Nation's Restaurant News: How brands enhance off-premise platforms

View full article here 

Foodservice industry executives met during the NRA Show, held in Chicago in May, to discuss off-premise trends at a Beverage Roundtable sponsored by Whirley DrinkWorks.

The conversation focused on strategies to drive off-premise sales and covered such topics as third-party delivery partnerships, operational changes and how to protect the brand and customer experience. Here’s a look at how six restaurant executives are approaching off-premise business at their companies.

Participants were:

• Laura Rea Dickey, CEO of Dallas-based Dickey’s Barbecue Restaurants

• Brian Farris, vice president of operations at Austin, Texas-based Schlotzsky’s

• Ira Gleser, vice president for industry relations for Warren, Pa.-based Whirley DrinkWorks

• Ed Keller, director of off-premise business development at Dallas-based Corner Bakery

• Jackie Kurkjian, senior director of off-premise at Dallas-based Fiesta Restaurant Group Inc.

• Gracie Prasanson, director of sales at Beaumont, Texas-based Jason’s Deli

• Brianna Schmaltz, former senior direct of catering at Lakewood, Colo.-based Coffee & Bagel Brands

• Ron Ruggless, roundtable moderator and senior editor at Nation’s Restaurant News

Ron Ruggless, NRN: How long have you been in your positions, and how are your brands approaching off-premise sales?

Gracie Prasanson, Jason’s Deli: I've been in my role as director of sales for about the last eight years. I've been with Jason's Deli for 19. Our approach to off-premise right now is we've been doing that for a long time, so we are going to continue to keep it in-house.  We've done some tests with some third-parties probably about two years ago and we've decided it's best for us to go ahead and continue to keep it in-house and continue delivering ourselves. 

Ruggless, NRN: What percentage of your sales are off-premise? 

Prasanson, Jason’s Deli: 30 percent.

Ed Keller, Corner Bakery: I've been in my role for more years than I can remember. I was 21 years at Boston Market, a good part of that was as VP of catering and then moved on to … Which Wich to start a brand new program there. Now I've been at Corner Bakery for two months. Just catering alone is 25 percent of their business. They average $2.2 million per location, so that's some significant sales. They have not dabbled a whole lot in third-party. My position is brand new there, so I was brought on to kind of develop that whole third-party. … We’re also going to test internal delivery to see if that makes more sense.

Brianna Schmaltz (left), Coffee & Bagel Brands: I oversee the catering department for Einstein's, Noah's Bagels and soon to be Caribou Coffee. I say soon to be because we don't have catering or off-premise yet with Caribou. I've been with the organization a little over five years, been in this role for about a year and a half. Editor’s note: Schmaltz left the company since this roundtable took place. Our catering has some room for improvement in some brands and it's pretty well established in others. Our Noah's business is about 25 percent catering, Einstein's is 13, and we're really excited about Bruegger’s because we've got a lot of room to grow in off-premise.

Jackie Kurkjian, Fiesta Restaurant Group: I've been at Fiesta Restaurant Group for just one month and have been in this role as Senior Director of Off-Premise for about 16 years. I started at Boston Market. I worked for Qdoba for a short time, Potbelly, and then over to Fiesta where I am in charge of off-premise for Pollo Tropical in Florida and Georgia and Taco Cabana in Texas. And as far as our off-premise, they brought me onboard to start off-premise. They did a little bit of catering but haven't laid the foundation yet, so that's what I'll be doing.

Brian Farris, Schlotzsky’s: I've been with Schlotzsky's for five years. I've been in this role since December. Off-premise represents about 15 percent of our business, and we are looking to continue to grow in the catering space. We're all-in on the third-party delivery. We see that as an emerging marketplace and an opportunity for us to not only protect those occasions that may be moving to the home but as an opportunity to acquire new customers through that marketplace. We realize it's an evolving space.

Laura Rea Dickey, Dickey’s BBQ: I've been with the brand a little over 10 years, formerly in a CIO role, and we are approaching off-premise really as an extension. It has always been a part of our brand from a catering standpoint. In fact, that accounts for about 20 percent of our sales on a unit level and then overall about 18 percent for the brand. We are in off-premise really extending in the third-party space, that's been extremely important for us, and then we're piloting direct delivery, so we have about 12 percent of our units that are doing direct delivery as a pilot and have been for about several months. 

Ruggless: What are considerations for your brands in off-premise sales?

