Discussions with Ann Wells Reveal Managerial Goals of Research ……………………. 7
We Performed Exploratory Research Using Secondary and Primary Data ……………….. 9
The Takeout Taxi provides a comparable fast food model ……………………………………….…9
Schwan’s Foodservice provides a comparable grocery model ………………….……………….10
We gathered background information in depth interviews and focus groups ………….. 11
We formulated engaging questions to ensure actionability …………………………………….. 14
We pretested and improved our questionnaire ………………………………………………………… 15
We created a sampling plan that would ensure representativeness ………………………….1 6
We collected our data using a non-biased strategy ……………………………………………………17
Our sample is representative of the target population ………………………….…..….….17
A fast food delivery service would be successful ………………………………………………..19
DeliverMe Food will enjoy sufficient demand ……………………………………………………….19
DeliverMe Food should focus on dinner and late-night deliveries ……………………………20
DeliverMe Food should focus their delivery hours on the weekends ………………………..20
DeliverMe Food needs to make deliveries within an hour ………………………………………21
DeliverMe Food should focus on providing services to underclassmen …………………….21
DeliverMe Food should target males …………………………………………………………………..21
DeliverMe Food should target Bodo’s, Little John’s, and Christian’s …………………………22
DeliverMe Food should target Chipotle, Panera Bread, and Five Guys ………………..…..23
DeliverMe Food should further research students’ willingness to pay ..……………………23
Current eating habits drive demand for fast food delivery service ……….…………………23
Lack of time is the primary reason students would use the fast food service …………….24
A grocery delivery service would be a successful addition ………………………………….25
DeliverMe Food should offer grocery delivery services to students ………………………….25
Underclassmen will pay more for grocery delivery services ……………………………………25
Lack of time is the main reason students would use the grocery delivery service ………26
Access to transportation and other drivers were surprisingly insignificant ………….27
Our study had a number of limitations ……………………………………………………………………28
Ann Wells should implement DeliverMe Food …………………………………………………………29
Exhibit 1: Guide for conducting interviews and focus groups ………………………………33
Exhibit 2: Major findings from interviews and focus groups ……………………………….34
Exhibit 3: Select transcripts from interviews and focus groups ……………………………35
Exhibit 4: Questionnaire with suggested changes from industry expert, David Mick ……………………………………………………………………………………………………………….39
Exhibit 5: Questionnaire with suggested changes from convenience sample ……….42
Exhibit 6: Final questionnaire ……………………………………………………………………………45
Exhibit 7: Script used when approaching prospective respondents ………………………48
Exhibit 8: UVa undergraduate population by year and gender …………………………...49
Exhibit 9: Forecasted demand for the food delivery service is strong ………………….50
Exhibit 10: Chart of students’ preferred delivery time ………………………………………..51
Exhibit 11: Histogram of students’ willingness to wait ………………………………..…….52
Exhibit 12: Regression of willingness to pay for fast food delivery service …………..53
Exhibit 13: Crosstabs of monthly use of and willingness to pay for fast food
Exhibit 14: Charts of students’ preferred restaurants …………………………………………55
Exhibit 15: Histograms of students’ willingness to pay ……………………………………….56
Exhibit 16: Regression of monthly use of fast food delivery service …………………….57
Exhibit 17: Histograms of monthly use and willingness to pay for grocery delivery …………………………………………………………………………………………………………… 58
Exhibit 18: Correlation between monthly uses of fast food and grocery services ….59
Exhibit 19: Regression of monthly use of grocery delivery service ……………………….60
Exhibit 20: Crosstabs of willingness to pay and demand for grocery delivery ………61
In January of 2009, Ann Wells of AGW, Inc. approached us regarding a potential business opportunity.She was interested in starting a fast food and grocery delivery service for undergraduate students at the University of Virginia called DeliverMe Food.This service will deliver food that is not currently available for delivery to university students.In addition, Ms. Wells could expand this service to include a ten-items-or-less grocery delivery service.She wants to know the demand for this service, the price she should charge, where she should locate, and how she should advertise.
Methodology included exploratory and descriptive research for actionable results
Our research consisted of both exploratory and descriptive research.We conducted exploratory research to give us some preliminary insights about the demand for the service and to help us design a more useful and actionable questionnaire.Using this exploratory research, we designed a questionnaire and conducted descriptive research.
We analyzed comparable fast food and grocery delivery business models
To understand how a fast food delivery service is structured, we looked at the largest multi-restaurant delivery service in the nation: Takeout Taxi.They have a strong emphasis on customer service, providing menus from various restaurants on their website and offering ordering options over the phone and online.Most grocery delivery services we researched have failed.However, Schwan’s Foodservice has been able to remain profitable for 55 years, and it is a good model on which to base our service.The information from our secondary data helped us to more insightfully interpret the qualitative information provided from the interviews and focus groups.
