Managing Quality: Food Delivery Companies Tackle Challenge

Over the past few years, the food industry has seen drastic changes. It has pivoted from a world of strictly sit-down meals or take-out, with some restaurants offering delivery services, to a world where nearly any meal can be ordered and delivered through a third party. According to Statista, 20% of Americans order food delivery at least once per week. A variety of firms have been formed to take advantage of these new opportunities: GrubHub, Seamless, Foodler, Caviar, Insomnia Cookies, and UberEats have introduced an entirely new level of consumer convenience to the restaurant experience. However, as in any industry, its growth has presented new assignable causes of poor quality: in this instance, companies are realizing that not all foods can be as easily transported. Ice cream, for example, faces the obvious challenge of melting in transit, drastically decreasing the value it provides the customer. A more widespread issue is combating sogginess. Items that mix wet and dry ingredients, such as a gyro or nachos, are at risk of losing their appeal by the time they reach their final destination. Even something as simple and common as french fries can be ruined due to the accumulation of steam within the packaging. Without solutions to these issues, the food delivery industry will find its horizons significantly limited.

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Fortunately, delivery companies have heard consumer complaints and are tackling the issues head on. The article gives the example of a delivery worker packaging ice cream first in a space blanket, then in a cooler bag to provide sufficient insulation. It also highlights tactics such as giving french fries breathable containers, allowing customers to “assemble” the food when it arrives, and cutting out menu items that simple can not be delivered in a satisfactory manner. Additionally, they have put an increased emphasis on logistics. By ensuring that drivers are taking the fastest routes from the restaurant to the delivery location, they can assure that there is minimal damage to the quality of the foods. Each of these steps represents an attempt to assure that the third party transit providers are not decreasing the quality of the product. The value chain, from ingredients that become meals in the restaurant, to pick up by a driver, to drop off at the customer’s house, combines multiple entities, but can be analyzed as a single supply chain. Each entity has its own motivations to ensure that the quality of the final product is sufficient: the restaurant’s reputation will drop if their food is not well-preserved, customers will not order from delivery companies if the food they receive is low quality, and naturally, because quality is the level of satisfaction customers derive from the product, their evaluation of quality is crucial.

 

In order to ensure the maintenance of quality in delivery, companies could implement x-charts to evaluate the consistent speed of delivery, and thus consistent quality of food delivered. However, some common cause will always exist due to the unpredictability of wait times at restaurants and in traffic. Analysis of each driver’s performance can still give companies some guidance as to who is most committed to keeping their deliveries high quality.

 

https://global.factiva.com/ha/default.aspx?ftx=quality%20management#./!?&_suid=1520279483893039123758642282436

https://www.statista.com/statistics/259191/ordering-takeout-delivery-from-restaurants-in-the-us/

15 thoughts on “Managing Quality: Food Delivery Companies Tackle Challenge

  • March 7, 2018 at 4:08 pm
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    It is very interesting to see the food industry evolve throughout the years. The food industry has followed suit behind companies, such as Uber, to provide their food products in an extremely convenient manner. Delivery companies have made great strides in improving and maintaining the quality of products they are handling to these customers. The delivery companies are working on the continuous improvement aspect of total quality management, as they are proactively working on finding solutions to these problems as they arise. I believe these delivery companies realize that they are an important step in the customer value chain and their success is dependent on preserving the quality of the food they are delivering.

  • March 7, 2018 at 6:01 pm
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    Nick, this is a very interesting post as it is relevant to us as college students. You talk about the concern for the restaurants making the food that their product will not be represented well by the delivery companies. You also discuss how companies can evaluate the consistent speed of delivery, which in result will produce a consistent quality of food. With restaurants the cost intake for using packages that keep the food fresh is not always worth the added compensation for delivering fresh food. AN article written by Brenna Houck of Eater Detroit states that while restaurants that deliver food increase the number of orders their business receives, most of these companies say that it also increases operational headaches behind the scenes and don’t significantly affect profit margins. Because most delivery service apps require addition hardware and software to communicate orders with the restaurants, many employees complain about juggling multiple orders from IPhone, IPad, or different in-store lines. Additional costs include hiring more employees to cover the inflow of online orders, and due to commission fees, the company only receives 70-90%. Lastly there is a clear correlation between a growth in mobile ordering and a decrees in in-house earning. Many fast food companies such as chipotle, Starbucks, and Dunkin Donuts have seen this same decrease in in-house purchases. Each company that is deciding to bring on Mobil ordering or a delivery service, must first figure out if the added convenience to their customer will actually be profitable. Is a well-known marketing rule that it is exponentially easier to keep a customer than it is to gain a new one, so if your current customers don’t require a delivery service, then it might not be profitable to take up this added service.

