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Business-boosting delivery services becoming increasingly popular

While delivery can be tough on some profit margins, operators are finding that offering the service can address both their appetite for sales and the consumer’s hunger for convenience.

Long a key component of pizza operations around the country, delivery is being explored by a growing number of restaurateurs, from fast-casual players to frozen-yogurt chains, as a way of boosting volume and offering a service not available from their competition.

San Francisco bicycle messengers are finding they have to compete these days for street and sidewalk space with Johnny Rockets malt shop crewmembers, thanks to a franchisee there who is testing a delivery program.

For Matt Johnson, who owns three Johnny Rockets stores in San Francisco, it made sense to test free bicycle delivery for $10 minimum orders at his Chestnut Street location. He said it demonstrates a commitment to auto traffic reduction and “a convenient way for San Franciscans to enjoy their Johnny Rockets’ favorites.”

Johnson said that after two months, with little promotion, the store averages about five requests a day to have food delivered via the $500 custom-painted cruiser bicycle it keeps parked out front. That volume makes it feasible to handle deliveries using existing staff and a slightly tweaked insurance policy, he indicated.

“It adds to the whole ambience of the restaurant,” Johnson said. “Instead of just having a delivery sign on any old car, we have a retro bike ridden by our guys in their [old-style] uniforms, and it all contributes to our retro image.”

The Lake Forest, Calif.-based Johnny Rockets chain includes 295 full-service, diner-style restaurants offering burgers, specialty sandwiches, fries and shakes.

Depending on results at the Chestnut Street restaurant after some additional marketing is applied, Johnson said he might expand delivery service to his other stores.

Though many pizza chains have long offered delivery — and some sandwich chains heavily market their delivery capabilities, including 995-unit Jimmy John’s of Champaign, Ill. — a growing number of chains, franchisees, small groups and independents are adding delivery as a way to build sales in a tough economic environment. 

They include:

• More than 300 franchised Subway restaurants in the Washington, D.C., area, which have been testing delivery service for patrons paying fees and meeting minimum order requirements since fall 2009. 

• The 98-unit Los Angeles-based Pinkberry frozen-yogurt chain, which is 16 months into a test of delivery that has expanded to 42 units in California, Colorado, New York City and Texas. Pinkberry officials said deliveries are handled by store employees using insulated bags. The service is free with a minimum $10 order in Colorado, New York and Texas, but carries a $2 charge in California for orders of less than $15.

• Wow Bao of Chicago, a fast-casual Asian-foods concept owned by Lettuce Entertain You Enterprises Inc., which last November began offering bicycle delivery at two of its three locations.

Some U.S.-based chains also are leveraging their experience overseas for development of delivery programs at home.

At last fall’s Multi-Unit Foodservice Operators conference in Dallas, Julio Ramirez, Burger King Corp.’s executive vice president of global operations, said the 12,150-unit chain provided some form of delivery services in 12 countries.

“There are countries where they are not as litigious as in the United States, and there they do deliveries on motorcycles, by foot and other ways,” Ramirez said, commenting on the possible legal liabilities attached to sending employees or agents with food to homes or businesses. He explained that with delivery service comes the need to map out logical radii around a restaurant within which delivery is practical and the need to develop new operational procedures.

“We’re doing delivery in the States, and we’re using the model we use in other countries,” he said.

Geoff Alexander, vice president and managing partner of LEYE’s Wow Bao group, said most of his bicycle delivery sales come during a two-hour period at lunch on weekdays. Customers within seven square blocks of participating restaurants who place orders of $10 or more may request that their food be delivered for a $2.75 fee. Delivery sales amount to about $500 per restaurant per week on average, he said.

Alexander said that Wow Bao uses an outside bicycle messenger service that charges $5 per delivery. He said that approach means that he does not have to hire new staff or reallocate existing-store employees, buy bicycles or worry about insurance, which is maintained by the outside service.

Wow Bao’s use of an outside delivery service results in a lower profit margin per transaction, as the chain pays a $2.25 subsidy for each delivery. However, Alexander indicated that is acceptable to his group because of the much higher average ticket for such orders — $26 for delivered food versus $6.25 for dine-in or carryout patrons. That higher ticket means that even after deducting messenger service fees, Wow Bao’s delivery transactions bring in more than three times the profit, dollarwise, of operators who handle their own delivery service.

Wow Bao is gaining exposure as well as sales through its delivery program, which features riders carrying bright red, backpack-style food bags that are covered with the chain’s logo. A mini trailer can be fastened to a bicycle to carry large catering orders, as well.

“You can order online for pickup, delivery or shipping from both and from our Facebook page at,” Alexander said. 

Wow Bao also uses Twitter to promote its delivery service, offering up such tweets as, “Rainy day outside, stay dry inside and order Wow Bao bicycle delivery.”

“We’re definitely feeling good about it,” Alexander said of the delivery business. “It allows us to grow our customer base and business, without any additional labor or seats.”

Contact Alan J. Liddle at [email protected]

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