We gathered background information through depth interviews and focus groups
Using focus groups and depth interviews, we gathered background information on DeliverMe Food services.We interviewed 14 university students regarding the business proposition.Overall, the people we spoke with expressed positive reactions to the service.The key factors that would influence their usage of the service included speed and cost of delivery.The interviewees showed particular interest in the service when they were strapped for time, such as when studying in the library during mid-terms and finals weeks.
We administered a questionnaire to a 100 person quota sample
We designed our questionnaire to help us determine who Ms. Wells should target, how much she should charge, when she would experience high demand, what restaurants would be the most popular among students, and what elements of the service she should most heavily advertise. Our survey consisted of many unstructured questions measured on a ratio scale that were aimed at gauging willingness to pay for the service, willingness to wait on the service, and usage rates.
To ensure our questionnaire was unambiguous, actionable, and impartial, we took submitted our first draft to an industry expert and revised it based on his suggestions, administered the revised copy to a convenience sample of 5 UVa undergrads and revised it, and re-submitted the updated version to the industry expert to check for final problems.
We used a quota non-probability sampling plan to carry out our research, in order to properly represent the gender and class distribution at UVa.
Data analysis shows the ideal price, product, place, and promotion of the service
In our data collection, we achieved a representative sample of the UVa student population.Although our data showed that students are fairly satisfied with their current dining situation, our analysis shows that, if properly targeted and marketed, the fast food and grocery delivery service could achieve around 52,000 orders per month.
DeliverMe Food should base its service hours late at night and on weekends
DeliverMe Food should structure its business hours and personnel to focus on dinner and late night deliveries.Over 80% of respondents ranked dinner and late night as the times they would most use the fast food delivery service.During our depth interviews and focus groups, many students described their potential use of the service as a “late night craving” option.Also, based on our analysis, students would primarily use the fast food delivery service from Friday to Sunday.Over 65% of respondents said they would use the service most on weekends.As a result, we suggest keeping more delivery staff on hand and having longer hours on weekends.
DeliverMe Food needs to make deliveries within an hour
According to our analysis, consumers are not willing to wait more than an hour for fast food deliveries.On average, students are willing to wait 30 minutes per delivery.DeliverMe Food should take these constraints into consideration when planning the logistics of its service.
DeliverMe Food should target its services towards underclassmen and males
Underclassmen are willing to pay more for and males are more likely to be heavy users of the fast food delivery service.We ran a regression and cross-tabulation which showed that year in school drives willingness to pay for this service.In addition, we ran a cross-tabulation that suggested that males drive monthly demand for this service.Therefore, we suggest that DeliverMe Food focus on males and underclassmen.
DeliverMe Food should offer grocery delivery services to students
Offering a grocery delivery service in addition to fast food delivery would increase profitability and encourage loyalty.On average, students said they would pay more for the grocery delivery service than the fast food service.In addition, the correlation between monthly use of both services is over 0.60.Also, we believe that this service would achieve adequate demand.Therefore, adding a grocery delivery service will improve profitability and customer loyalty.
Based on our research, we suggest that Ms. Wells pursues both the fast food delivery service and supplementary grocery delivery service.We based this suggestion on an extensive methodology, which included depth interviews, focus groups, and surveys.We did significant analysis of the resulting data, which included regressions, correlations, and cross-tabulations.While our research had certain limitations and may require further inquiry, our data strongly supports the idea of a fast food and grocery delivery service in Charlottesville.
In January 2009, Ann Wells of AGW Inc, approached McHayesborn & Schates Consulting to assist her company, Deliver Me Food, in gaining insight into the market demand for a potential business venture.In particular, Ms. Wells wanted a better understanding of the market for a restaurant and limited grocery delivery service at the local college campus—the University of the Virginia (UVa).Ms. Wells’ preliminary idea was a delivery service that focused restaurants that don't currently have a delivery option.The grocery service would be limited to 10-items-or-less.However, these parameters would be subject to manipulation based on our research findings.
Although she had an idea of the market demand for such a project being a recent graduate of UVa, she wanted to reduce her uncertainty about the demand before funding the proposed service.Her idea required purchasing electronic devices that would receive both online and over-the-phone requests from consumers, purchasing portable machines for credit card transactions, and hiring the appropriate number of staff to service the customer in an adequate amount of time.
