Ask two independent operators how to approach third-party delivery and digital off-premises operations and you’re bound to get five answers. That rang true during a Food On Demand Conference panel titled Case Studies from Independent Operators.
Moderated by Hanson Li, the renowned San Francisco restaurant owner and founder of San Francisco-based Salt Partners who’s working a lot on Chinese concept Lazy Susan these days, the panel was packed with novel insights from four savvy and very different independent operators. Joining Li were the co-founder of Zingerman’s, Paul Saginaw; CEO of Original ChopShop Jason Morgan; Kim Bartmann, CEO of the multi-concept Bartmann Group; and Charisse McGill, founder of Lokal Artisan Foods.
Li said he was at the bleeding edge of delivery in San Francisco and it was exceptionally confusing in those early days.
“People were coming in and ordering sundaes to go, I was so confused, like ‘just eat it!'” he joked. “But they were Postmates drivers delivering these.”
He, like the other panelists, figured out a way to not just cater to those confusing customers, but enhance the business along the way. Here are five actionable tips for independent restaurant operators—and everyone else.
Differentiate and bring them in
Kim Bartmann went to heritage grains for all her pasta back in 2019. And when the world imploded in 2020, she said that made her stand out from the crowd in delivery, and helped keep the proverbial lights on at her hardest-hit restaurant, a date-night and brunch beacon, the Red Stag Supperclub. She crafted a whole new brand in the back of house.
“We used the same ingredients to create an Italian brand [cooked] out of Red Stag, it was only a few menu adjustments, so training was easy,” said Bartmann.
She said it wasn’t just a virtual brand though, while she was “obsessed with how you put hospitality in the bag” she said one thing that has resonated are monthly popups for the new cohort of heritage pasta fans. She redecorated one of the Red Stag’s private party rooms with an Italian theme to give those customers a place to experience the food they love via delivery with high-touch service to extend the brand online and off.
Mark it up, way up
All the data shows that when someone wants delivery, they’re willing to pay for it, so let them.
Jason Morgan said they are not shy about an aggressive markup on third-party platforms.
“If you’re not marking it up with a surcharge, you need to be. We’re covering 100 percent of our fees with a markup,” said Morgan. “We’re at 25 percent in one brand and 30 percent in another and nobody complained. If they do, I can tell them they can order from me. Don’t let the fees keep you out, there’s elasticity in the price today.”
Make first-party extra enticing
Morgan said even at cost parity, he sees the platforms as marketing. All of his direct marketing, however, pushes people to use his first-party system built on Olo. Perks like aggressive discounts push people to his app.
“We spend a lot of time in our business making sure our digital business is aligned with our overall business. All our marketing pushes require you to use the app,” said Morgan. “So, load $50 in the app, and through January you’d get $3 off every visit. Once it’s in there they come and spend it.”
Lean into platform plays
Charisse McGill founded Lokal foods in 2018, just as the off-premises world was exploding. A few months after she quit her cushy day-job, she was making as much selling tasty French toast bites and doing a ton of delivery.
She and a local brewer teamed up to create French toast beer, too, which grabbed the attention of Gopuff—snacks and beer, that’s the core business of GoPuff.
“Gopuff, they’re our biggest sales channel,” said McGill.
The company brought her and her bites down to the massive music and tech festival South by Southwest. By leaning in with the company, she’s in constant rotation in Gopuff marketing, which is always a nice boost.
“Anytime they put my face on the screen, our sales go through the roof,” said McGill.
Keep it local
While Paul Saginaw has a massive mail-order business selling candy, snacks, high-quality ingredients and bread from Zingerman’s, he’s all about keeping delivery local. He’s currently exploring delivery co-ops as a way to extend delivery, which his company currently does internally within a three-mile radius.
The company has quite a heritage of supporting the local community, so he said he wants to keep that a key part of the new brand he’s starting in Las Vegas, Saginaw’s Delicatessen
“I think that’s a really wonderful alternative, to take something and keep it local so all the money from delivery stays in the community. You can have a really vibrant local economies staying in the community and keeping that local control,” said Saginaw.
