Chinese food delivery has a long history in the United States. There are more than 30,000 Chinese restaurants in America, a number that exploded during Nixon’s trip to China in the 1970s, but began to decline as the first generation of immigrants created and ran these restaurants took over. their retirement. Chinese food was one of the first foods to be delivered in America, and the Chinese takeout box is as synonymous with delivery as the pizza box.
With a long history of cost-effective, consumer-loved delivery, these restaurants have a lot to teach the rest of the market about how to deliver well. At the same time, new cuisine delivery choices, thanks to third-party marketplaces like DoorDash and UberEats, have made the delivery market more competitive for Chinese restaurants. While other types of cuisine may take inspiration from Chinese takeout, Chinese restaurants are also working to up their game to compete with newcomers.
The first advantage of Chinese delivery compared to third-party markets is its profitability. Without multiple different parties (platform, driver, restaurant) involved in the transaction, Chinese restaurants were able to profitably deliver food from the restaurant to the home at a reasonable price. What is the model that Chinese restaurants have so perfected that allows them to serve the delivery market profitably?
Of course, good food served regularly is the basis of any good restaurant. No amount of business model adaptation or technology will fix bad food. Chinese restaurants start with great food, then make it more easily accessible. Four major aspects make delivered Chinese food more profitable, efficient and effective compared to the current incremental approach to other culinary categories via third-party marketplaces.
1. Delivery-centric kitchens
The dominant form of Chinese restaurant takeout is off-premises first. Your favorite local Chinese restaurant may have no tables at all. If so, customers are rarely there. The restaurant is often found in older buildings and is usually quite small – around 1,000 square feet. In many ways, these restaurants were the first “ghost kitchens.” This small delivery kitchen, designed primarily for ordering and preparing Chinese food, makes much more financial sense than a large, heavily decorated restaurant concept at Main on Main.
Other restaurant categories are beginning to divide into on-premises and off-premises dining prototypes. Establishments focused on dine-in will do what they do best: create a great experience for guests choosing to go out for a meal. Off-premises locations will increasingly do what they do best: innovate for a better delivery experience.
Because Chinese takeout restaurants have always known the power of off-premises design, this is an advantage they maintain over other “omnichannel” restaurants – or those trying to be all things to all people. the world. As urban areas redevelop, Chinese takeout restaurants must resist the urge to embrace too many chains and complexity. They also must fight to retain their advantageous locations as their owners redevelop their shopping centers.
2. Restaurants are sized to serve a limited delivery radius
Chinese takeout restaurants are cheaper to build and operate than their dine-in peers. Because they are smaller and invest less in furniture, fixtures and equipment (FF&E), the initial investment is low. Without a front desk to operate and clean, labor costs are low. Together, these two factors enable profitability at lower average unit volumes (AUVs) than a dine-in restaurant needs to succeed.
It is extremely important for Chinese takeout restaurants to succeed with lower AUVs. Delivery times must be fast enough to fully utilize drivers (more deliveries per hour) and reduce time from cooking to consumer (time from order to delivery). “Windshield time” – time spent driving between pickup and drop-off – is time wasted. A restricted delivery radius reduces the time spent in front of the windshield. This restricted delivery radius means the restaurant cannot rely on consumers who live or work more than 15 minutes away. With fewer consumers to drive sales, sales volumes may be lower than those of a large catering restaurant. The business should cater to consumers who are within a short driving distance of the restaurant.
Once again, Chinese restaurants have mastered this aspect of the delivery business. By designing for lower expected volumes, they can be profitable without millions of dollars in AUV. A recent innovation in the digital age has been adding cuisine types to the main Chinese restaurant through virtual restaurant brands. These brands increase the frequency of consumers who live within the existing delivery radius by offering nearby consumers a greater selection of items than just Chinese food they only order once or twice a month.
3. First Party Order First
Chinese food delivery had a head start of several years. This means that consumers had an ingrained ordering behavior that spoke directly to the restaurant, with no third parties in between. Although ordering from third parties is an easy way to get online and can generate additional orders, it is essential that Chinese restaurants provide their existing fans with an easy way to order. This will allow first-party customers to continue ordering first.
Since Chinese food delivery was invented before the Internet, the ordering mechanics are done over the phone. Ask any American over 50 how they grew up ordering Chinese food, and they’ll tell you they called it quits. They might tell you they always do it. Even back then the phone call was very efficient, focused on placing the order and confirming a quick turnaround. Payment was initially made against reimbursement.
Chinese delivery has innovated enormously over the last 10 years to keep pace with Marketplaces. Companies like Beyond Menu, MenuSifu, WondersCo and ChowBus have had great success bringing traditional Chinese restaurants into the smartphone era. Tso Chinese Delivery in Austin has created its own impressive technology to make the ordering, payment and fulfillment process as seamless as possible.
Continued innovation in online ordering and fulfillment is essential for Chinese restaurants to not lose their historical advantage. Chinese restaurants should choose a technology platform that includes the triumvirate of excellent first-party ordering: integrated product ordering, payments, and loyalty. Going further with a holistic system that connects consumer demand to back-of-house capacity and driver availability creates a customer experience that outperforms third-party delivery.
4. Dedicated drivers
Chinese food delivery establishments typically use dedicated drivers tied to specific restaurants. This driver pool increases availability, reduces delivery times, and enables batch delivery. This also avoids the breakdown of the chain of hospitality inherent in a restaurant that entrusts its food to a driver who is employed, managed by and therefore responsible to… no one.
The challenge of Chinese food delivery is that historically, drivers were often family members: a cousin, an uncle, a son. As second and third generations pursue careers outside of the restaurant industry, the pool of available drivers dwindles. Moving away from family in today’s work environment can be difficult.
It seems a lot easier to just exploit drivers on DoorDash, UberEats, or Relay and let these large, well-funded companies take care of finding enough drivers. The problem is that using a third-party driver is expensive. The list price for most third-party deliveries is $6.99 per delivery. Most consumers will pay a maximum of $4.99, leaving the restaurant $2 less.
New software, like Empower Delivery, can simplify driver management by creating a pool of gig drivers associated with the restaurant itself. This reduces the inefficiencies and markups of relying on an external driver while maintaining the “easy button” of an on-demand workforce.
Chinese cuisine has led the way in delivery for many years. These four advantages – design, location, direct control behavior and dedicated drivers – are huge advantages. Technology designed exclusively for these delivery-focused restaurants can innovate on these four benefits and ensure that Chinese takeout restaurants continue to dominate in food delivery.
Meredith Sandland and Carl Orsbourn are co-authors of “Building a Digital Restaurant: Your Roadmap to the Future of Food” And “Offering the digital restaurant: the path to digital maturity.“After each spending more than 20 years in corporate strategy and food retailing, Meredith and Carl each concluded that food in America was changing. They left their corporate jobs at seeking innovations that would transform the restaurant industry. Ghost kitchens, virtual brands, digital marketing, the gig economy and Lean operations are at the heart of the future they envision. Carl is the COO of Citrus press, a dynamic restaurant pricing company. Meredith is the CEO of Strengthen delivery, software that powers delivery-centric kitchens. Subscribe to their newsletter and podcast at deliverthedigitalrestaurant.com.