Discussions with Ann Wells Reveal Managerial Goals of Research
After receiving the request for market research, we met with Ms. Wells several times to ensure that both Ms. Wells and our firm had the same understanding of the problem at hand.She believed there existed an opportunity to profit from students’ need for convenience when they desire to eat food from restaurants that do not have a delivery service.Additionally, as some students do not have ready access to transportation off-grounds, she believed adding a grocery service to the business was a unique opportunity to reach this market of undergraduates.She felt that students who lacked easy access to transportation would be her most lucrative target market.She anticipated that large number of students lacked easy access to a car at UVa for two reasons.First and foremost, about a quarter of UVa’s students are first years and are, therefore, prohibited from having a car on grounds.Secondly, about 40% of UVa students are from out of state and are less likely to drive their car to UVa.
In order to provide actionable results for Ms. Wells, our research was organized in a manner that would address Ms. Wells’ key concerns.Our research would provide insights into the following decision making problems:
Product: What services should be offered?How long are students willing to wait to receive the delivery order?
Price: How much are students willing to pay?How should AWG price the service?What forms of payment do the students prefer?
Place: Which restaurants should be included?
Promotion: Who would be the most profitable target market?What is the best advertising method to reach this market?
After agreeing on the goals of research, we showed Ms. Wells mock tables to ensure that management and the research team were on the same page and to guarantee that she could act upon potential findings.The plan we presented Ann Wells is as follows:
Analyze secondary data to understand comparable business models
Conduct focus groups and depth interviews to gauge interest in the business idea
Design, pretest, and administer a survey that would show quantifiable results regarding demand for the service, willingness to pay, and usage rates
Analyze the results using Microsoft Excel and SPSS software
Make conclusions and recommendations for the business based on the results
In this section, we will discuss the various research methods we employed, how we designed our questionnaire, whom we sampled, and how we collected the data.We performed both exploratory and descriptive research.
We performed exploratory research using secondary and primary data
The exploratory research came from both secondary and primary resources and included background research on comparable business models, one-on-one depth interviews, and mini focus groups.
Although we had a basic sense of what information we needed to procure for Ms. Wells, we conducted exploratory research to give us some preliminary insights about the demand for the service and to help us design a more useful and actionable questionnaire.Below we will discuss the various techniques we used and the ensuing findings.
The Takeout Taxi provides a comparable fast food model
To understand how a fast-food delivery service is structured, we looked at the largest multi-restaurant delivery service in the nation: Takeout Taxi.They have a strong emphasis on customer service, providing menus from various restaurants on their website and offering ordering options over the phone and online.On top of restaurant delivery, Takeout Taxi also flaunts a strong catering business.They capitalize on their web platform by tracking customers’ orders and sending them discounts and promotions catered to their preferences.This ensures continued business and customer loyalty.Some other key findings included:
Delivery takes on average between 45-60 minutes
Food cost minimum of $15 per restaurant
Service fee is a flat fee, which varies from 6.99-9.99 depending on distance
A 10% “Miscellaneous, Service and Convenience Fee” is applied to all orders
A 15% gratuity is suggestedi
This preliminary analysis revealed some potential conflicts regarding the success of the business proposition.Primarily, the cost of delivery and extra service charges seemed well above what a typical college student would be willing to pay given their tight personal budgets.This may have a profound effect on the profit margin Ms. Wells can expect.This research also enlightened us to the importance of online access to the service.Consumers today value convenience and efficiency, so excluding online access would translate to the loss of many potential customers.
Schwan’s Foodservice provides a comparable grocery model
In general, grocery delivery services have failed.However, some companies are exceptions and have been able to create successful business models.Schwan’s Foodservice has been able to remain profitable for 55 years because of its competitive advantage: delivering pre-made or easy-to-prepare meals as opposed to miscellaneous food itemsii.Peapod, an online delivery service, has experienced some success because of its ability to keep costs lowiii.Peapod acquired a traditional grocery retailer, Royal Ahold, which gave Peapod access to a cost-effective supply chain.
However, the fact remains that many delivery services have failed.The main reasons for this include:
Consumers shop for food largely based on senses (touch, smell, sight).Delivery services fail to meet this need.
Consumers enjoy the spontaneity of grocery shopping (“impulse buys” from being able to walk up and down the aisles).
Consumers have a relatively low tolerance for waiting for grocery products.They are skeptical that delivery services can provide their groceries in a timely matteriv.
This research proved a little worrisome for Ms. Wells’ proposed business, but we feel that if Ms. Wells’ targets students who lack access to grocery stores, such as first year students, this business may still be profitable.Furthermore, we felt that she should limit the number of grocery items a student can buy to ten or fewer.This will save time and focus the company’s efforts on students who have precise grocery needs and therefore are unlikely to be affected by the aforementioned impulse buying.
After conducting secondary research, we conducted primary research in the form of depth interviews and focus groups.The information from our secondary data helped us to more insightfully interpret the qualitative information provided from the interviews and focus groups.
