Dive Brief:
- Over a third of adults in the U.S. and half of millennials are more likely to order food for delivery compared to two years ago, according to a report from CBRE Group.
- Further, third-party delivery service is claiming a growing share of restaurant delivery sales. In 2019, third-party sales are expected to comprise 58% of all delivery and will increase to 70% by 2022, up from 37% in 2016.
- The report also predicts that delivery-only ghost kitchens will become a primary growth vehicle for restaurant delivery platforms.
Dive Insight:
These off-premise trends are why some industry leaders, like Modern Market founder Anthony Pigliacampo, consider delivery to be the "new drive-thru," according to the report.
That doesn't mean the drive-thru is going away, however. In fact, it's growing. Another recent report from the National Restaurant Association and Technomic finds that the growing demand for off-premise dining includes the drive-thru and takeout channels as well. Off-premise sales now account for 60% of all foodservice occasions, and compared to a year ago, 39% of customers have used the drive-thru channel more; 34% have ordered more delivery; and 29% have ordered more takeout, according to the report.
As such, plenty of chains have revamped their restaurant designs, with more units adding separate areas or entrances for meal pickup, while some brands are rolling out drive-up windows for mobile order pickups. To meet the growing demand for takeout orders, Starbucks and Chopt both recently opened pickup-only stores in New York that let customers order in advance on their phones and pick up their orders without the wait.
All of this also explains why the CBRE report predicts that traditional restaurants will change their layouts to provide more space for delivery and pickup areas to avoid congestion without compromising the dine-in experience. Cava and Chipotle, for example, prepares pickup orders on a separate side of the kitchen with second makelines.
Also on the delivery front, ghost kitchens are expanding rapidly and are expected to continue doing so, according to the CBRE report. The report points to Kitchen United's plans to open 400 spaces with more than 5,000 individual ghost kitchens within the next four years as an example of this growth. Chick-fil-A, Sweetgreen and The Halal Guys and Wetzel's Pretzels have all leveraged this Kitchen United expansion.
Michael Schaefer, Euromonitor global lead for food and beverage, recently told Restaurant Dive that formats like virtual kitchens and drop-off points will be crucial assets needed to compete in the future of delivery. Perhaps that's why plenty of investors are opening their wallet to support the space. Kitchen United recently received $40 million in funding from a real estate company to help its growth in the New York and New Jersey area. In addition, former Uber CEO Travis Kalanick's CloudKitchen concept gained $400 million in January to help with its expansion, and Virtual Kitchen has garnered $15 million in funding so far.
With such an abundance of changes, not just with restaurants' physical space but also for the technology that enables off-premise business, funding like this is a necessity, and not just from investors. According to the National Restaurant Association, 70% of quick-service operators plan to invest more in technology. All of this explains why Hudson Riehle, senior vice president of the association, said what constitutes a restaurant is changing.
"Timing-wise, this is definitely a tipping point for the emergence of essentially a new business model for certain restaurateurs," he told Forbes.
