If you’re in this business, you are undoubtedly also a bit blown away by the exponential rate of change the industry is undergoing as a result of restaurant technology. From the infinite number of third-party delivery apps to AI and robots, the restaurant business is now a more multi-faceted, multi-discipline business than ever. And along that road to the future, one of the biggest hurdles of the moment for many brands continues to be integrating that multitude of third-party delivery providers into ordering, operation and payment systems.
Recently, two players on this front, including POS provider, Revel Systems, and third-party integrator, Chowly, combined to enhance functionality for each company and its clients in a move that’s indicative of where things are going. But more importantly, the real business-boosting benefits of these types of integrations is coming clearly into view through successes of brands, like 1000 Degrees Pizza.
Operationally, the 5-year-old, 40-store chain reports that the number of profitable perks they’ve realized through use of this type of integrated system has been eye-opening. Recently, brand leaders gave us a closer look at how 1000 Degrees has used this type of system, as well as how it’s both changed the way the brand does business and changed how much business it does.
What a little ‘new’ can do for the ‘ol’ tried-and-true’
Mind you this is a brand dedicated to the “old way” of making Neapolitan pizza, specializing in that type of thin crust first made so famous in the Italian city centuries ago. And of course, it also sells Roman-style thick crust pies, which are made along with those Neapolitan pizzas, in a special handmade brick oven that rotates pies over the flames.
But as much as 1000 Degrees appreciates the culinary traditions of old Italy, brand leaders also respect the necessity of incorporating third-party delivery providers into their ordering, payment and even kitchen practices. That’s why the 1000 Degrees Franchise Coordinator Matthew Merrill said the brand started working with Revel about five years ago, followed soon after by adding to the API to accommodate all those 3PD players brand leaders though customers would increasingly want. And boy were they right, so Merrill said, they’ve stayed with that approach because it pays.
“Our brand is currently partnered with north of 25 such companies,” Merrill said referring to providers like Uber Eats, Doordash and Foodsby, among others. “When the opportunity arises, we prefer to work with local services where possible. For some of our locations, third-party delivery now accounts for up to around 40% of sales.”
Across the brand’s system, Merrill said franchisees can access their system’s online ordering, as well as any network third-party programs. The brand’s franchisees can also use local delivery services prominent around their individual store locations, since corporate leadership believes that’s an important element in showing involvement in the local communities around each store.
“It expanded our options and dramatically changed our business model for the better,” Merrill said in an interview with Pizza Marketplace. “When we opened our second location in December of 2014 we offered limited home delivery. It was revolutionary at the time for the fast casual pizza sector and (we) became the first to offer multi-topping pizza delivery. Shortly after, everyone in our category started to see the opportunity and it was a hit pretty fast.
“We sent out a notice to our franchisees and changed our concept set. Where before we had been looking for 2500-square-foot locations, now 1600- to 2,000-square-foot spaces in smaller shopping centers were being considered with the boom of delivery apps. We could rely more on the delivery setup versus purely an in-store experience. This also positioned us to reduce our overhead, adopt more delivery services in our coverage areas, and take a 25-30% cut of the revenue.”
Merrill said 1000 Degrees also partners with Eatsa/Brightloom in several locations with great success and even texts franchisees when larger corporate orders come in, to give different operators the chance to take the order on as their level of traffic allows.
Integration: Many roots, same tree
Revel Systems Chief Strategy Officer Chris Lybeer said the desire of many restaurant brands his company works with to spread out and take on an array of 3PD providers has made Revel’s integration with Chowly, particularly attractive since it pushes orders directly into a brand’s POS and then to its kitchen. In fact, he said, as this market matures, the company is even considering direct integrations with some vendors.
Like Revel’s clients, the company itself said its reasons for such partnerships are very much the as those of the restaurant brands they serve: It’s good for business.
“It depends on location and marketplace, but most brands will experience a 20% to 30% increase in sales,” he said of brands’ increased income with their 3PD partnerships. “The brands do need to weigh the sales gains with the costs of third-party providers. Driving more customers to their own online sites where there are no service fees is equally important.”
Lybeer said the Chowly partnership allows incoming orders to be more cleanly ingested, but there are still opportunities to crank up operational efficiency to improve payment to restaurant brands by so many different vendors daily. Likewise, he said there’s still a need for a workable way to handle out-of-stock notices.
At 1000 Degrees, however, Merrill admits they did not come to the realization how essential an integrated POS might be until they first tried to pull in many more 3PD providers without such a system.