We gathered background information in depth interviews and focus groups
We spoke with 14 university students regarding the business proposition.We conducted eight depth interviews and two focus groups with first, second, third, and fourth-year students to gather more exploratory research.Our focus groups were smaller than typical focus groups, consisting of three to five undergraduates.We figured that it would have taken too much time to gather eight to twelve willing participants and that a larger number would not have provided us with more useful insights into the market research problem.There was no prescreening process to determine the participants of our focus groups since we believed the input from any UVa undergraduate student would be valuable.Each group was heterogeneous regarding year in school and homogeneous regarding gender.We wanted to keep females separate from males so that they would feel more comfortable sharing their eating habits.
When conducting the interviews and focus groups, we had a loose outline of topics to discuss to ensure the conversation flowed (Exhibit 1).However, we tried to foster an unstructured, flexible environment in both settings, so we would stray from the outline when interesting topics arose.Also, we tried to keep the setting informal and get the respondents interested by asking open-ended, fun questions such as, “What is that one fast food item that when the craving hits you, you’d go to almost any extent to get it?”
Given time and monetary constraints, we figured that interviews and focus groups were the most relevant and useful primary research.They gave us firsthand reactions to the business model from members of our target population (UVa undergraduate students).We felt that observation would be timely and would not provide meaningful insights.Observing students grocery shopping or buying fast food would not explain why they would want to forego the activity in exchange for a delivery service.Further, it would be both invasive and infeasible to observe students ordering delivery services and monitor the conditions (environmental, time of day, student workload) under which they do so.
We didn't feel it necessary to conduct projective techniques for two reasons: the information we needed could be obtained by directly asking a selection of people from our target population (i.e. there are few subconscious attitudes regarding food delivery services), and we do not have the psychological expertise necessary to accurately interpret findings from this research method.
Overall, the people we spoke with expressed positive reactions to the service (Exhibit 2).The key factors that would influence their usage of the service included speed and cost of delivery.Additionally, they claimed that they would be most likely to use the service for dinner and “late night” snacking.Another common theme was the convenience of the service.The interviewees showed particular interest in the service when they were strapped for time, such as when studying in the library during mid-terms and finals weeks.When working in the library for hours at a time, the students tended to find vending machine food unfulfilling.As a fourth year student exclaims, “When I’m at the library and don’t have time to go anywhere, I usually end up at the vending machine.The items offered are usually unhealthy and don’t really fill me up” (Exhibit 3).
Based on the exploratory research, we formulated several hypotheses to test with our questionnaire, including:
First years will have higher demand for the service,
Consumers without cars will have higher demand for the service,
The service will have the highest demand during dinner and late-night hours,
The service will be most profitable Thursday-Sunday night.
Broadly speaking, we wanted our questionnaire to help us determine who Ms. Wells should target, how much she should charge, when she would experience high demand, what restaurants would be the most popular among students, and what elements of the service she should more heavily advertise.Because our questionnaire is intended to test specific hypotheses and determine characteristics of our target market, it can be classified as descriptive research.
We created and pretested a questionnaire to collect data
As already stated, the above exploratory research helped us design our questionnaire.When creating the questions, our primary concern was how the answers to that question would lead to actionable results for Ms. Wells.The questionnaire can broadly be divided into four sections:
One section to determine typical eating habits, satisfaction with food options in Charlottesville, favorite places to eat in Charlottesville, and accessibility to a car
One section where the respondent was asked to consider a possible new fast-food delivery service and answer questions regarding their willingness to pay for it, how often they would use it, when they would demand it the most, and why they would be most likely to use it
One section where the respondent was asked to consider a possible new grocery delivery service and answer questions similar to those described above
And one section with basic demographic information (year in school, gender, housing)
We formulated engaging questions to ensure actionability
To keep the questionnaire engaging, we structured our questions in a variety of ways.For example, to determine overall satisfaction with the food options in Charlottesville, respondents were asked to numerically rate their satisfaction on a semantic differential scale.We figured that the less satisfied students were, the more chance of success Ms. Wells would have in promoting her business.Additionally, we asked an unstructured question (“What are your three favorite places to eat on the Corner?”) to get the respondent more involved in the questionnaire and to find out the areas of highest demand for Ms. Wells’ business.We included one ordinal question where we asked the respondents to rank the times they would be most likely to use the service (question number 10).This questions placement between a dichotomous question and a multiple-choice question allowed it to serve as a control measure to ensure respondents were accurately reading the questionnaire.Many students failed to rank their answers and instead merely checked off the time of day they would be most willing to use the service.About 12% of respondents failed to answer this question correctly, which gave us an estimate of respondent inability error, or the error that results from the respondent’s inability to provide accurate answer.The major drivers of this error were probably students’ boredom and hastiness.