    https://www.eater.com/2017/8/29/16214442/restaurant-order-pay-apps-seamless-postmates-uber-eats

    • March 8, 2018 at 8:41 am
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      I agree with Tommy’s points, especially the one regarding employees having a difficult time juggling all the different means of customers ordering. Take McDonald’s as an example. They have their normal register, along with many stores now implementing electronic order stations. Furthermore, they have their drive-through window, plus mobile app ordering as well as UberEats. In essence, they have potentially 5 different waiting line channels, and employees are expected to still process and complete these orders in a timely manner. Customers will always expect to receive their food quickly at a place like McDonald’s so I think we will see greater dependence on automation at a lot of locations, simply because it is more effective for a computer system to handle multiple influxes of orders rather than a most-likely underpaid and unenthusiastic worker. Nonetheless, I do think this development of mobile-based delivery services will continue to change the landscape as to how restaurants function.

  • March 7, 2018 at 8:02 pm
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    The food delivery service, like many other industries in our modern age continues to be shaped by current technology. All of these different services that are mentioned in the article have exploded with growth in the past few years. I think the main driver behind this is the fact that, unlike some other new technologies, these companies reach consumers of all ages and demographics. The surge pricing on delivering food is not too significant to dissuade many customers, and clearly everybody needs food and will use the amenity. For example, last summer during my internship, every employee in the office utilized Seamless for both breakfast and lunch each day. They were too busy to leave their desk and instead opted to conveniently have food delivered to them as they continued to work. I personally think the quality concern regarding these applications is not too viable as consumers truly understand they are choosing to get food delivered for the sense of convenience, not quality. These services have competitive priorities in speed and should be content with losing some point on quality because of that. I do however find it interesting that restaurants fear for their image due to the poorly perceived quality. These restaurants on these apps are not five star Michelin rated establishments. Therefore, I think the restaurants on the apps gain more revenue because of the increased demand and should be ok with the potential for losing some of their great quality reputation.

  • March 7, 2018 at 8:37 pm
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    Nick, good point! This is especially topical being a college student who doesn’t have the time or motivation to cook for himself. Food transportation varies from food group to food group, but the quality of the product always goes down once it goes into the back of the car instead of on a plate. As we notice, customers are responding to the poorer quality of food and year-to-year growth is increasing at a decreasing rate. How will service based companies like UberEats and GrubHub make changes to respond to the consumer’s pickiness?

    As you mentioned, they have created better transportation methods for the foods and the quickest routes for the drivers, but is that all they need to do to sustain growth? As your graph shows, it appears the demand is increasing again. I believe the growth will level off at some point. The cost is too high for a constant stream of customers in their target market which is eighteen to twenty-five-year-old, mostly males. The price for an UberEats delivery is $5. With a radius of restaurants around ten miles wide, there becomes a point when that just isn’t worth the cost. Not only does it raise the price of the meal substantially, but the quality goes down as well. Even with the new transportation methods, the food will always get worse when it is driven from the restaurant to your door. I used UberEats a few times earlier in the semester, but once I checked my monthly balance I stopped immediately. To attract their main market segment they need to lower costs by using promotion methods like sales or nearby spilt fare options.

  • March 7, 2018 at 8:52 pm
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    As any other industry, it is inarguable that the food delivery industry will adapt to meet customer needs. Whether the solution will be conventional or not is up for time to tell. However, it is clear that consumers are unhappy with the current standing of food delivery services. Companies like Pizza Hut have heavily advertised their “Pizza Parka” to reinforce their focus on delivering “oven fresh” pizza. This evidence is directly addressing the desires of the consumer. In the present day for most consumers, they either opt for a non-delivered meal or value the convenience over the quality of the food.

