Food delivery brings home the bacon

Iceal Peñalosa

Iceal Peñalosa is the general manager for contact center and food delivery of Max’s Group Inc., the leading full-service restaurant company in the Philippines, composed of such brands as Max’s, Yellow Cab, Pancake House, Krispy Kreme, Teriyaki Boy and Dencio’s.

Peñalosa, who won the Mansmith Young Market Masters Awards in 2017, shares here his thoughts on the challenges and trends in food delivery.

Q: How big is the food delivery market in the Philippines? When do you think or expect delivery to exceed actual restaurant visit?

A: While exact numbers are hard to come by, it is very evident that the food delivery business is likely the main source of sales growth for retail food establishments.

Based on an online research study by Statista, the online food delivery market in our country is worth around P11 billion with almost eight million Filipinos using the service at least once in 2018. Given that digital delivery (orders placed via the web or mobile app) represents around 25 percent of the total pie, we are looking at a P44-billion industry that is growing by more than 20 percent annually, driven by online deliveries.

Although dine-in foot traffic is challenged right now and the National Restaurant Association even projects that 70 percent of customers will be ordering food off restaurant premises (gen z and millennials are much more likely to use off-premise meal solutions) by 2020, I still believe that a good majority of customers would still make the effort to visit actual restaurant locations since everyone wants to enjoy that indulging dine-in experience once in a while but they would frequently opt for delivery since it provides more convenience.

Q: Is there any difference in the ordering method/s of different customer groups?

A: There are two basic ways to order: voice (by calling and speaking to a call center representative) and online (order thru digital channels like website, mobile app, chatbot etc.).

The tech-savvy millennials and gen z users are more inclined to take the digital route while the baby boomers and older generations prefer to talk to a live person at the other end of the line. While this seems to be a stereotyped generalization on user age groups, sometimes it boils down to the need of the user and nature of the transaction. A millennial might be more comfortable to call when she wants to relay special instructions like customizing the toppings on her pizza order or inquiring about a particular product or promo before ordering. The key is to have both ordering channels in place so that customers can seamlessly relay their delivery orders.

Q: You had to experience being a call center agent and food delivery rider before finalizing the setup of Max’s food delivery. Any insights you can share with us about call center agents and food delivery riders after that experience?

A: Yes! I definitely learned the ropes. I became a call center agent and then tried my best to keep my balance while driving an actual delivery motorbike.

It was a humbling experience for me that allowed me to understand the true nature of the industry. The food delivery business (or any other business for this matter) is all about your people: the agent who tirelessly goes on 24/7 shifting schedules, the kitchen personnel who cooks our Max’s sarap-to-the-bones fried chicken or bakes our New York’s finest Yellow Cab pizza, the delivery rider who traverses metro traffic rain or shine, the programmers that maintain our e-commerce system and countless other unheralded team members who ensure that each and every customer’s order is processed properly and delivered on time.

The employees are the heart and soul of the business. More than our marketing tactics and technological innovations, our people who interact and play a key role in engaging with our customers are our main strategic advantage.

Every day, I try my best to make them feel that they are important and that, yes, they do matter. At least that’s what I know Max’s Group is all about … we are family and we are all about our people.

Q: What’s the business case of creating a fleet of in-house dedicated delivery riders versus thousands of outsourced delivery riders (Grab, etc.) readily available?

A: Two words: operational control. You have full control over their area assignments and shift duty schedules most especially during peak operations. You control the branding through the uniforms they wear. You control the service journey platform that will guide them how to interact with your customers.

But honestly, I recommend using them both: a healthy mix of dedicated and outsourced riders will ensure that there will be enough logistics personnel to process the volume of delivery orders.

Q: What are keys to delivering speed while being cost-efficient in the delivery operations at the same time?

A: Command center. Food production. Delivery logistics. The contact center team is like an air traffic control tower that directs and manages hundreds of delivery orders per hour so that all transactions are accounted for and attended to. The next key factor is the speed of production of the restaurant because they are the ones who actually cook and dispatch the packaged food items. Finally, you need to have an efficient and committed team of drivers who will do whatever it takes to deliver the orders on time. The right forecasting balance of manpower personnel to support the influx of orders is vital in ensuring cost-efficient operations.

Q: What are major challenges in food delivery?

A: If anything goes wrong with any of the three key factors I mentioned above, then operational efficiency is affected. Of course the weather plays a major role, too since the volume of deliveries significantly surges during inclement weather conditions. Dine-in patrons will be converted to delivery customers (because they will decide not to visit the restaurant if it is raining too hard or if it is too hot outside) and this poses a forecasting nightmare in terms of agent and rider manpower staffing and/or product inventory stock outs if you don’t have a contingency plan in place. Customers always want to have their food delivered faster, fresher and cheaper so you need to innovate and keep on experimenting with new ways of cooking and transporting orders.

Q: Can you share some trends in food delivery?

A: Food delivery is here to stay and restaurant brands will need to offer this service if they want to be competitive. Over the years, we have seen the rise of “third party food delivery aggregators” that consolidate different restaurants into their digital platform so it is so much easier now for a food establishment to offer delivery just by partnering with these startup companies. We also expect more delivery orders being placed online through websites, mobile apps and other digital platforms as more and more digital native customers expect to satisfy their food cravings anytime, anywhere.