Restaurant Delivery Is Harder Than You Think

Logistical complexity may dtermine profitability, but it is not the customers' problem - and their perception of service quality rules. JL

Dan Frommer reports in Re/code:

15% of retail shopping already happens online, but only 5% of restaurant spending.“It has to be fast. It has to be high quality — meaning hot or cold, appropriate. It has to hold up in the container that it’s coming in.” If you can deliver a cheesecake in proper shape, or a burrito hot, you can deliver anything — any size, any shape, any distance. The ambition of the company to become the last-mile logistics provider, in any city, goes very far.

Want to appreciate the logistical complexity that goes into some restaurant delivery scenarios?

Here’s DoorDash founder and CEO Tony Xu explaining — at our Code Commerce event Tuesday night in Las Vegas — what goes into delivering food for his partner, The Cheesecake Factory, in just one San Francisco location:

“It’s on the fifth floor of Macy’s of a Westfield shopping center. We had to figure out how to get a dedicated parking spot for the [delivery] Dashers. We had to figure out how to take a special access elevator so that the Dashers can quickly get to the right spot. We had to figure out how to collate food from the bakery, the expo’d food center, the kitchen, as well as the drinks center. And we had to do it all just for that one location.

And then after that order, we have to dynamically figure out all the adjustments: If you added avocado to your toast, or whatever it is that you like to do to the order.

To make that one order happen, lots of details have to go right. It’s not just no longer working with fax machines. We have to integrate into all of the systems — the front end, the kitchen, as well as the back end. And once we get that right, we report out on that and we make it better.”

And his partners — especially big ones like The Cheesecake Factory, whose president David Gordon joined the conversation — are paying attention.

“It has to be fast,” Gordon said. “It has to be high quality — meaning hot or cold, appropriate. It has to hold up in the container that it’s coming in.”

“So that slice of cheesecake,” he said — pointing to a slice of cheesecake that Xu delivered onstage to Recode Executive Editor Kara Swisher — “is a perfect example.”

“It should look like that when it shows up at your door. It shouldn’t be sitting on its side, it shouldn’t be upside-down. It should look like the value that it is. All of that is very important to us.”

Both executives spoke of the opportunity that high-quality delivery could represent for the industry. Some 15 percent of retail shopping already happens online, Xu said, but only 5 percent of restaurant spending.

Which brings us to DoorDash’s new $535 million funding round, led by SoftBank. What’s it for? Xu wouldn’t say if DoorDash was about to go shopping for a big acquisition, such as Postmates, but said DoorDash would be nearly tripling its coverage to 1,600 cities across the U.S. and Canada, up from 600 last year.

And the round “does match the size of the opportunity and the ambition that the team has,” he said.

“If you can deliver a cheesecake in proper shape, or a burrito hot, you can deliver anything — any size, any shape, any distance. The ambition of the company to become the last-mile logistics provider, in any city, goes very far.