FRANCISCO — A year ago Mendocino Farms didn’t offer
delivery at any of its 15 Southern California locations.
Now Ellen Chen, co-founder of the artisanal sandwich
chain, is knocking down restaurant walls to make room
for delivery drivers.
kind of crazy," Chen said.
partnering with the San Francisco food delivery startup
DoorDash 11 months ago, Mendocino Farms has seen such an
enormous surge in sales that at times the restaurant has
had to turn off the DoorDash app to keep up with
delivery orders. Chen estimates that three of Mendocino’s
restaurants alone have turned away at least $500,000 in
DoorDash orders since last April because they couldn’t
keep up with the demand.
wanting to leave any more money on the table, Chen and
her business partner and husband, Mario Del Pero, have
been quick to act. They’ve allocated more counter
space at their existing restaurants for DoorDash
pickups; they’re negotiating with landlords for more
10-minute parking spots to accommodate delivery drivers;
and they’re knocking through a wall at one location to
create a pickup window just for DoorDash orders.
had to go back to every store and reorganize them,"
Del Pero said. "You can’t make them any bigger,
but you can allocate more space to it."
advent of apps such as DoorDash, UberEats, Caviar,
GrubHub and Yelp’s Eat24 — where users can browse a
menu, place an order and have it delivered without
communicating directly with a restaurant — has quickly
given anyone with a smartphone (and the funds to cover
the delivery surcharge) on-demand access to a wider
swath of dining options.
many restaurants in big cities like Los Angeles,
app-enabled food delivery services have gone from being
an afterthought to a core part of their business, with
restaurateurs realizing that smartphone apps don’t
cause a drop-off in dine-in customers, but instead help
grow a new customer base.
Farms, for example, saw sales increase 2 percent to 3
percent shortly after it began its partnership with
DoorDash. They have continued to climb, resulting in an
additional $2.5 million in revenue since the partnership
began. In an industry in which margins are already razor
thin, squeezing more revenue from existing restaurants
without adding significant overhead is a major win.
DoorDash deliveries now account for 6 percent of
restaurants have noted similar upticks in sales. Burger
chain Bareburger last year partnered with five delivery
apps, including GrubHub and Caviar, for its West Coast
flagship outside Los Angeles. In the three months after
the partnerships, it saw an 8 percent to 9 percent
increase in sales. In the last two months, that figure
has increased to 13 percent.
Area Greek restaurant Nick the Greek partnered with
DoorDash two years ago and has since seen a 15 percent
growth in sales.
it comes to restaurant economics, it just makes sense
that delivery is becoming an increasingly large portion
of everyone’s business," said Allen Wong,
president of LA Chinese restaurant Fat Dragon and a
partner at the Sticky Rice Group. Fat Dragon primarily
uses Caviar for deliveries.
delivery business is growing so fast, it’s giving
restaurants cause to rethink their expansion strategies
you were to set up a new restaurant in West LA, you’d
have to go through the process of signing a new lease,
spend half a million dollars on the restaurant and it’d
take a year before it opens. That’s pretty challenging
for a lot of brands," Wong said.
to delivery apps, restaurants can serve more customers
with far lower costs by opening "ghost"
kitchens without any dining areas.
can rent a 10-by-10 kitchen on a monthly basis and jump
right in without having to spend a year setting up a
restaurant," said Wong, whose Sticky Rice Group is
looking to expand to ghost kitchens that can accommodate
more orders than its restaurants can handle. "That’s
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Coffee, a cafe in LA’s Chinatown, opened its ghost
kitchen in Hollywood last September to help fulfill
orders from the UberEATS app. After partnering with the
ride-hailing offshoot early last year, it saw a 35
percent bump in sales. Chimney Coffee founder Amnaj
Bholsangngam estimates that UberEATS now accounts for 30
percent of Chimney’s business. The kitchen — which
has no storefront and doesn’t directly serve customers
— doubles as a place to prep the cafe’s house-made
bacon and sausages, and service the extra 200 to 250
orders a week that come through the UberEATS app.
definitely been positive," Bholsangngam said.
apps also provide restaurants a way to offer delivery
without having to hire their own delivery staff —
though eateries that partner with the services have to
pay a fee. Along with taking a commission from
restaurants on orders, the apps charge customers for
delivery as well. DoorDash’s delivery fees vary by
region and restaurant, while Caviar charges an 18
percent service fee plus a delivery fee based on
of that haul goes to the people who deliver the food.
Driver pay varies app to app: DoorDash drivers in Los
Angeles get a flat $5 payment per order plus tips;
UberEats drivers get paid for pick-ups and deliveries,
plus a rate that covers distance traveled between the
the added fees, diners say the convenience of not having
to sit in traffic, find parking, wait in line, or even
leave their home is worthwhile.
willing to spend a lot more money on the same food I
would have gotten, all for the ease of someone else
getting it for me," said Austin Grogin, 26, who
uses GrubHub, UberEats, Eat24, Postmates and even the
Subway sandwich ordering app. "It’s about
maximizing the ease and speed at which I can eat. It’s
essentially made me a far lazier person."
has used the apps to discover new places to eat, turning
him into a big fan of restaurants he’s never set foot
in, such as Sidecar Doughnuts.
wouldn’t have known about it had I not ordered
doughnuts for a co-worker’s birthday through an
app," Grogin said. "And now I’m incredibly
makers are fighting desperately for customers like
Grogin, and they’re also competing for restaurant
partnerships. Yet a lot of the pie remains unsliced,
according to GrubHub’s chief operating officer, Stan
Chia, who said that 95 percent of the delivery market
still places orders using paper menus. And according to
DoorDash’s stats, some 80 percent of U.S. restaurants
still don’t offer delivery. Which means the
opportunity could be huge for delivery platforms and
of Sticky Rice Group doesn’t believe that food
delivery apps have reached their potential yet because
the majority of restaurants still aren’t using them,
but he thinks that in two years it will be as easy to
order food as it is to hail an Uber. At that time, he
says, delivery will truly become a core part of
want to be well-positioned for that," he said.
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of being well-positioned means showing a willingness to
change. At Fat Dragon, in addition to partnering with
Caviar, the restaurant is looking into developing more
braised dishes such as curries that can be prepared in
bulk so it can handle the logistics challenge of
fulfilling dozens of delivery orders at once.
the Bay Area, falafel restaurant the Halal Guys is
building a Berkeley location with a separate pickup area
for delivery apps, with a dedicated hot food holding
unit to keep meals warm as they await pickup.
a new store, we have the luxury of knowing how big food
delivery is, so we’re able to carve out a space for
it," said Rene Hjorth, the Halal Guys’ Bay Area
director of operations.
Coffee has hired more line and prep cooks to keep up
with orders, nearly doubling its staff over the last
Mendocino Farms is opening three locations this year,
each with bigger to-go areas, more spacious waiting
areas for DoorDashers and enough floor space around the
seating to accommodate its red delivery bags.
been a real game-changer," Del Pero said.