Dining In is the New Dining Out
As more people order meals delivered, foodservice supply chains chow down on speed, quality, and safety.
Not too long ago, the only meal most people could get delivered was pizza. But today, consumers in major metropolitan markets can get anything from sushi to pierogies delivered to their home or workplace.
Dining in is the new dining out, reports Cowen and Company. Restaurant meal delivery will grow from $43 billion in 2017 to $76 billion in the next four years, according to the firm's estimates. Cowen attributes much of that growth to an increase in online orders, which it says will account for three-quarters of delivery orders by 2022.
The secret ingredient is technology, which makes ordering meals from a smartphone as easy as tap, tap, tap.
At the same time, meal kits—think Blue Apron, HelloFresh, and supermarkets—became a $5-billion business in 2017, according to Packaged Facts, a market research company.
While each of these expanding order-in culture segments impacts the food supply chain differently, transportation and food quality are significant factors for both.
Because the meal kit delivery market relies on fresh ingredients, speed from farm to consumer is essential. Companies expedite delivery and reduce transportation costs by zone skipping from strategically located food prep centers, says Geoffrey Milsom, senior director of transportation solutions at enVista, an Indianapolis supply chain consulting firm.
"They ship the kits from fulfillment centers in line-haul refrigerated truckloads to the destination parcel terminal to save both time and shipping costs," he says.
"Those businesses with enough purchasing power will influence their suppliers to push for tighter delivery window agreements, too," adds Peter Shin, director of North America pre-sales at Quintiq, a Dutch company that develops planning, scheduling, and supply chain optimization software.
You Must Be Kitting
Meal kit companies must also be able to trace ingredients from the source to individual kits to ensure customers are notified quickly when food quality issues arise.
"Meal kit companies not only need to know who received problem ingredients so they can notify them, they also need systems in place to identify any bacteria or contamination problems before the food even gets added to kits," says Robert Sproule, director of food and customized audits for Bureau Veritas, a company that tests, inspects, and certifies food around the world. That can be a challenge for smaller farms supplying kit companies.
Restaurants responding to the increase in delivered food must also consider food quality and safety. The two biggest restaurant delivery challenges are sanitation and temperature control.
"The person delivering food to your home might be an expert in transporting people as an Uber or Lyft driver, but not in delivering food safely," Sproule says.
That's why deliveries need to be packaged properly—which usually means not using the leftover containers provided to in-house diners.
"Leftover packaging is for food that you're taking home to be consumed later," says Josh Oleson, vice president of packaging development and innovation at HAVI, an Illinois-based company providing supply chain management services that include packaging design. "Delivered food is meant to be consumed warm, so it needs a package that's specially designed to retain the product quality at its freshest level."
To protect both the brand and diners, "Drivers should be empowered to take the food back to the restaurant if there has been a contamination problem or it can't be delivered quickly enough to be safe," Sproule says.
Not So Dedicated Deliveries
That's not realistic yet, though. Unlike the old-school pizza delivery operations, platforms such as Grubhub, UberEats, and DoorDash that connect customers with restaurants don't have dedicated delivery teams. They all draw on the same pool of freelance drivers, who often also transport other merchandise and people.
"I was recently in a Lyft car and noticed the driver had three phones, each open to a different app—Lyft, Uber, and Grubhub," says Roei Ganzarski, CEO of asset optimization company BoldIQ. "The driver told me he monitors all three simultaneously and picks up the next job from any one of them, depending on which direction he's heading."
Ganzarski advocates for a dedicated delivery team paid by the restaurant—the Panera Bread Co. approach—or by a third-party service that delivers nothing but food.
"Companies that want to provide consumers with a true door-to-door service must control and handpick the drivers and train them to a brand," he says. "The difference is that the emphasis is on protecting the brand and timing the delivery rather than just getting the meal there."
BoldIQ is providing start-up food delivery companies with a software solution that optimizes the use of a network of delivery drivers and their routes in a way that yields a 25 percent efficiency increase. When using the company's technology, a driver might pick up orders at one restaurant and deliver just one of them before picking up more orders according to the optimized schedule, all while maintaining delivery integrity. Pickup and delivery flow is determined by locations, when the orders will be ready, and the overall integrity of the delivery.
Another solution is a whole new take on how and where restaurants prepare meals. Entrepreneurs are starting to bring several restaurant partners under one roof for meal preparation and delivery only. The kitchen facilities are strategically placed according to consumer demand and easy access for delivery people.
Checking the Forecast
The changing consumer behavior in how and where people enjoy their meals is also forcing companies to get even better at forecasting demand.
"Ideally, we have enough data to segment regionally and offer what is popular for that market. This forecast directly impacts the purchasing plans and supply logistics to ensure product availability," says Shin.
Supply chain transparency is a must.
"Consider shelf-life, perishability, and cold chain refrigeration requirements and this becomes an incredibly complex puzzle with high impact penalties for mistakes," he adds.
While some might crave the simplicity of the pizza delivery model established decades ago, those days are gone.
"The foodservice segment is beginning to see the impact of omnichannel distribution in the same way that electronics and fashion have," explains Bernard Goor, vice president for consumer goods, retail, and food service at One Network Enterprises, a Texas-based cloud supply chain services provider. "Food orders can come to the kitchen from the waitstaff or by phone, web, or an app. In some cases, those orders can be fulfilled from more than one location, too."