    This customer preference, combined with immense contributions from investment banks will further a shift in prepared food delivery. According to a recent WSJ article, numerous banks have poured massive amounts of money into the industry, betting big on food delivery. With a solid base of capital and strong consumer demand, companies will begin to look for ways to differentiate themselves in a largely competitive and unregulated industry. Companies like DoorDash, GrubHub, and Uber Eats allow for nearly anyone with a license to participate in the business of delivering food prepared at restaurants. Just as with ride sharing services, many of these drivers take advantage of working for multiple services. As companies begin to invest in new techniques of delivering kitchen-fresh food, revenues will follow, as will pay for these delivery drivers. This is the point of differentiation that will likely separate the leaders from the industry.

    https://www.wsj.com/articles/softbank-bets-big-on-food-delivery-1519912804?mod=searchresults&page=1&pos=2

  • March 7, 2018 at 9:06 pm
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    Food delivery services are very important on a college campus, and I agree that this new development comes many issues. I have had my fair share of cold delivery items and delayed response time. My biggest issue with delivery service is the time it takes for orders to come from the restaurant to the customer. I fully understand that most foods cannot be made until an order has been placed, but I think the majority of the lag time comes from the low volume workforce, especially on the weekend. Food delivery is an industry that is expected to grow immensely in the next few years and I hope that the companies are well equipped to handle the increased demand and maintain the quality of the food.

    https://www.mckinsey.com/industries/high-tech/our-insights/the-changing-market-for-food-delivery

  • March 7, 2018 at 10:28 pm
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    This blog post reminds me so much of the “Amazon Effect”, and it makes me wonder if what happened to bricks and mortar stores such as Macy’s will happen to the food industry. Once food options perfect their quality strategy, I believe that slowly more and more restaurants will begin to shut down as they see fewer customer arrivals. Passing by the fast food restaurants in my town, I see fewer families dining in and more of them taking the meal to go. As a college student, my friends and I always prefer to have food delivered straight to us. The process is much simpler, and now people are much lazier than before. This theory is clearly demonstrated by the retail industry. I believe that food delivery industries and restaurants need to engage their customer involvement more as a process improvement strategy to mend satisfaction. This way customers see that their favorite food options are making a clear effort to make change.

    Regarding the cost of poor quality; this is an issue of prevention costs as the food companies have failed to prevent defects before they happen. The poor quality is now an external failure cost. These costs may actually overweight the revenue made. I agree with your recommendation above that calls upon using statistical process control techniques, but I think p-charts would be more appropriate. P-charts are used for controlling proportion of defective services or products generated by the process. This process is the delivery process, and the defective product is soggy fries, which I absolutely detest, or melted ice cream. The delivery issue is an attribute as it can be counted for acceptable performance, and this type of quality is not measurable (which variables are). What do you think?

  • March 7, 2018 at 11:32 pm
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    It is interesting to see how this still very young industry is changing. I am curious to see where the main push for quality control comes from whether it will be the restaurants or the delivery services. The article below describes the crowded nature that is beginning to develop in the food delivery industry. As the article describes there have been a significant number of new entries to the industry over the past few years. In such a crowded field one firm may be able to differentiate itself if it is able to create a reputation for superior quality. The article also describes how there has been a great deal of M&A activity in the field as well. This leads to the conclusion that the market likely can not support the current number of firms and as a result those firms more dominant in some area will likely begin to gain market share.

    https://www.cbinsights.com/research/food-delivery-startups-crowded-market/

  • March 8, 2018 at 12:47 am
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    Uber leverages its proprietary logistics algorithm to maximize efficiency in pickup and delivery times for UberEats. Similar to Liza’s post about Amazon, Uber competes with restaurants that offer their own delivery services. The edge that individual restaurants have over UberEats when it comes to food delivery is simplicity and integration of restaurant and delivery operations. Delivery is a much more capital-heavy, lower-margin business than creating a marketplace. Companies like UberEats and Deliveroo have grown fast by recruiting workers in the so-called gig economy. While this is cost-efective for Uber, it makes managing quality very difficult as employees are always in-and-out of commission. Scale and network effects argue for significant investment in building (https://www.wsj.com/articles/why-its-hard-to-make-cold-cash-delivering-hot-food-1519827518).

  • March 8, 2018 at 8:27 am
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    I agree with you on the necessity for x-charts to manage the consistency of speed, but there are other measures companies can look at to ensure quality. Customers could fill out a consumer satisfaction survey to show how they felt about the quality of the products delivered, and managers can make decisions off of that. As data becomes more and more important as technology improves, hopefully managers can find different metrics that they can assign quality issues to.

