Off-premise now accounts for more than 21% of the chain’s total sales, up from 10% to 12% before the pandemic. Taylor-Smith believes that Denny’s would have gotten to this point with delivery eventually, but the pandemic sped things up. “The pandemic really forced the issue,” she said. “It just forced some really cool innovation and growth and expansion of brands that really fit our model in ways that doesn’t maybe fit in some other casual-dining players.” While the growth of delivery has been good for many restaurants, it has not come without its challenges. The new revenue stream introduced fresh economic and operational complexities. And it deepened restaurants’ ties to powerful delivery companies like DoorDash and Uber Eats. It became common for restaurants to mark up their prices on delivery apps to help offset their commissions, creating frustration for customers and tension with delivery providers. And many operators feel bound by the opaque algorithms that influence their performance on delivery apps. Restaurants of all sizes are still navigating this new landscape. Even before the pandemic, Crisp Salads, a salad concept with three locations in Portland, Oregon, did a lot of delivery. But it has skyrocketed since 2020 and by the end of last year, third-party delivery alone accounted for 53% of Crisp’s sales. The problem is, third-party delivery is Crisp’s least-preferred sales channel because of the cost and because it doesn’t get to keep any of the customer data for those orders. Crisp marks up its delivery prices by about 10% to help offset its delivery commissions. “In my perfect world, people would probably do takeout,” said owner Emma Dye. “Then I’m not paying any commission to anybody.” Dye has made an effort to get people to use Crisp’s other ordering methods, particularly its own website, where delivery and pickup are offered for a lower price. Staff put postcards in every to-go order encouraging people to do so. But it has been difficult. Crisp’s first-party online ordering sales have actually declined while third-party delivery has grown. “It’s really hard to convert those folks,” she said of third-party delivery users. “People who have DashPass (DoorDash’s subscription program), they look at DoorDash.” And yet restaurants have little choice but to participate in the third-party delivery market these days. “When we think about restaurants, where more and more customers are moving to the delivery model, then not being on the platform becomes a risk,” said Steve Tadelis,
DENNY’S AVERAGE WEEKLY SALES ($MILLIONS) As Denny’s on-premise sales returned, off-premise remained elevated.
an ecommerce expert and professor of economics at the University of California, Berkeley, in an interview last year. “They’re pretty much stuck in a world where this is the new business model.” Backman noted that up to this point, restaurants have largely viewed delivery companies as antagonists. Restaurants’ interest in hospitality and service do not necessarily align with delivery providers’ focus on technology and rapid expansion, and that has put them at odds. But, he said, that could change as the market stabilizes and delivery firms turn their focus to sustainable growth. He foresees more cooperation between the two parties as a result. “Delivery companies need to become closer to restaurants than restaurants need to become closer to delivery companies,” he said. “I think this will have a calming effect on delivery companies and pave the way for a more cooperative environment.”
ILLUSTRATION BY DIMITRI MORSON/MIDJOURNEY
APRIL 2025 RESTAURANT BUSINESS
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