Our questionnaire consisted of many unstructured questions measured on a ratio scale that were aimed at gauging willingness to pay for the service, willingness to wait on the service, and usage rates.These were left open-ended because we believed that if we gave the respondent brackets of waiting times and payment rates, they would underestimate their answers and merely check the lowest brackets.
We pretested and improved our questionnaire
To ensure our questionnaire was unambiguous, actionable, and impartial, we took the following steps:
Submitted our first draft to an industry expert, Professor of Marketing Research David Mick and revised it based on his suggestions
Administered the revised copy to a convenience sample of 5 UVa undergrads and revised it based on their suggestions
Re-submitted the updated version to the industry expert to check for final problems
The biggest concern Professor Mick had regarding the questionnaire was ambiguous wording (Exhibit 4).Based on the feedback from the convenience sample of five undergrads, the most pressing issues facing our questionnaire were ambiguous wording and confusion regarding when we were referring to the fast food delivery service versus the grocery delivery service (Exhibit 5).Professor Mick had no suggestions for our questionnaire when the updated version was re-submitted to him, so we were able to administer that copy to a sample of 100 UVa undergraduate students (Exhibit 6).The questionnaire represented the entirety of the conclusive research we conducted.
We created a sampling plan that would ensure representativeness
The population of interest for Ms. Wells’ business proposition included all UVa undergraduate students.Ms. Wells believed UVa students to be the most profitable market since she could utilize mass-advertising techniques.Specifically, the target population spanned all four years of undergraduate study at the university and included both males and females who lived on or near campus.Sampling units included those UVa undergrads on or around campus who responded to our questionnaire.
We used a quota non-probability sampling plan to carry out our research.Although a probability sample is prone to less selection bias, constructing a probability sample is much more complex and time-consuming.Furthermore, we did not believe that the results from a probability sample would have differed greatly enough from a non-probability sample to necessitate its implementation.Our sampling plan can be classified as quota because we controlled which respondents we pursued based on gender and year in school.Specifically, we wanted our questionnaire to be filled out by approximately 25% of students from each graduating class, 56% males, and 44% females, to mimic the actual UVa undergraduate population.For the last ten of our questionnaires administered, we asked the student’s year in school before giving it to the student so that we could obtain the percentages described above.To have a large enough sample size to give us meaningful results, we surveyed 100 UVa undergraduates, or approximately .7% of the total population.
We collected our data using a non-biased strategy
When collecting the data, we approached students with a pre-planned verbal script.Although we did not follow this script verbatim, our routine always consisted of asking the student if they had 5-10 minutes to fill out our questionnaire and stating the purpose of our survey (i.e. for our marketing research class to gauge interest for a proposed business model) (Exhibit 7).Upon completion of the questionnaire, we thanked the student for their time.
To increase the variety of respondents and minimize bias, we surveyed students from various locations on and off grounds, including: Newcomb Hall, Clemons Library, Alderman Library, the Commerce School, Cabell Hall, and the O' Hill Dining Hall.Since there is such a large portion of students involved in Greek life at UVa, we also administered the survey at a fundraising event hosted by a Greek organization.
Data Analysis Results
Our sample is representative of the target population
Our sample proved to be fairly representative of the UVa population with regard to gender.Of the respondents we surveyed, 53 of the respondents were female and 47 of the respondents were male (Charts 1 and 2).Our sample wasn't as precise in mimicking actual year distributions at UVa (Exhibit 8), but it was still representative.29 respondents were in their first-year, 32 respondents were in their second year, 20 respondents were in their third year, and 19 respondents were in their fourth year.
Students are mostly satisfied with their current dining options
According to our data, students consistently rated their satisfaction with current dining options above five on a scale from one to ten, ten being most satisfied (Graph 1).Students rated satisfaction with the quality and variety of dining halls lowest, with average ratings between five and six.Next, students rated satisfaction with delivery service quality and variety, with an average rating of seven.Finally, students ranked satisfaction with their access to off-grounds food highest, with an average rating of around eight.Although these results may be daunting, we believe that the business model could serve as a niche supplement to student’s diets that won’t directly compete with the dining hall.The fact that all of the satisfaction ratings don't significantly drive willingness to pay or demand for this service confirms this belief.
A fast food delivery service would be successful
We believe that DeliverMe Food will experience heavy demand, decent willingness to pay, and many other factors that will make it a valuable investment.Therefore, we suggest that Ann Wells invests in DeliverMe Food.
