Menulog NewsPosted on 23.07.2014

Why Fast Food Chains Are Turning To Online Delivery

International fast food giants like McDonald’s and KFC have run delivery programs throughout Asia, Africa and the Middle East for years. Now McDonald’s and Red Rooster are launching their own Australian delivery trials. So, what’s suddenly making online delivery so attractive for fast food chains?

The first McDonald’s delivery was over 20 years ago, in 1993. While the first country to trial it was – unsurprisingly – the USA, it was in Asia, the Middle Eastern and Latin America that it really found purchase. Why? Low rent and labour costs – combined with crowded cities that make drive-through impractical – made delivery a worthwhile proposition for both businesses and customers. In Egypt, for example, delivery for both McDonald’s and KFC now accounts for roughly a third of sales.

It’s taken some time for the concept to reach Australia. Here, food delivery has generally been the provenance of smaller, local takeaway restaurants and pizza chains, whose products are ideally shaped for easy bulk transport. Only in the past few years, with the rise of online takeaway services and menu aggregators like Menulog, has delivery been successfully adopted by a broader range of fast food chains.

McDonald’s began their first Australian delivery trial in Sydney’s North Parramatta store in 2013, and has since expanded delivery service to a number of other Sydney stores, with further plans for expansion into other states. Red Rooster — one of the largest Australian owned and operated fast food chains — will launch their trial in Sydney in late July 2014, with a view towards further growth, should the campaign be successful. What’s driving this newfound interest in online delivery? Growing customer demand, led by an increasing scarcity of time and the rise of convenient online delivery.

Time is Valuable

14 percent of Australians work very long hours each week, ranking us fourth amongst 34 OECD nations surveyed. As demands on time increase, our free time becomes more valuable, and people become less inclined to spend it preparing meals. Australians now buy takeaway an average of 4.1 times per month – that’s more than once per week – with expenditure on fast food and eating outgrowing by nearly 50 percent between 2004 and 2010.

Ordering takeaway by any method cuts down on shopping and cooking time, but online ordering goes several steps further by reducing time spent waiting in queues, picking up takeaway, seeking out individual restaurants and menus online and trying to reach restaurants by telephone. Customers can place orders before leaving work and have food waiting for them when they arrive, or pre-order on weekends when they know the week ahead will be busy. It means more time to relax and spend with family and friends.

“Online delivery is all about convenience,” says Julia Snabl, Marketing Manager at Menulog. “Customers are realising that there’s no point spending all that time in the kitchen when you can jump online for five minutes and have food brought to your door.”

The Rise of Online Delivery Services

Menulog, Australia’s largest online takeaway and delivery service, sought to address these issues of time and convenience when the company launched in 2006. Menulog has since grown its restaurants partners to more than 3,500 Australia-wide. The service allows customers to find new locations within their area, browse menus and order online. There’s no need for call centres, and customers can explore and make choices in their own time. Menulog also matches restaurant prices, and in many cases offers specials and discounts that make online ordering a cheaper option than ordering in-store.

The first Red Rooster delivery store, in Baulkham Hills, will use Menulog for its orders. “Online is the future,” says Rob Bond, the project manager in charge of delivery at Red Rooster. “Every trend is pointing that way. It’s convenient, allowing customers to take their time and explore the menu. They feel more comfortable online than on the phone, and people are more likely to try new dishes if they can look through a menu and order at their own pace.”

Internationally, large fast-food chains have already dabbled in online delivery orders. Web-based McDonald’s delivery is available in both Singapore and Turkey, while online orders account for 40% of all delivery orders for Pizza Hut and KFC in China. Australia already has a built-in customer base for ordering meals online: online retail in Australia is worth $15.3 billion per year, and in 2012-2013, almost three million Australians had purchased food, groceries or alcohol online.

Customer Demand

With these online delivery channels already in place and busy Australians motivated to order, Red Rooster felt it was time to give the customers what they want. “Customers want delivery,” says Rob Bond. “We’ve had a lot of feedback through various channels stating customers would like the option. The industry is going the way of prepared, delivered food. It’s a service that’s very convenience and value-driven – a $29.95 delivered chicken dinner for a family of four is a very good value proposition.”

A surge of interest in healthy food has also provided Red Rooster with an avenue to promote the nutritional value of its food, which is largely focused around roast chicken and, alongside chips and mashed potato, offers vegetables such as peas and corn as side options. “Red Rooster prides itself on providing good, healthy food and that’s a key point of difference from traditional delivery restaurants like pizza,” says Bond.

As well as nutrition, food quality and freshness are also increasingly important to customers. Improving technology means that food delivery is no longer synonymous with soggy chips and cold pizza – which means more satisfied customers and, in turn, more orders. “Red Rooster has taken care to spend a lot of time on food validation testing,” says Bond. “Food quality, visual appeal, taste and how our packaging holds up – it’s all been extensively tested.”

What Next?

That testing process will continue throughout the trial. If Red Rooster’s first delivery store is successful, the company plans to expand to a number of other pilot stores before launching a broader national campaign. The idea is that delivery will complement Red Rooster’s extensive drive-through network and allow restaurants to reach a broader customer base than ever before. Following international trends, more chains are expected to follow in the roast chicken giant’s footsteps.

What does this mean for the Australian consumer? “Quicker food, less stress,” says Menulog’s Julia Snabl. “It’s an exciting time for food lovers: as more and more restaurants catch on to the reality of what modern customers want, we’re able to bring a much greater range of choices from all across the country straight to your door.”