The restaurant and food service industry has gone through massive transformation over the past few years. The COVID-19 pandemic and home-bound lifestyle have changed the way people dine and enjoy restaurant food, making way for a new world of food mobility. Contactless food delivery has become mainstream, and the pandemic has given a big boost to cloud kitchens and third-party food delivery platforms. 

Revenue from the online food delivery market is projected to reach $33,430 million this year in North America and grow more than 6.5% in 2022, according to a report by consumer data company Statista. The convenience of ordering food and quick delivery timeframes are the biggest drivers of this rapid growth. 

While cloud kitchens or "ghost kitchens" have given new players a chance to enter the booming food delivery industry, third-party platforms have enabled conventional restaurants to find a solid presence online. 

More than 90% of restaurants say they’ll continue using third-party delivery services after the pandemic, according to a survey by UberEats. Eighty-four percent indicated that delivery apps have allowed them to reach customers they otherwise wouldn’t have access to.

Customer expectations are growing, too:

• A friendly user interface. Ordering food online must be seamless. A good user interface and a secure payment gateway is a must to ensure a smooth ordering experience.
• Speed of delivery. The whole point of food delivery is to feed a hungry belly. Tasty food within minutes is every customer’s biggest expectation. 
• Quality of food. While the food travels from a restaurant to the customer’s doorstep, it should be delivered in its best shape — ice creams cannot melt on the way, and pizzas cannot turn soggy. The quality of food somewhat deteriorates due to packaging and transportation. Good packaging and careful handling of food during transportation are therefore essential.
• Clear visibility. Transparency is another important element of a great food delivery experience. Customers expect to be able to track their package in real-time and have clear whereabouts of their orders. 

In order to beat the growing competition and keep up with customer expectations, brands must focus on the single most important element of the food delivery supply chain — last-mile logistics. The speed and efficiency in the last mile can make or break a food delivery business. But why is logistics so crucial in the food delivery business?

The restaurant supply chain is highly complex and time-sensitive. From the minute an order is placed online, the clock is constantly ticking! While the food gets prepared in the restaurant, a delivery agent must be assigned to pick the parcel from the restaurant and deliver it to the customer within a short time, without potentially hampering the quality of food. 

Even the slightest package mishandling or delay can result in a negative customer experience. 

Logistical Challenges 

Given the complexities of the food delivery supply chain, brands often face some common challenges in the last mile.

• Poor planning. Many brands still rely on old-school pen and paper planning processes to dispatch orders and plan day-to-day logistics operations. In a race against time, manual logistics planning tends to slow down the pace of last-mile deliveries.
• Inefficient order management. Oftentimes, finding delivery agents at the right time to execute online orders becomes a huge challenge for businesses. Without a proper task allocation system, it can be a struggle to manage on-demand food delivery orders efficiently.
• Ineffective routing. Scheduling hundreds of food deliveries every day involves planning hundreds of delivery routes as and when orders are placed. Route planning without considering real-world constraints such as traffic, weather conditions or territorial restrictions is ineffective, and leads to extra fuel consumption.
• Foggy on-ground visibility. Inability to monitor resources during ongoing deliveries causes delays on the ground, and restricts managers from ensuring a great customer experience. Due to a lack of visibility, it is also difficult to share live delivery status with customers. 

Getting Smarter

Innovations in artificial intelligence (AI), the internet of things (IoT), data science and location intelligence are now transforming supply chains globally, and the restaurant supply chain is not an exception.

Geocoding and location intelligence tools help in mapping delivery addresses precisely on a virtual map, allowing agents to reach customers faster, without spending much time on locating them.

Advanced route planning solutions automate logistics planning for food delivery businesses, enabling faster order scheduling and optimal route generation for every order within seconds. Smart routing takes into account on-ground constraints and leads to lesser miles driven, therefore lesser fuel consumption and reduced logistics costs.

With the help of AI-enabled rider allocation software, managers can find the right executives and assign delivery tasks based on multiple factors such as proximity to restaurant/customer location at the time of order placement, rider’s preferred area of servicing, delivery expertise, and so on. 

Live visibility tools allow remote monitoring of delivery operations in real time, and predictive alerts help in avoiding unnecessary delays in deliveries. Historical and real-time data analytics help in improving logistical planning and supply chain decision making in the long run. 

In a business space where the competition is constantly growing, fine tuning last-mile operations with smart use of tech will have a huge impact. It’s time for restaurants and food delivery platforms to leverage logistics tech to fix the gaps in their last mile, ensure great customer satisfaction and stay ahead of the curve.

Krishna Khandelwal is chief business officer at Locus.