DeliverMe Food will enjoy sufficient demand
DeliverMe Food will profit from substantial demand for its fast food delivery service.We discovered that students would use the fast food delivery service on average four times per month (Exhibit 9).Extrapolating this figure out to the entire undergraduate community, the business would achieve around 52,000 orders per month.Even if this projection is optimistic, we believe that DeliverMe Food will experience sufficient demand to be a long-term, profitable enterprise.
DeliverMe Food should focus on dinner and late-night deliveries
DeliverMe Food should focus its service hours around dinner and late night meal times.We found that students would mainly use the fast food delivery service for dinner and late-night deliveries rather than for breakfast and lunch.Our survey results indicated that 44 respondents ranked late night first and thirty-nine respondents ranked dinner as the meal for which they would most likely use the service (Exhibit 10). Consequently, we believe that DeliverMe Food should advertise its delivery business using a "Late Night Cravings" advertising campaign to entice late night snackers.
Delivery Me Food should focus their delivery hours on the weekends
According to our data analysis, students would primarily use the fast food delivery service on weekends (Graph 2).Over 65% of respondents claimed that weekends would be the time of week they would use the service the most, while only 21% of students gave the second most common answer, equal demand throughout the week.As a result, we suggest that Ann Wells dedicate the most delivery personnel to weekends and have longer hours on weekends.Providing less service on weekdays would minimize costs and would only adversely affect the 13% of students who prefer weekday deliveries.
DeliverMe Food needs to make deliveries within an hour
DeliverMe Food should determine if it can make deliveries within one hour of receiving a customer's order.We found that students wouldn't be willing to wait longer than one hour, and that they would be willing to wait on average thirty minutes (Exhibit 11).DeliverMe Food should take this into consideration when it plans the logistics of its fast food delivery service, such as the company's primary location and its geographic scope.
DeliverMe Food should focus on providing services to underclassmen
According to our analysis, underclassmen are willing to pay the most for a fast food delivery service.In our regression of what flat fee students were willing to pay, year alone explained 6.3% of the variation in willingness to pay (Exhibit 12).As class increases by one year, students are actually willing to pay almost a dollar less for the service.
In addition to our regression, we ran a cross-tabulation to confirm this relationship.This cross-tabulation compared the number of upperclassmen and underclassmen to the flat fee they were willing to pay (Exhibit 13).At a significance level of 0.02, upperclassmen proved to be unusually stingy towards this fast food delivery service.Therefore, we suggest that DeliverMe Food focus its business on first and second years by advertising strongly at and providing heavy service to dorms.
DeliverMe Food should target males
Our analysis shows that males are more likely to be heavy users of the fast food delivery service.Although only significant at 0.13, our crosstab of gender’s relationship with monthly use of the fast food service showed that there is a strong chance of males being heavier users (Exhibit 13).Our regression agreed with this finding, showing that being male increases the number of times per month a student will use this service.However, the gender driver was also only significant at a level slightly above 0.1.Due to these early findings, we believe that DeliverMe Food should collect more data to further test this gender bias.
In addition to the monthly use of this service, we tested the relationship between gender and the reason for using this service (Table 1).One of the most common reasons students cited for using this service was laziness.We ran a crosstab of gender’s relationship to laziness and found that males are much more likely than females to report laziness as a reason for using our service, with a significance of 0.018.These findings further confirm our belief that the business should target males, and we suggest that the business markets their idea as a convenient solution for lazy guys.
DeliverMe Food Should Target Bodo's, Little John's, and Christian's
DeliverMe Food should establish relationships with Bodo's, Little John's, and Christian's.We discovered that these three restaurants are the most popular options on the corner according to our sample (Exhibit 14).DeliverMe Food should focus on obtaining discounts or deals at these restaurants.In addition, DeliverMe Food should promote these restaurants as options in its advertisements.
DeliverMe Food Should Target Chipotle, Panera Bread, and Five Guys
DeliverMe Food should create relationships with Chipotle, Panera Bread, and Five Guys.We found that these three establishments are the most popular fast food restaurants according to our sample (Exhibit 14).DeliverMe Food should concentrate on getting discounts or deals at these restaurants.Furthermore, it should advertise these restaurants as options for its fast food delivery service.Lastly, DeliverMe Food should assume that most of its business would center on these restaurants at Barracks Road Shopping Center.DeliverMe Food can use this assumption in planning the primary location and the geographic bounds of the business.
DeliverMe Food Should Further Research Students' Willingness to Pay
DeliverMe Food should perform more in-depth research to determine students' willingness to pay for the fast food service.We discovered that students are willing to pay on average a 10% service charge on top of the cost.If the service used a flat fee, students would be willing to pay on average a $3 flat fee (Exhibit 15).However, we believe that students were underestimating their willingness to pay and that DeliverMe Food could charge a larger service charge or flat fee.DeliverMe Food should conduct more research to validate this hypothesis.Validating this hypothesis will determine whether DeliverMe Food can build a profitable pricing model.
