Incrementality, margins, cannibalization and the true impact of third-party delivery on a restaurant business can become to be tricky math really fast. And that math is essential to move from testing the waters of third-party delivery to learning to swim.
So to get a deeper look at the impact of third-party delivery, Sense360 unveiled Delivery IQ, a product dedicated to matching operating results with broader industry data. CEO and co-founder Eli Portnoy said it was designed to offer clearer insight than looking at the profit and loss statement alone.
“Leveraged correctly, third party delivery services can drive incremental revenue lift. Restaurants need–and deserve–clearer insight into the performance of these services and the impact on their businesses,” Portnoy said. “That’s why we developed Delivery IQ and are so thrilled to share its powerful, real-time monitoring and analysis capabilities with the market.”
Already, the data has shown some notable results. He said the system showed that more than half, (52 percent) of third-party delivery orders replace in-person restaurant visits. That’s almost twice as much as consumers report in surveying.
To get to numbers like that, he said Delivery IQ taps into a huge amount of data outside the four walls of the restaurant, including location and visit and traffic data, credit card data and consumer surveys to get a clearer picture of industry trends.
“If you just have one data set, it’s not actionable,” said Portnoy. “When you get really specific about the questions, that’s when you can take action.”
By having the data, he added, there are near endless questions that can be answered, but a few questions have already proven valuable to early-access users.
For instance, “brands where late-night is an important day part you need to be working with Uber Eats, they’re one of the few that are open late and have a demographic that uses late night,” said Portnoy.
It can serve as a nice barometer check against the industry at large too.
“Some are clearly over indexing on delivery and some are under indexing,” said Portnoy. “If you’re over indexing that’s great, that means the delivery piece is going really well. If someone is under indexing there’s a lot of opportunity to get better integrated with a third party delivery.”
And getting to the actual incrementality of a restaurant’s third-party orders is something just about every restaurant operator wants to figure out. And it’s unique to every brand and location. While orders are replacing restaurant visits 52 percent of the time according to the data, the dollars may still be incrementally higher.
“The person who is using third party is ordering at such a higher dollar level, the net result of what I spent versus what they spent is higher. So they are spending more even when you adjust for fees and the margin hit, it still looks incremental,” said Portnoy. “I think the thing that’s really interesting to me about it, incrementality can be defined in a lot of different ways. One of the things I think you need to do is look at it in a lot of different ways.”
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