The recent sale of Little Rock's Chef Shuttle to Bite Squad, based in Minneapolis, highlights the biggest trend in the restaurant industry these days: food delivery. The Nation's Restaurant News calls delivery "one of the fastest-moving trends in industry history. If not the fastest."
"More than 80 percent of publicly traded restaurant chains, not counting pizza chains that already deliver, are at least testing delivery at the moment — based on an analysis of company earnings calls and announcements," the trade journal reported earlier this month.
The importance of food delivery reflects the importance of convenience to diners. At the same time, the food-delivery sector is growing and as it grows, it's consolidating.
Ryan Herget, the president of Chef Shuttle until its sale, was keenly aware of where the industry was heading. "That was our goal all along — to position ourselves where we could reap the financial reward when the industry consolidated, and Bite Squad saw an opportunity with Chef Shuttle and took it," Herget said.
Bite Squad was founded in Minneapolis in August 2012 by Kian Salehi and Arash Allaei. "These two friends met in college here in Minnesota, and have been involved in several partnerships over the years that have centered around how technology can connect local businesses to the customers they serve," according to Craig Key, vice president of marketing for Bite Squad.
Bite Squad is now in 20 markets and 14 states across the country. In addition to Chef Shuttle, Bite Squad recently merged with Doorstep Delivery in Orlando, Florida.
"We want to serve as many customers as we can," Key said. "We've grown organically into some markets, and we've also had some right kind of partnerships like the one with Chef Shuttle where it's a win-win. We get to benefit from the great business and customer model that Chef Shuttle has built."
It's also a win, Key said, for the customers of Chef Shuttle, which at the time of its sale operated in three metro areas — central Arkansas, northwest Arkansas and Memphis. "We bring a technology and a logistical excellence," he said. "Folks are going to see an improvement in their order times."
In delivering food, restaurants can employ their own drivers as so many pizza places do, or they can turn to the burgeoning delivery service sector that includes not only Bite Squad but Amazon Restaurants, UberEats and the granddaddy of delivery services, Grubhub, traded on the New York Stock Exchange. (Analysts think Grubhub might be Amazon's next acquisition target after its recent purchase of Whole Foods.)
Of the food-delivery sector, Key said: "As we are now entering a very real-time consumer economy, where consumers do expect what I want, when I want, how I want, it's natural that a category like restaurant delivery service is going to experience a boom. And we're right in the middle of that."
Loca Luna, Red Door Drop Out
In an interview in Mid-June, Mark Abernathy, a veteran Little Rock restaurateur, said he was "on the fence" about food-delivery services. "If people use Chef Shuttle or something like that, they're not coming in my restaurant, so they're not tipping my employees, they're not buying drinks and they're taking a big chunk. We don't run on a big profit margin."
He said he'd been satisfied with Chef Shuttle's service but it was too early to tell with Bite Squad. A week later, however, Abernathy said his restaurants — Loca Luna and Red Door — had dropped out of the service because of problems with deliveries. "I'm sure they'll eventually get it worked out, but now — Chef Shuttle, No. 1, was a local company, and we had a phone number we could call if we had any problems," Abernathy told Arkansas Business. "This is some out-of-state group that doesn't even have a number you can call if you need help."
In response, Bite Squad's Co-Founder and CEO Kian Salehi said in a statement:
"Overall, we've experienced a successful transition in Little Rock — the response we've received from customers and restaurant partners since making the switch has been overwhelmingly positive. Our order volume is already more than what Chef Shuttle was processing, and we've significantly improved delivery times in just 3 weeks — we're confident we can further improve too. We've lost very, very few restaurants."