April 2, 2018

What Do Hotels Have To Do with Food Deliveries?

"Incremental Sales" can be a misleading term. Of course in a franchise system corporate 
and shareholders love incremental sales because they get their slice of the action no 
matter what happened down the line.

The example of a hotel operator being happy to pay a commission to rent an empty room 
is apt. The room's sitting there ready to go and all the hotel has to do is hand the guest 
their key and re-clean the room the next day.

But incremental sales at a restaurant are different. The restaurant operator has to pay 
for the food, packaging, labor,and all other misc. costs. Plus pay the franchisor rent and royalties on the sale. Plus put up with a distraction in their operation. In the end, the 
restaurant operator absorbs all the liabilities of a delivery order and would probably be 
better off without that "incremental" sale.

Thanks to "anonymous" for this link.

What the fast casual industry can learn from hospitality's $2.5 billion braw.
.

1 comment:

Anonymous said...

I do not have a problem with a delivery service taking 15%-20% of the sale that is cheaper than I could have delivered it. I do have a have a huge problem with McDonald's charging me rent & service fees prior the delivery surcharge, McDonald's franchise agreement has always been rent & service fees charged for products sold through the restaurant not on labor or service charges to sell more product; thanks SET & NLC for doing a great job again that is why delivery should have been voted down by them.

I am not sure if any or what percentage are incremental sales and could really careless most people who go on delivery apps were going to choose a delivery restaurant anyway so I am option, the reason they probably pick McDonald's is under 30min category I am not sure they were ever going to get in their car and drive over anyway maybe a small percentage but that is also offset by the small percentage that is also incremental sales.