Farris, Schlotzsky’s: We have the potential to reach out to new guests who have not experienced our brand, and we need that product, that sandwich to be something that's going to make them inclined to come in and visit us in our restaurant, so it starts with the great product. You know, we're delivering to their homes, so accuracy is very, very, very important to us, making sure that they got exactly what they want, and then anything we can do to make it a little bit better, anything that we can do to differentiate in that space is better. So whether it's tamperproof on the packaging so that we're demonstrating that, hey, somebody didn't open this bag, you're the first person to get into it, nobody has been inside pinching your chips or anything like that. It is really important because we realize that it's a very flat marketplace, and it's easy to trade between one brand to another. 

Schmaltz, Coffee & Bagel Brands: We have to give our guests what they want, when they want, how they want, and order accuracy and on-time delivery are the top two priorities. We know we have quality product, so we're working on on-time and order accuracy. 

Keller, Corner Bakery: To me, it's ease of ordering. I call it confirmation communication. It's just that reassurance that, “Hey, we got your order, we'll be there, here's when we'll be there.”

Dickey, Dickey’s BBQ: Anything for us that's $100 or more, we define as catering, and so anything below the $100 mark, we're looking at that as off-premise or delivery.  And I would agree that it is definitely first and foremost quality, accuracy, packaging and then the communication touch point. That's something we've added to the experience, that order-tracking piece. They know they're not forgotten about from the time they place the order until the time they receive the order. … We're used to catering — the meats hold well for us, proteins are easy to travel, so those are all pluses — but it's the driver experience. It's making sure that that driver has the same experience as a person at our register or on our lines would have as the guest.

Prasanson (center, at left), Jason’s Deli: Ed had a good point, you really need a frictionless experience for your customer in the ordering process. … Those folks that you're delivering to a lot of times never enter your establishment, so how do you connect them to Jason's? We are big on quality, value and variety, and it's much harder to deliver the value piece on the delivery side of things. Free ice cream, the salad bar, the refills on your drinks, your delivery customer is not experiencing that, so I think that definitely can kind of be an obstacle for us on that side of the business. 

Ruggless, NRN: What consumer changes are you identifying that are driving them to delivery? 

Prasanson, Jason’s Deli: Everyone is mobile, people are communicating less. Even if you go into a restaurant, it's all kiosk or place your own order, so I think that the mobile side of things and just being able to do everything from your iPhone versus your computer, that's just changed everything.

Dickey, Dickey’s BBQ: Mobile has been an extension for us, an evolution of that communication with the guests. And where it's different is that Amazon.com world that we're living in, and that's how I think of it — that's what our guests expect of us.  And so it's how do I not commoditize our brand if they're on their phone and they differentiate the Dickey's experience from inserting another experience? So that's where we try with the mobile in particular to stay in this communication, absolutely add in additions into the packaging to try to simulate that experience.  

Keller, Corner Bakery: I think the Amazon effect has evolved the industry. People got used to sitting on their couch and ordering retail, so now they want to do the same with food.

Dickey, Dickey’s BBQ: Consumers have spent years building the outdoor decks, the expanded kitchens. … Coupled with the mobile on demand, the Amazon factor is really pulling them into their dining rooms instead of ours.    

Kurkjian, Fiesta Restaurant Group: Right, which for future restaurant opens, you're going to see the footprints get smaller because people are dining at home from their couch.

Keller, Corner Bakery: That's why people are considering ghost kitchens as well; it makes sense. 

Schmaltz, Coffee & Bagel Brands: I echo the technology changes for sure. With our business, 20 percent of our business comes in after 2 p.m. for the next morning. And that statistic grows, I think, with every generation.  Our customers want things now. You know, they want to be able to go on their phone and be able to order a bagel bucket and cream cheese in 30 minutes, and we up until recently have not been prepared to do that.

Kurkjian (center, at left), Fiesta: These third-parties are an extension of your brand. So if you are going to commit to working with them, you need to really engage and have a really strong partnership with them. You can't just pick 10. Pick a small few and have really good relationships that can cover your territory. 

Keller, Corner Bakery: I agree, and I see more willing to do that lately, to really work with you.    

Farris, Schlotzsky’s: On the farmed-out delivery, especially for catering, I think it depends on where you are on your efficiency scale like if you are at critical mass. Otherwise you have to invest very heavily and have lots of drivers available to be able to meet the demand because, as Brianna said, a customer wants it immediately; they want it now.

Kurkjian, Fiesta: I just want to add to that. That is one of the reasons why I'm looking at maybe doing hub restaurants so you can get to that a lot faster in a market if you have enough restaurants around to support it. 

Prasanson, Jason’s Deli: I will say in the third-party space, like you mentioned, we've been doing it for a long time, and I think for us it's a dilemma because we've already invested a lot of resources in growing out that side of the business; so when you have already invested in your own drivers, your own sales team, a department, how does a company explain investing in that route and investing in the third-party?  