  • March 8, 2018 at 8:33 am
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    When I was a freshman in college, three years ago, I thought that I had the best new business idea. As a busy student-athlete, I was always hungry. However, I had limited time. Therefore, after practice most days, I wanted to get straight to my homework, rather than take and hour and a half or so to sit down, socialize, and eat at the Dining Hall. Also, after a long, hard practice, I simply didn’t want to walk all the way across campus. Therefore, to save time and be most efficient, I would order food most evenings while I was completing my work. I soon learned that the options to order food in the city of Richmond were limited. Basically, there was pizza, Jimmy Johns, and chinese food. These are all sufficient options options, but they can get old and boring at a point. As a result, I came up with the idea of creating a mobile platform where customers can order food from anywhere, and it will be delivered to their door through the third party service. While I know that other people have had this idea, I had never seen it in action by that time.

    This summer, however, when I was studying in London, one of my flatmates introduced me to UberEats. I absolutely loved it! Rather than having to get up and spend time going to get food, I could click a few buttons on my phone and the food would show up shortly after. We often would UberEats from McDonald’s which was always hot and delicious, because the restaurant was just five minutes from our apartment. When I got back to the states, however, UberEats was not functioning yet in my home area. In Richmond, it was working, but it had some major flaws. For instance, the additional cost of using a third party was almost too high for my preference matrix. Also, the food that I ordered often came soggy and cold, which made it unenjoyable. This is a common cause; it is purely random, unidentifiable source of variation that is unavoidable with the current process. Therefore, UberEats must work to change and better the process to satisfy the customer. If UberEats or some other third party food delivery service is able to create a supply chain process that is inexpensive for the customer and delivers fresh quality food, I believe that they will be extremely successful. I know that this is not an easy feat, but I am hoping that it will be accomplished.

    Please see the link copied to learn more about the new market for food delivery: https://www.mckinsey.com/industries/high-tech/our-insights/the-changing-market-for-food-delivery

  • March 8, 2018 at 8:50 am
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    A lot of these delivery companies have always had problems creating a profit. Many exist in a space where the original retailer does not do delivery itself because it is not profitable enough. By operating in this very slim margin, it prevents them from increasing costs too much to where delivery becomes unattractive compared to actually attending the physical retailer. These companies consistently struggle to perform well outside of a very high density urban environment where there are high enough populations to support these outside ordering delivery companies. The market is oversaturated with these third party delivery companies and it is tough to find workers as it is often more profitable for employees to work for Uber or a similar ride sharing company rather than work as a delivery-man. I do not think that a rise in quality will aid this stagnating market and it will continue to struggle going forward. I believe that once the original retailer finds a way to make their products deliverable themselves at a profit, they will immediately force this third party business out, and that will terminate their business. It will be interesting to see if I am wrong in my predictions but I feel that these companies will find it tough to succeed in the long term without losing money.

  • March 8, 2018 at 3:12 pm
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    This article really strikes home with me. I am a frequent user of delivery services. I think it is very interesting to see the growth in this market as a whole. All of these new services have popped up recently. Another trend that I have begun to see is that restaurants that used to deliver have stopped their delivery services and solely use a third party option. This option probably works best for the restaurant, as they do not need to staff another worker. However, as a customer this does not excite me. The reasoning is that the services always include a surcharge fee, sometimes up to 5$. Since this market is new, I am excited to see the innovations that come, such as wrapping the ice cream. But I am more excited to see the market adjust the price of the services. As more services are created I imagine the competition for a customer/restaurants service will rise, leading to the price of the service to drop, through supply and demand.

  • March 8, 2018 at 6:46 pm
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    I really like this topic because I think it’s one of the most applicable industries, yet rarely talked about. I personally use food delivery services quite a lot, even more now when I live off campus. I have noticed that the quality of the food depends drastically on the service that you use. For instance, EatStreet, which has a very wide variety of options, always takes the longest time and in turn has the lowest quality of food. One specific aspect I thought was interesting that Nick brought up was ways to improve product quality. While it’s easy to say that taking faster routes will increase final product quality, you can’t always control the flow of traffic or take “faster” routes to get to the final destination. The most popular times for me to order deliver is for dinner which always lines up with the heaviest traffic congestion. I was also surprised about how the “product” in question for the delivery services is the food and not in the delivery. The companies that deliver the food are usually not the ones making it, so it didn’t occur to me that the status of the food would really be something counted against them, but rather the company. When I think of the “product” being given to me from delivery companies I think of the service of bringing food to me. This is not to say there aren’t defects or quality issues here, but I think that they should only be help accountable for the service they are providing directly, not indirected.

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