Have Burger, Will Travel : Fast-Food Purveyors Launch Mobile Mac Attacks
Big Mac is boning up for a home delivery attack.
So are Kentucky Fried Chicken, Subway and El Pollo Loco. As fast as you can phone or fax your request, these familiar fast-food names are starting to deliver--to the home or the office.
Pizza parlors that long reigned as kings of home delivery are suddenly competing with the big names in burgers and chicken. For now, most of the big chains are watching closely while their franchisees experiment with delivery. But the battle for customer loyalty may eventually force all fast-food chains--particularly in Southern California--to take to the streets.
At stake is a share in the fast-growing home delivery market--now about $6 billion annually but possibly double that in two years, industry executives say. Home delivery is emerging as one of the fastest-growing niches in the fast-food business. An increasing number of time-conscious consumers will eat only what is brought to their front doors, analysts say.
“Home delivery comes down to one thing: time,” said Gerald Celente, founder of the Trends Research Institute. “Americans don’t care what food tastes like--we just want it fast.”
Nowhere is this trend growing faster than in Southern California, where Kentucky Fried Chicken Corp. plans to mount a major home delivery push in 1994. From downtown office buildings to the most exclusive residences of Beverly Hills, fast-food carriers seem to be ringing doorbells almost as often as the Avon lady does.
“Southern California is famous for its traffic congestion,” explained Bob Sandelman, president of the Brea-based market research firm Sandelman & Associates. “Anything that helps people stay out of traffic can be a great selling proposition.”
Seeing the success of a McDonald’s in downtown Chicago that had delivered food to office workers for several years, a McDonald’s franchisee in Los Angeles recently began to do the same from two units he operates downtown. Deliveries are made to businesses within five minutes of two locations--one near the Civic Center and one in the jewelry district.
The overriding issue downtown appears to be safety.
“Ever since the riots, office workers have been frightened about going out on the street,” said Frank Sanchez, owner of the two downtown units. An increase in panhandling has also scared many downtown workers from walking outside at lunchtime, he said.
When business at Sanchez’s two McDonald’s dropped 30%, he decided it was time to offer delivery as an option. Business has indeed picked up since spring, when his outlets began accepting phone orders from businesses within about a dozen-block radius.
Among his best customers: Mayor Richard Riordan, whose office phones several times a week, Sanchez said. The mayor prefers an orange juice and Egg McMuffin for breakfast and a Big Mac at lunch. All food is delivered by McDonald’s employees in uniform who walk--or bicycle--to the locations. Food is kept warm in insulated carriers. There is no delivery charge.
“You should see the looks our delivery people get on the street,” Sanchez said. The delivery people are always asked the same question by pedestrians: “McDonald’s delivers?”
Meanwhile, Subway employees putt around Beverly Hills on motor scooters delivering submarine sandwiches to the wealthy. Sam Ghareebo, who started delivering from his Beverly Hills franchise store in March, predicts deliveries will be 30% of his business in a few years.
Of course, fax orders for deliveries from the Beverly Hills Subway store are accepted.
One of Subway’s most loyal delivery customers is singer Tom Jones. “The guys all like to deliver to his home because he’ll sing, ‘What’s New Pussycat’ when you bring his order,” Ghareebo said.
But home delivery “is fraught with problems,” said Scott Allmendinger, editor of Restaurant Business magazine. The food often gets cold. The customers can get impatient. And the added insurance and liability costs can be excessive.
“Consumers all say they want home delivery,” said Ron Paul, president of Technomic Inc., a Chicago food research firm. “But the reality is, so far it hasn’t worked very well.”
Burger King had just begun to test home delivery in Miami last year when Hurricane Andrew pounded the program into the ground. It hasn’t tried since. A Wendy’s spokesman said the chain has a few franchisees who have tested it, “but delivery isn’t high on Wendy’s list.”
Still, fast-food home delivery will be the wave of the future, Allmendinger said. “People in the boardrooms of every single fast-food company are right now asking this question: ‘Should we be doing home delivery?’ ”
Industry analysts say the real future of fast-food delivery may be in the hands of the chicken chains. Unlike burgers and French fries, chicken rarely gets soggy when it’s delivered.
Kentucky Fried Chicken, which has experimented with home delivery for several years, plans to push it aggressively next year when it begins delivery in the Los Angeles and San Diego areas.
“The biggest problem is getting consumers to accept it,” said Dan Smith, senior director of delivery at KFC. “People are more accustomed to calling out for pizza.”
Last year, rival El Pollo Loco began testing delivery in Southern California. Home delivery has since become so popular at its store in Rancho Palos Verdes that it now accounts for 35% of the store’s sales. “It’s like adding new business without making a big investment,” said Norman McKinnon, national marketing director for the chain.
But while El Pollo Loco has had few problems attracting delivery customers, it has had a tough time recruiting drivers, said Stu Blaze, new products manager. “They all go to the pizza parlors.”
Briefly . . .
Venice agency Chiat/Day has lost the estimated $20-million TV Guide account, which has not yet been put into review. . . . The Los Angeles agency Italia/Gal has picked up the $3-million-plus ad account for Frame-N-Lens, formerly handled by Davis, Ball & Colombatto of Los Angeles. . . . The Los Angeles agency Frojen Advertising Inc. has been purchased by Santa Ana-based Roberts, Mealer & Co. for an undisclosed sum. The combined firm, with 18 employees, will operate in Santa Ana under the Roberts Mealer name. . . . Los Angeles-based Teleprograms Marketing has picked up the estimated $20-million media buying and promotions account for Clearwater, Fla.-based Eckerd Corp.
Slow Growth for Fast Food
One reason the big fast-food makers are getting into home and office delivery is because fast-food sales have grown slowly for the past five years, barely keeping up with inflation:
Revenue Year in billions % change 1985 $14.63 +4.4 1986 $15.71 +3.4 1987 $18.17 +11.2 1988 $20.48 +8.3 1989 $21.96 +2.5 1990 $23.37 +1.6 1991 $23.79 -1.5 1992 $25.24 +4.0 1993* $26.91 +4.5 1994** $28.68 +4.5
* projected
** forecast
Sources: Techmonic Inc., Chicago; U.S. Department of Commerce
