The Financial Challenges of the Curbside Pickup Model

The way that businesses sell to customers is constantly evolving. As global markets shift and customer preferences change, companies must adopt new practices to offer customers what they want. Curbside pickup is one of the more recent trends to emerge. Combining aspects of brick-and-mortar retail and e-commerce gives businesses—from restaurants and corner shops to major retailers and small businesses—a convenient way to sell to their customers.

However, curbside pickup isn’t without its challenges, especially when it comes to finances.

What is curbside pickup?

Curbside pickup is a method for customers to collect an order from a restaurant or retailer without leaving their car. Using curbside pickup, a customer can place an order online, over the phone, or through an app, then drive to the outlet or a designated pickup point, where staff will bring the order to them. 

Arguably, curbside pickup originated with drive-in restaurants, where carhops would serve food to guests in the comfort of their cars. It also shares similarities with other customer collection methods, such as BOPIS (buy online, pickup in-store). 

Although BOPIS still requires the customer to enter the store or restaurant, curbside pickup provides further convenience by having staff bring the order to the customer.

While curbside pickup isn’t an entirely new idea, it has seen a marked increase in popularity in recent years due mainly to the global COVID-19 pandemic. Curbside pickup provides a safer way for customers to collect orders, limiting their contact with staff and other customers.

The method has remained popular post-pandemic, however. The percentage of retail sales made through click-and-collect and curbside pickup services has remained steady. Moreover, overall sales made through these schemes are forecasted to continue increasing in the coming years.

As well as providing a virtually contact-free method for collecting shopping or takeout, curbside pickup is also incredibly convenient when executed correctly.

Many customers with busy schedules have continued to use curbside pickup due to the convenience of paying online via their preferred method and collecting their goods at a time of their choosing.

Financial challenges of the curbside pickup model

Although curbside pickup has proven to be a popular service among consumers, implementing it is not always a smooth process for restaurants and retailers. Let’s look at some of the primary financial challenges.

Increased operational costs

Adopting a curbside pickup model can lead to increased operational costs. While existing staff can man curbside pickup, this can strain your workforce, especially at peak times.

Many businesses with a popular curbside pickup operation may require extra staff to ensure the service runs efficiently. This can lead to increased costs from hiring and training new employees or retraining existing staff.

In addition, some curbside pickup services may require specialist technology. Businesses may wish to introduce a dedicated ordering app or website, which would likely need to be designed, built, and maintained by a third party.

A business may also need updated technology to take payments online. Business payment solutions software can be valuable in this scenario. Besides allowing your business to accept and make payments easily, such tools automate processes and provide real-time data so you can reduce operational costs and save time to focus on other elements of the business. 

Food safety and sanitation costs

If you serve hot or cold food, you must ensure prepared food stays at the right temperature while waiting for your customer to collect it. This can result in increased food packaging costs or even the need for additional refrigerators, freezers, and heating trays.

Policies and procedures may also need to be introduced to ensure food is handled safely and hygienically while being prepared and handed to the customer. This could require additional equipment, such as gloves, masks, and insulated carrying bags.

Packaging upgrades

As previously mentioned, curbside pickup often requires specialized packaging to ensure that food stays at the correct temperature and reaches the customer in a satisfactory condition.

Different kinds of packaging may be required for other menu items so you may invest in plastic trays, cardboard boxes, and styrofoam cartons. Anti-tamper seals are also a popular investment for restaurants offering curbside pickup, as they reassure customers that their food hasn’t been touched since it was packaged.

Many outlets also invest in disposable cutlery, napkins, and condiments. Providing these alongside orders is helpful for customers who wish to eat immediately after collecting their order.

Marketing operations cost

If nobody knows about it, there’s no point in setting up a curbside pickup service. So you’ll likely need to spend some money on marketing to see a return on your investment. You may wish to invest in signage for your pickup service, alerting customers of your curbside offer. Email marketing campaigns can also help reach customers with a relationship with your brand. You can include links to your curbside pickup menu and offer discounts for early adopters.

Inventory management costs

A successful curbside pickup service requires proper inventory management procedures to alert your team to product availability and prevent customers from ordering items that aren’t in stock.

You may need to invest in dedicated software and tools to achieve this. Opt for an inventory management software or ERP solution that is cloud-based so that you can receive real-time updates. 

ERP software connects departments and business processes, from supply chain to inventory and customer relationship management. In this way, different teams can effectively collaborate to monitor inventory, update stock counts on your app, and alert your buying team when items are low.

Ultimately, investing in such software can help you manage your supply chain to ensure that you can keep up with demand. Tools like this can also inform business decisions and help you to direct resources to where they’re needed most.

The takeaway

While curbside pickup can be convenient and efficient for customers to order food and collect products, it can present serious financial challenges to businesses. Costs can arise from adopting new technology and hiring and training staff to ensure your curbside offer is efficient.

Moreover, updated inventory, storage, and packaging solutions can add to rising costs, not to mention the other marketing campaigns needed to spread the word about your service.

However, with the right strategy, you can overcome these challenges. Do your research, invest in your team, and adopt modern software to limit costs, streamline your service, and ensure customers are satisfied. 

With careful planning, it can become an excellent addition to many businesses.