It’s been a slow recovery for restaurants since the recession. Average profit margins are slim, ranging from three to five percent. Recent growth in the industry has come mainly from what’s known as off-premises sales — food going from their door to yours.
“When one looks at all restaurant industry traffic today, three-quarters of that traffic is off premises,” says Hudson Riehle, senior vice president of the National Restaurant Association’s Research and Knowledge Group.
If you’re craving a Chili’s Southwestern BLT or Santa Fe chicken quesadillas, the restaurant chain now has hundreds of locations across the country that will bring that meal directly to you.
Riehle says takeout and delivery is growing mostly because consumers have more money to spend on meals. And they’re busy.
“So there really is a confluence of events in that consumers have a heightened demand for convenience,” he says.
The drive-thru doesn’t quite cut it anymore. Burger King, for example, is expanding delivery service. Company officials say smartphones have completely changed the notion of “having it your way.”
Burger King has a $10 minimum for delivery. Chili’s minimum? $150.
That’s because people usually skip high-profit items like soft drinks and alcohol. But the company is making up for it, says Edithann Ramey vice president of brand marketing for Chili’s.
“So it’s the alcohol we miss, but again, we’re making it up because it’s, I mean these orders are much larger than even the $150 minimum, so it still becomes a nice sales jack,” she says.
Still, so many things can go wrong
“You may drive 20 minutes before you get to the house, and that food’s just been sitting for 20 minutes,” says Todd Barrios, who teaches hospitality management at Stephen F. Austin State University and previously worked in restaurant management.
For one thing, he says, delivery drivers need more insurance. And then there’s the issue of food quality.
“The freshness and heat may not be there as it is if you were to go to that place in a sit-down environment.”
Barrios says all it takes is one bad experience with a restaurant, and customers can be turned off for good.
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