Retailer’s $2 million delivery gamble pays off

Retailer’s $2 million delivery gamble pays off

While many businesses struggle to control “the last mile” of customer deliveries, one retailer has revealed the cost of proving deliveries could work in-house and the benefits they now enjoy from doing so.

“Delivery for Red Rooster was almost about disrupting ourselves, and secondly about disrupting the industry as well. We started in delivery about three years ago, and it’s actually been an amazing journey,” reveals the company’s CEO, Chris Green.

“But it really took us three years to get where we are, and today we actually have 250 of our sites that actually do delivery, out of 350.”

The decision to launch a delivery service was aimed at providing convenience to customers in a high-growth area, however Chris says the demand for delivery has proved “much, much stronger than the traditional business.”

Red Rooster has used its established network of 350 restaurants from which to launch delivery services, meaning it is leveraging the existing kitchens, facilities and many of the same staff. Yet establishing the new distribution channel for its products has been a sizeable investment.

“We have had to obviously invest in online ordering, as well as the franchisees have had to invest in cars and signage to tell people about it,” says Chris.

The concept was trialled carefully and cost-effectively at first to prove the concept.

“Probably the first year, it was really just about sort of testing and piloting. We did it in a very low-cost way with minimal investment. We relied on third parties, so we actually used Menulog at first.

“By using them, we were able to prove out the model, that there was high demand and that our product was wanted by people that wanted delivery. Very, very low-cost.”

After trialling the service through to 28 of its restaurants, Red Rooster decided to bring much of its delivery service in-house.

“We realised that there were benefits with investing in our own online ordering platform, in that we could control the total customer experience and not have to compete on an online world with other businesses,” Chris explains.

“At that stage, we actually made the decision to invest about $1 million; since then, it’s probably been closer to [$2 million].

Despite the cost outlay, Chris says that bringing delivery in-house rather than relying exclusively on third parties has brought a number of benefits to the business.

“Menulog is still a great low-cost way for us to get new people into the business, but obviously we pay higher commissions on that network,” he says.

“[Plus] having those branded cars, not only do they sit out the front and promote delivery, but when they’re buzzing around, they’re like mobile billboards. They do help us reduce costs a little bit with drivers as well, but the exposure that we get from an advertising [perspective] is huge.”

Chris’ comments came as fellow Aussie quick service food brand SumoSalad announced it had joined Menulog’s platform, similarly for tapping into consumer demand for convenience as a means of growing the business.

Hear more insights from Chris on Red Rooster’s impressive strategy to re-energise and grow a well-established brand in a highly competitive marketplace on the My Business Podcast below:

Retailer’s $2 million delivery gamble pays off
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