Current eating habits drive demand for fast food delivery service
According to our regression, current eating habits are the primary drivers of demand for the fast food delivery service.In our regression, meals per week bought from the store, taken to go, and ordered from delivery services account for 16.2% of the variation in monthly use of the fast food service (Exhibit 16).Each of these drivers was significant at 0.05.Meals per week bought from a store had a negative relationship with monthly use, while meals per week delivered and taken to go had a positive relationship.Based on this relationship, we suggest promoting the service through established take out chains.While restaurants that already deliver would oppose DeliverMe Food's entry, take out services would probably welcome the added business the service would bring.Moreover, they would allow Ann Wells to promote the business to the target market through their restaurants.
Lack of time is the primary reason students would use the fast food service
While students’ laziness and lack of transportation are reasons for interest in using the fast food delivery service, lack of time is the main reason students would use it (Graph 3).In our questionnaire, students could all the given options for reasons why they would use the service.Over 50% of respondents claimed that no time was a reason for their demand.Therefore, we suggest that Ann Wells promote the service in areas around grounds that demand large time commitments from students, such as libraries.By promoting awareness of the business to time-crunched students, Ann Wells will be able to capitalize on this demand.
A grocery delivery service would be a successful addition
We believe that a grocery delivery service will add a niche element to DeliverMe Food’s fast food delivery services that will be more profitable.Therefore, we suggest that Ann Wells expands the business into an additional grocery delivery service.
DeliverMe Food should offer grocery delivery services to students
Our analysis suggests that offering grocery delivery services in addition to fast food delivery services would increase profitability.On average, students said that they would use a grocery delivery service 2.4 times per month (Exhibit 17).Although this is fewer times per month than for fast food delivery, students would be willing to pay a premium for the novelty.The median fee that students would pay for the service is $5, with an average of almost $7 (Exhibit 18).By offering this niche service, the business can increase profitability per customer.
In addition to this profitability effect, offering grocery delivery services to students will help the business capitalize on customer loyalty.Based on our analysis, the correlation between monthly use of the fast food service and monthly use of the grocery service is over 0.60 (Exhibit 18).Therefore, heavy users of the fast food delivery service will most likely be heavy users of the grocery delivery service too.By offering these dual services, DeliverMe Food will capitalize on the crossover between these markets.
Underclassmen will pay more for grocery delivery services
According to our analysis, underclassmen are willing to pay a higher premium for the niche grocery delivery service.Based on our regressions on monthly use of the grocery service and willingness to pay, year in school is a significant driver of both quantity and profitability of this service (Exhibit 19).In addition, our crosstabs of class’s relationship with monthly use and willingness to pay showed that underclassmen would be both heavier users and higher payers (Exhibit 20).Both of these results were significant at the 0.01 level.As a result, we suggest that DeliverMe Food offers grocery delivery services to students by focusing on first and second year dorms.
Lack of time is the main reason students would use the grocery delivery service
Students cited lack of time and lack of transportation as reasons that they would use the grocery delivery service (Graph 4).As was the case with the fast food delivery service, no time was the most common reason that students would use the grocery service, given by 45% of respondents.Therefore, we suggest that Ann Wells advertise in the same, busy places as the fast food service, such as libraries.Our regression of monthly use of the grocery delivery shows that both no time and too much of a hassle are responses that significantly drive demand for the grocery service.This confirms our suggestion that Ann Wells should promote the business in areas like libraries, the Commerce school, and the Architecture school.Also, time constrained students may be more willing to pay for the convenience of the service.
Access to transportation and other drivers were surprisingly insignificant
Many variables that we thought would drive demand for our services were insignificant in our data analysis.
Access to transportation.We thought that students who don't have access to a car would be more interested in these services.However, that correlation did not hold in any of our analyses.
Satisfaction with dining halls.We thought that students who aren't satisfied with the dining halls would have a higher demand for these services.However, satisfaction with dining halls and monthly use of our services weren't related.
Current Fast Food Spending.We thought that current fast food spending would influence willingness to pay and interest in the service.Although current eating habits were significant drivers, fast food spending wasn't.
The insignificance of these variables disproved many of our hypotheses.However, we still think that issues such as transportation access could have an effect that we did not find, especially since lack of transportation was cited as a primary reason for using the fast food delivery service.Also, variables such as satisfaction with dining halls could have a different relationship than we anticipated.Lastly, the business’s services could actually be more of a supplement to dining halls than a competitor to dining halls.