The problem we find is that food on demand has really changed the consumer's expectation. Putting together an order for 40 people is a lot different than putting together two sandwiches and getting it out.  The consumers are now transitioning that expectation on the catering side of things like, well, I need this in 30 minutes. You're like, “Oh, okay, we're good at what we do, but we're not magicians.” 

Ruggless, NRN: What has been the highlight of off-premise sales at your brand so far?

Farris, Schlotzsky’s: We had an operator who was failing. They just recently had to close two of their stores, and they were failing at the third, and they needed help desperately. So we put together a catering program for them. … They went in and with discipline and vigor, they did everything we asked them to do and excelled at every point. What we found is their catering grew exponentially. They were doing tens of thousands of dollars more in catering. The real great thing about it was that catering drove in-store sales because as more and more people experienced the brand in their offices with their meetings. ... I think the power of this business is to be able to move the lever quickly and impact people.

Kurkjian, Fiesta: Just teaching them how to fish, I guess is what you would say, because they're operators and they haven't gone outside the four walls to do a lot of marketing outside of what the marketing department does. I think teaching the operators how to go out and canvass and who to look for, from what exactly to say, how to find the leads, that's a great experience because you're showing them something that's going to help them improve their sales, and they feel good about it. 

Schmaltz, Coffee & Bagel Brands: The addition of the Bruegger’s brand into our portfolio has been really exciting for us. The opportunity to grow Bruegger’s catering to the same level that we've been able to grow the Einstein's business is just a very exciting opportunity, and we've had the pleasure of growing double-digit sales percentage growth year over year in our catering business on the Einstein side.

Keller, Corner Bakery: My position didn't exist before, so the company is making a commitment that, hey, this off-premise role is important. But I inherited some delivery tests that were out there with various third-parties in different parts of the company, and all of them are showing a sales uptick, so I think that's positive, and I think that's what's getting a lot of people a little more excited about dabbling in that world. 

Dickey, Dickey’s BBQ: It's market share. That's how we're getting to and justifying that third-party is reach the customer, expanding that experience not only for the brand but at the individual unit level, and that's how we're looking at the third-party commission structure.  

Prasanson, Jason’s Deli: I would say our biggest accomplishment is just there has been so many people entering the delivery space and getting into our backyard, so to speak, and we've continued to hold strong. We're continuing to do things to look at enhancing the customer's experience, you know. … I think that's what I'm most excited about is how we are taking what other people are doing and putting that into our brand to continue to elevate that consumer's experience and stay relevant.

Ruggless, NRN: How much growth are you expecting this year in off-premise sales?    

Farris, Schlotzsky’s: The catering business we expect double-digit growth which is about where we're at today. The off-premise business is a little more tricky to see how fast it grows. We see a big honeymoon curve when a new location goes on with a new service, we'll pop up, you know, high teens, and then it kind of levels off over a six-month period.

Kurkjian, Fiesta: They're working on the sales goals. But how much growth the remaining of the year, I think that I can make a big impact in our sales in the last half of the year once I get some structure in place, but we'll see significant growth next year, double digits for sure. 

Schmaltz, Coffee & Bagel Brands: I would say double digits too. You know, on our Noah's business, it's more established, so it's probably 8 or 9 percent on the Noah's business; but when you get into Einstein's, double digits; and then Bruegger’s would be over 20 percent growth in the back half of this year from the catering perspective. 

Keller, Corner Bakery: Catering, 3 percent. Third-party, it's unknown right now. It's just so young.

Dickey, Dickey’s BBQ: For us, overall off-premise, double digits, 2 percent in catering because it's mature, but double digits in the third-party. Where we are evolving is — and I double-checked this number because I was surprised by it —we have 61 third-party vendors that we spread out across over 560 units because we have a great geographic spread, so we have the major players that we work with to cover the majority of our stores, but we have a lot of regionalized and localized players. I was surprised by the number of stores that have over 20 percent of their revenue in third-party.

Prasanson, Jason’s Deli: We're very established, so 3 percent. If I can be 3 percent up in delivery, that's good for us right now. You look at how many people are entering in the space, and, you know, you're already doing 30 percent of your business in deliveries, so for us it's that, and then just continuing to look for new channels in which to grow that off-premise outside of the third-party partnership.

Ruggless, NRN: How do you convert third-party customers to your own?

Dickey, Dickey’s BBQ: Communication. … We've evolved our packaging and messaging on the packaging to speak to that customer.  I find a lot of the third-parties that have restrictions on or supplement your brand packaging — different to-go meal kits, napkins, that sort of thing. We've evolved some of our core packaging that the third-party doesn't preclude to have messaging to the customer and to try to pull them in. They want to retain them as a third-party customer first, but if you put that type of messaging or offer or value-based pieces on the packaging itself, that's how you can work yourself into that cycle.