Digital Commerce: Delivering Disruption

E-commerce is affecting more than CPG sales—it’s changing the face of foodservice

Restaurant-Free Restaurants

Another disruptor at play is the rise of restaurants built purely for the purpose of delivering meals—with no dining room or even a walk-up counter. The food is ordered via mobile app and cooked in a commissary-style kitchen. Sprig, Maple and Munchery are among the delivery-only concepts popping up, and equity firms and big-name backers are pouring millions of dollars into the movement.

“They’re not working yet,” says Gagan Biyani, CEO of Sprig, which recently received $45 million in funding from backers that include former White House chef Sam Kass. “The business model is still unproven. There’s no reason to believe this will or won’t work.”

The uncertainty isn’t worrisome to tech veterans such as Biyani. “As Internet entrepreneurs, we bet on things that have a 10% to 20% chance of succeeding; but if they do, there’s a big opportunity to make an impact,” he says.

And yet despite all this push toward delivery, consumers are increasingly dining in, according to NPD Group. A recent report from the Port Washington, N.Y.-based firm found that dine-in restaurant visits increased by 1% in the year ending May 2015; the number of to-go orders remained flat.

The rise in on-premise dining was particularly strong for quick-service restaurants, which saw a 5% increase in customers dining in, according to NPD. This could reflect the strength of the fast-casual market, which by nature lends itself to dining in. But even those players are trying to capitalize on convenience with mobile ordering, drive-thru and, yes, third-party delivery.

The growth of third-party services gives even c-store retailers the opportunity for delivery without the investment in infrastructure. The threat? If you don’t act on what Niccol of Taco Bell claims is the biggest consumer demand today, you could be giving restaurants one more way to steal a meal occasion.