Our study had a number of limitations
We formulated our research study to reduce the uncertainty associated with starting DeliverMe Food.However, it is important that Ann Wells know about the limitations of the study and how they may have affected the results.
The secondary research that we conducted indicated that similar businesses operate in densely populated metropolitan areas in order to have sufficient demand for their service throughout the entire year.Our questionnaire only gauged student demand during the academic year.During breaks, the demand for DeliverMe Food may not be sufficient to ensure profitability.It is important that Ann Wells conduct more research to estimate demand during these periods.
While conducting field research, some students chose not to fill out the questionnaire, which led to a non-response error.The rate of non-response for our study was relatively low at around 20%.Although the sample was representative of the undergraduate population by year and gender, it is possible that non-response error may have affected the conclusions by creating self-selecting biases.
In addition, despite the pretesting that we conducted, there were a few response errors.The most problematic question involved ranking meal times from most preferred to least preferred.Some students didn’t read the instructions and instead placed a check mark next to particular meal times.We were unable to include these respondents’ answers to this particular question and therefore a significant amount of data was lost.As discussed above, the failure of many students to provide answers to this question gave us a reasonable estimate of respondent inability error.
Another problem with the questionnaire involved ambiguity around housing locations.Respondents were unsure of whether "dorm" included on-grounds upperclassmen apartments.This may have had a slight effect on the results that show which housing areas would have the most frequent users of DeliverMe Food.It may have caused the insignificance of housing in any of our analyses of this data.
Ann Wells should implement DeliverMe Food
Our study indicates that demand for both of these services has the potential to be highly profitable.We have found that students would use the food delivery service an average of 4 times per month.This may not seem like a large number, but multiplied by the approximately 13,000 undergraduates at UVa it's quite sizeable.With such high demand, DeliverMe Food could take advantage of cost advantages to larger orders.
The study also indicated that the Corner and Barracks Road would be the most popular areas for the food delivery service.If Ann Wells should want to form partnerships with restaurants, our research indicates that she should focus on these two locations.In particular, students indicated that their favorite Corner restaurants are Little Johns, Bodo’s, and Christian’s and their favorite fast food restaurants are Chipotle, Panera, and Five Guys.If DeliverMe Food could organize discounts through these restaurants in exchange for providing more business, the business could develop a significant competitive advantage.These finding also indicate that when Ann Wells promotes her business it would be smart to feature these restaurants.
In planning logistics, our research shows that DeliverMe Food’s food delivery service will be most used between 4 PM and 5 AM.Further research is necessary if Ann Wells would like to know if demand would be sufficient between 5 AM and 4 PM.In addition, students are most likely to use the service on weekends.
The questionnaire also posed several questions aimed at determining a pricing model.On average, students reported that they are willing to pay a $3.00 flat fee or a 10% service fee for food delivery.The service charge would apply to the students’ average order price of $7.Therefore, we would recommend using a flat fee, since 10% of $7 only amount to seven cents.However, we believe that these figures are an underestimate of students’ actual willingness to pay.Moreover, research indicates that approximately 70% of students would be willing to tip the driver on top of these fees.This could save money on the cost structure of DeliverMe Food.
In addition to the fast food delivery service, we think that DeliverMe Food should offer a ten-items-or-less grocery delivery service.This niche service would be more profitable, with an average willingness to pay of $5.In addition, this service would capitalize on customer loyalty, since there is a large correlation between predicted monthly uses of both services.
The questionnaire didn’t ask about payment methods but secondary data indicates that including plus dollars and cavalier advantage as payment options in addition to cash and debit/credit cards would boost demand.During focus groups a few students indicated that because they have a meal plan, they feel obligated to use their meals as well as their plus dollars.However, if Ann Wells could cooperate with UVa as well as popular restaurants, using plus dollars as a method of payment is a possibility.By doing so Ann Wells would gain a large competitive advantage because Dominos is currently the only delivery restaurant that accepts payment in plus dollars.
The results of the research indicate that the target market for DeliverMe Food would be first and second years.Due to the fact that a large percentage of this target market live in dorms, it would be wise to promote DeliverMe Food in these areas.In addition, the prominent drivers that students listed for potential use of the food delivery service were lack of time and motivation.It was also lack of time for the grocery delivery service.These findings indicate that Ms. Wells should promote the convenience of the service.Also, due to high traffic usage rates 4 PM and 5 AM, conducting a late night cravings campaign would appeal to the students’ desires.
We believe that students would readily welcome DeliverMe Food to the UVa community.Due to high demand, decent profitability, and a consistent consumer base, we suggest that Ann Wells pursue DeliverMe Food at UVa.
i "Takeout Taxi."
ii "The Schwan Food Company."
iii "Welcome to Peapod."
iv Kempiak, Mike, and Mark A Fox.