“There were problems at the beginning — we were offering pizza in six minutes, but guests wanted it in 20 minutes. …” he said to highlight just one operational challenge. “Now, when we get an online order, we get an alert on the Revel POS which integrates with a lot of the third-party services we use brand-wide. … We get the expected completion time and a breakdown of order details. If we are notified of a larger order, we manage our time as efficiently as possible and make sure someone is not waiting once they’ve arrived at the store.”
But the benefits don’t stop there. In fact, Merrill said they’re springing up all over the operational map, often in some of the most unlikely places. For instance, he said aside from rethinking the actual store size and footprint, 1000 Degrees leadership is also reconsidering where they’re opening stores in order to better respond to indicated demand. Similarly, new ordering trends are shaping the way the chain calculates labor costs as well.
“Guests often save orders in the app and then adjust or reorder from the app again while they’re in store,” he said. “This has cut down our need for customer kiosks which, in turn, reduces labor and creates more efficiencies.
“We can make an app order twice as fast as an in-person line order. There is also less direct customer interaction this way — some people prefer that, others don’t. We will look at the efficiencies of our in-store kiosks in the future depending on location and customer trends, but ordering on the app is definitely a lot easier all around.”
The bottom line: More orders more efficiently
Translated into the brand’s overall sales, Merrill said by year’s end the company expects at least 15% to 20% of system-wide orders will come through its app for either delivery, in-store pickup or even, dine-in. He understands that from both the operator and customer point of view.
“The online ordering process allows people to more fully explore our menu options without the pressure of making quick decisions at the counter in person. …” he said.
“We can also recognize customer trends based on preferences and repeat orders (for example, vegetarian consumers). This allows us to use the data to give people more choices and persuade them to explore new combinations based on their order patterns.”
As a brand that’s weathered the storms, both of taking on an array of 3PD providers, and finding a POS with adequate integrations to make handling them all more efficient, Merrill agreed to offer a few suggestions for brand leaders who are either in the midst of, or just beginning those tasks.
First, he cautioned, “before you do anything,” Merrill urged brand leaders to really buckle down and do some research on each service available, as well as its service and rates. And keep in mind, he said, that both are negotiable.
Then, in order to pinpoint the POS system that best integrates services for a specific brand, he advised brands to look for “flexibility.”
“Look for flexibility in how the platform can be set up,” he said. “When looking at the different options available, we look for systems that offer integration with third-party services — this helps reconcile sales from different sources at the end of the day and keep track of all sales with one source. Tracking is incredibly important and having a system that can collect everything is imperative.”
Similarly, Lybeer cautioned brands also to do their research on the impact different delivery vendors rates will have on costs and margins.
“The cost of what’s going out the door, compared to the revenue these third-party vendors are generating is a major factor for brands to consider related to profits,” he said.
“Additionally, an issue to consider is that when restaurants engage with third-party delivery providers, they lose control of the customer experience. It is important to hold these third-party vendors to a high standard and make sure they are representing their brand satisfactorily.
Finally, he said take great pains to make sure your brand has its own native online site is a mistake to give customers the option of ordering directly from the brand itself, instead of being diverted to a third party. The advice is well-taken since it did not come without a few battle scars for this young brand. But so far, their decisions have turned out incredibly well, and Merrill for one, has no intention of that tapering off.
“The advent of third-party delivery services has revolutionized our whole philosophy,” he said. “Going forward, we are considering an even smaller, 1200-square-foot concept that is delivery-centric with many of the third-party apps.
“We are also launching a new app with extra features to drive traffic from Uber Eats. Our new concept stores will require fewer parking spaces and we anticipate a higher number of orders/reorders within the app and third-party systems.”
And that surely equals at least a 1000 degrees of happiness for these pizza franchise restaurateurs.
Those interested in the 1000 degrees pizza franchise for sale opportunity, please contact us at 609-382-3022 or email the director of Franchise Growth Lauren Heininger at Lauren@1000DegreesPizza.com
1000 DEGREES PIZZA FRANCHISE IS ON FIRE!
Interested in joining the best pizza franchise in the world? We are excited to work with new pizzeria franchise partners who share our passion for the best pizza in the world! 1000 Degrees is currently accepting new food franchise applicants in all 50 states. Some territories may be taken. Multi-unit operators, as well as local area developers, will receive discounts based on commitment. Applying for a 1000 Degrees Pizza franchise opportunity including speaking with one of our coordinators is completely free.