Red Rooster delivery model to hit 200 stores, 50 more planned

By Sarah Stowe | 21 Jul 2016 View comments

Red Rooster's delivery option provides an extra revenue stream for franchiseesRed Rooster will open its 200th delivery store in August and has more opportunities up for grabs.

Chris Green, CEO of Red Rooster, told FranchiseBusiness “We’ve put an incredible investment into this and it has equated to more profits for franchisees.

“Delivery has a halo effect, pulling up other sales in the store,” he said

On average franchisees are seeing a 20 percent uplift in sales after introducing the delivery model. The average spend in deliveries is two or three times that of in-store purchases.

And the Coburg, Victoria store has done exceptionally well, up 50 percent on turnover, delivering 300 orders each week.

While lunch time delivery sales across the network are predominantly from businesses looking for catering, 80 percent of customer demand is skewed to dinner time, predominantly Friday and the weekend.

But the perceived healthier meal options of roast chicken with veggies or chicken burger with chips are also proving popular mid-week alternatives to pizza, Green reports.

“It’s about ultra-convenience for families and singles,” he added.

It’s also filling a gap in the delivery market occupied by pizza brands and local Indian, Thai and Chinese restaurants.

“Our product is quicker to get out of the store. The chicken is cooked and ready, and we cook chips fresh, but we have a natural speed advantage.”

Franchisees will sustain higher labour costs and will need to lease or buy a branded car, but there are higher gross margins in deliveries, according to Green.

The delivery model was launched in September 2014 and trialled at a Baulkham Hills, Sydney for a year before it was extended across seven stores.

As a result, the business reset costs, adopting a differential pricing system. “The model had high customer demand and now it is a strong economic model for franchisees,” explained Green.

This allowed the brand to take the delivery model nationally, targeting areas with sufficient customer demand – households, offices, industrial areas – within seven to 10 minutes away by car.

“It’s not cannibalising existing business, it’s opening up a new channel, opening up the brand to new customers or existing customers using us at a different time,” said Green.

Red Rooster partnered with Menulog to generate new customers, and has since invested nearly $2m on developing its own online system and app.

“Now customers can go online and order directly, it’s a better customer experience,” said Green.

He believes that linking the Red Royalty customer loyalty program to delivery orders, allowing customers to earn dollars towards future orders, is a key customer advantage of the model.

Green expects up to 50 further stores in the 360-strong network to adopt the delivery model by November this year.