to satisfy both its dining-in and ordering-in customer groups presented its challenges, especially during the dinner and lunch rushes. In response, the restaurant boosted its staff this past year. In addition, the restaurant switched to eco-friendly containers to ensure the food not only travels well, but is also presented well, Heinemann said.
“We realized right away as the (delivery) sales increase that you have to really pay attention to it,” he continued. “We’ve definitely staffed for it, so we’re not neglecting the restaurant at the same time, knowing that we still have people coming in.
“We’re a destination restaurant, so we don’t want to just cater to Uber and suffer as a restaurant.”
‘The name of the game’
Over the last three years, through partnering with UberEats, GrubHub and others, Famous Dave’s in Reno has seen its to-go orders surge from 10 percent of its sales to 30 percent, said Bill Johnson, regional general manager.
“It’s the name of the game — everything is moving in that direction,” Johnson said. “I don’t know how if someone was going to do a restaurant right now and they’re going, ‘it’s a passing fad,’ how they would survive. It’s definitely going to continue to grow.”
In anticipation for the growth, Johnson said Famous Dave’s — which already sees a steady flow of costumers picking up take-out food — is considering remodeling the to-go side of its restaurant to also cater to mobile delivery orders.
“We’re talking about remodeling the to-go side to add a separate counter spaces just for the delivery-service providers,” he explained. “So they’re not interfering with our regular clientele that are there for phone orders or online orders that they have picked up. Because traffic can get heavy sometimes.”
Convenience … But at a cost
Since revving up in Reno in September 2017, UberEats, for example, has seen its weekly deliveries increase more than four times and its restaurant base grow by 150 percent, an UberEats spokesperson told the NNBV.
“Uber Eats provides new economic opportunities for every restaurant partner by offering a reliable turnkey delivery option, effectively expanding their capacity and reach to be able to service a whole new network of potential customers and a significant additional revenue stream,” UberEats said in an email to the NNBV.
Catering to the at-home diners comes at a cost for restaurants, though. Online and mobile food-ordering companies take a percentage of the order. GrubHub charges between 12 percent and 24 percent commission on food orders. Meanwhile, UberEats takes a 30 percent bite of the check, according to a New York Post report.
For this reason, restaurants like Homegrown Gastropub in Midtown — whose owner, Spencer Shea, pulls no punches when giving his take — have not given in to the delivery demand.
“It’s not even worth it. If I’m selling a burger and fries for $14 and they take $3 off of it, I’m not making shit,” he said. “I think it’s good for marketing to get your food out there, but for the restaurant, it doesn’t make sense, really, because you’re not making any money.”
To that end, Estee said, for Liberty Food & Wine Exchange, partnering with mobile food companies is an “amenity” for his costumers, not a boost to the business.
“It’s not going to really drive our business,” Estee said. “You might see it more on the revenue side, not necessarily the profit side. As long as it’s not cannibalizing the business, it’s really good to be involved in it. It’s kind of name recognition and people understand that you’re a restaurant that’s ‘with it,’ if you will.”
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.