Dive Brief:
- Focus Brands has added a 35-cent surcharge for digital orders, including pickup and delivery, across its brands, which include Auntie Anne's, Cinnabon, Jamba, McAlister's Deli, Schlotzsky's and Moe's Southwest Grill and Carvel, according to Restaurant Business. The surcharge took effect on Monday.
- McAlister's Deli customers have expressed frustration over Focus Brands' higher prices for digital orders on Twitter. "Watch your receipts. Now we all know what happened to this loyal customer," one woman tweeted. The sandwich chain has said on Twitter that the surcharge was added to improve the "online ordering experience."
- Adding this surcharge is likely one of Focus Brands' solutions to both meet consumer expectations for convenience and insulate operators from the burden of technology costs while they navigate lost business due to COVID-19 disruption.
Dive Insight:
Focus Brands is private, so it's hard to tell just how deeply the company has been impacted by the pandemic. But in March, the company furloughed at least 100 members of its corporate staff. Auntie Anne's, Cinnabon and Jamba also have a heavy shopping mall presence, and the company has been looking to expand further outside malls. Around 15% to 17% of U.S. malls may soon need to be redeveloped for other uses because they are becoming unviable as shopping centers, according to a Barclays Capital report.
Even beyond pandemic pressure, online ordering can usher in additional costs for restaurants. Delivery fees through third-party vendors can range between 15% and 30%. Those third-party vendors also charge marketing or payment processing fees, and those charges add up.
Digital ordering has become a consumer expectation, with 82% of diners ordering food directly from a website or app in 2020 versus 51% in 2019, according to Toast data. Adding technology infrastructure to accommodate this demand, whether in-house or through a third-party, requires an investment. And finding additional cash for such investments is hard to come by in a crisis environment.
"As consumer behavior in our restaurants shifts toward a digital experience, our brands must make sure we have the right infrastructure in place to ensure our guests/customers receive a seamless brand experience," Dawn Ray, senior vice president and brand communications at Focus Brands, told Restaurant Business.
What could be challenging for Focus, however, is how diners will react to being charged more for pickup orders long term. Customers have grown accustomed to upcharges on delivery, but may balk at paying more to still collect their food themselves.
