How Restaurants Are Coping With Increased Food Delivery

Restaurants have become a central pillar of the retail market, and in many ways helped to save retail loss as a result of ecommerce. But, now, restaurants are seeing their own ecommerce-like disruptor. The rise of food delivery services are impacting the retail experience and forcing restaurants to find ways to balancing physical and virtual customers, just like brick-and-mortar retailers have done.

“People are now more inclined to use food delivery services,” Motti Farag, senior associate at CBRE, tells GlobeSt.com. “The challenge for restaurants is balancing the needs of the customers that are in the store and the delivery customers. Sometimes, delivery activity can ruin the experience for people in the store. Now, restaurants are starting to use back-of-house just for food delivery service so that the in-store experience isn’t compromised.”

This trend is really the restaurant-version of ecommerce disruption, and restaurants are seeing the necessity to balance both customers. “It is connected to ecommerce. We are now seeing that ecommerce is helping brick-and-mortar, and we are seeing the same thing in restaurants,” says Farag. “Restaurants are providing a customer experience in different ways, whether it is going out or staying in. Today, retailers are really looking at how to get to customers multiple avenues to reach their business.”

Ultimately, tapping into both online and brick-and-mortar aspects of the retail business, whether a boutique or restaurant, will help drive revenue. “Whether or not people are actually going in store, you are still allowing people to have some type of relationship with these restaurants. This is another way that restaurants are able to hit their sales,” says Farag.

In the long run, restaurants are going to remain an essential part of a successful retail center. “We are seeing restaurant activity continue to grow, and restaurants are becoming the anchors of retail centers,” explains Farag. “Restaurant concepts are really driving people to retail centers, and from there, the neighboring tenants are starting to see increased foot traffic.”

As a result, restaurant rents are increasing as well—meaning that restaurants are going to need additional ways to drive business. “Restaurant rents are continuing to climb as it relates to A-quality real estate, both within a trade area as well as within a center,” says Farag. “Some restaurants, however, even with horrible locations are seeing success. It really shows that if you are giving customers a good quality experience and a good quality product, they will find you.”