By Laura Pratt
The Challenge
When Restaurants Canada asked its members in a recent survey whether they wished they had fewer seats in their restaurants, a startling 25 per cent said yes (with about 43 per cent of operators with 200 or more seats to fill expressing this wish for fewer seats). This, says Chris Elliott, Restaurants Canada’s chief economist and VP of Research, suggests that, as on-premise dining has not fully returned post pandemic, off-premise foodservice, such as labour shortages, will persist. More than that, it indicates that these operators know they’re not getting enough people in their restaurants and are anxious to do something about it.
It’s a reflection, he says, of their understanding that, while we’re closer to pre-pandemic restaurant traffic, we have yet to reach it. People have simply gotten too used to pandemic habits, such as picking up food on the way home, eschewing out-of-office lunch breaks and post-work confabs, and generally eating at home more often. “The industry is re-balancing,” Elliott says. “We may be ordering as much food in terms of sales dollars, but it’s shifted a lot beneath the surface, and that’s putting financial pressure on operators.”
Enter food-delivery systems, the powerful not-so-new player on the foodservice landscape that is either a boon or a threat to restaurants, depending on where you sit.
Full-service restaurant patronage is still 30 per cent above what it was prior to the pandemic, says Restaurants Canada data, while on-premise dining remains about 10 per cent below. Achieving a balanced existence in the company of foodservice-delivery systems is an incontrovertible reality, Elliott says, but operators shouldn’t demur in their efforts to attract customers to their dining-rooms, where frills such as alcohol and appetizers promise boosted sales compared to those that might take place virtually.
George Wensley, the long-time proprietor of Leslie Jones, an eclectic 90-seat neighbourhood restaurant that opened in 2006 and closed in 2023 in Toronto’s Leslieville neighbourhood, says it was the physical inconvenience of having to fold these food-delivery operations into his own that turned him off the concept. “Someone would place an order with Uber Eats and I would say it’ll be 20 minutes and there’d be someone standing at my bar five minutes later. We were a small, intimate restaurant, and having this guy there waiting for his order, crowded in against our regulars, gave off a bad vibe.”
In fact, Wensley resisted signing on with these systems for a long while, finally capitulating in the face of a high-pressure sales push in 2018. But from the start, he was not a fan. In addition to the physical inconvenience of their presence in his tight space, he resented the huge nightly bite they took from his sales — equating it to one employee’s wages. Combined, he says, these factors so turned him off the idea that he bailed on his one contract soon into signing it. “You’re talking about profit margins and the potential of maybe injuring your regular dinner service and having regulars who may not return because of having to wait for their food and having to deal with all these takeout containers. It was not worth whatever potential extra money I may have made.”
The Opportunity
Individual restaurateurs’ take on the third-party delivery concept notwithstanding, food-delivery systems are here to stay, says Vince Sgabellone, a foodservice industry analyst with Toronto-based Circana. “The consumer is demanding them, and it’s up to the restaurateur to decide if they’re right for their business, but the trend is seeing more people eat restaurant foods outside of restaurants.”
These aggregators have tremendous potential to help restaurants in their quiet times. Case in point is Domino’s recent partnership with Uber Eats in the U.S. One of the largest delivery brands teaming up with a third-party aggregator extends impressive credibility to the third-party aggregator, cementing its place in the foodservice space.
The Fifteen Group’s David Hopkins’ says food-delivery systems aren’t a bad development for many restaurants. “If you’ve got excess capacity and you’re not busy-busy, go for it. While the contribution margins to your profits are lower than if someone came into your restaurant, you’re still making money off it. In my mind, it is a good thing.”
Total on-premises volumes dropped from 42 per cent share of the foodservice market in 2019 to about 35 per cent today. It’s creeping up slightly, Sgabellone says, “but off-premises remains elevated and it’s going to stay there. My message to the industry is pick your lane, stay in it, and execute in it better than anyone else. If you want to be the best eat-in restaurant and don’t want to bother with off premises, good, just do it better than anyone else. Or if you want to close your dining-room and just do delivery, great, but do it better than anyone else.”
“We’ve come to accept that the foodservice-delivery systems are the reality,” says Elliott. “But no one should give up encouraging people to visit restaurants.” He cites perks such as trivia nights, wine and beer tasting, and other initiatives to draw would-be customers away from their Netflix couches and remind them why they want to be at restaurants. “I feel like operators are paying attention to that and that there’s innovation on that front.”
When the pandemic hit, Wensley briefly considered revisiting food-delivery systems, but ultimately steered clear and instead introduced his own delivery service — free for orders over $200. “That was great, and I didn’t have to give any of it away.”
Similarly, new organizations will manage a website and app for their own brand, reducing restaurant commission and sidestepping pricey third-party delivery platforms. This fringe idea that is growing quickly also allows restaurants to enact promotions that sweeten the deal for the customer, such as discounts for ordering directly from their website.
