What are we doing again?
What are we doing again?
The latest conversations about restaurant growth aren't about restaurants.
There was something notably different about lots of restaurant and restaurant-adjacent companies’ earnings calls this season: company execs weren’t talking about… restaurants. At least not in the traditional sense.
They talked about groceries.
DoorDash’s grocery business, which it’s spent the last few years building, is up. In fact, more new customers are coming to the ordering and delivery app for things that aren’t restaurant food.
“Already outside of the restaurant category, we attract more new customers that are ordering from these non-restaurants for the first time in the industry than any other platform," DoorDash CEO Tony Xu said on his company’s call.
The company says it has 100,000 retail stores on its app, which it redesigned around the expanded offerings two months ago.
This interest in grocery isn’t limited to mobile apps. The Wall Street Journal recently reported on renewed efforts by grocery chains to sell more prepared food, competing with restaurants. Grocery execs see opportunity as restaurant prices grow and operators face labor shortages, they say. Per the WSJ, dollar sales of prepared foods grew just over 8 percent in the last year, though “units sold” remained about the same.
They talked about food that’s designed to pull diners from the convenience of grocery.
Leaders of big-brand restaurants say the businesses are adding new food offerings — things they say can’t be replicated at home, which I find sort-of questionable when we’re talking about melted cheese on top of a burrito like Taco Bell is — in order to swing customers in their favor.
But their other recent efforts feel decidedly un-restaurant-y. For example, quick service chains from Burger King to Sweetgreen are designing new businesses around cars, not diners, adding or expanding drive-thru capabilities.
“Americans are eating their burgers, fries and nuggets at home, in their cars and at the office—increasingly anywhere but at the fast-food restaurants themselves,” reads an August 7 piece from the WSJ.
That means stores — I mean restaurants — can exist with much smaller footprints than they used to. Taco Bell has stores dubbed “go mobile” locations designed around cooking food for delivery drivers and app-based orders, reducing wait times. As a bonus, the company’s franchisees, the people and companies that own and operate the physical restaurant locations, love the smaller footprints in part because they’re cheaper and easier to maintain.
They talked new concepts.
Customers can also ditch the concept of a store or drive-thru lane all together. Starbucks has long found a home inside Target stores across the country; now thirsty car-bound shoppers can add a latte (or whatever else) to their Target pick-up orders to be hand-delivered by a Target employee. (As Insider notes, employees have voiced concerns about the viability of juggling bags of groceries and other items with a tray of hot beverages while crossing a busy parking lot.)
The goals here are understandable: find more customers, and sell them more things more frequently. But in order to work in the year 2023, it all has to happen at scale, which seems to equal constant growth outside the four walls of a “traditional” restaurant.
They talked partnerships.
Last week, execs from restaurant tech giant Toast spent much of their earnings report extolling a new partnership with Marriott that puts Toast point of sale systems inside restaurants at Marriott’s “select” hotel brands: Moxy, Four Points, Aloft, and others. The company’s chief operating officer described the Marriott deal as a way to help the company “break into” enterprise businesses — that is, those lucrative deals with big corporate brands that Toast has been chasing for years.
I understand that all of this reads like a list of boring business development. But it also signals evolving consumer preferences and expectations. Convenience, yes, but also multiple offerings, time-saving combos, and not having to get up, ever, from where you’re sitting.
