With our culture becoming ever-increasingly digital, restaurants are facing a greater need to cater to their online ordering demands of their customers. However, the impulse to join multiple vendors that essentially produce the same outcome has its downside if restaurants aren’t careful.
1. Increased Charge Rates
Delivery services like Grubhub, UberEats, Postmates and DoorDash are all vying for customer attention, so it is quite natural that restaurants find it an easy way to reach their customers quickly through some or all of them. Often, multiple vendors will be used by single restaurants. However, the 20-30% charge per order cuts into the profits in a big way. For large corporate restaurants, this is probably not too much of a concern, but for smaller restaurants this could be a slow, yet devastating blow to their bottom line.
2. The Trickle-Down Effect of Delivery Fees
The 20-30% charge per order is one thing, but when you consider the additional delivery fee that delivery services charge to customers, the transaction becomes quite costly. A recent report showed that 83 percent of fast casual customers would pay as much as $5 in delivery fees. Restaurants often think they’re maximizing their profits by getting more customers through delivery services, but the majority of the food profit actually goes to the delivery service vendor and often turns out to be a losing proposition for the restaurant.
These types of misconceptions can often result in misplaced priorities. The bottom-line dictates priorities for restaurants, and the high demand from consumers suggests that using many delivery services will guarantee success. However, the fees charged by these vendors, coupled with a decrease of people using the services after more than a couple weeks, suggest that these aren’t as sure-fire ways to more profit as one would expect.
3. Explore Online Carry Out Options
Rather than rush into multiple delivery service offerings, restaurants need to look at ways to increase their bottom line, and not just increase the number of customers. Online Carry Out ordering is an excellent way to keep costs down, and at the same time encourage their customers to visit the restaurant.
Online Carry Out provides better customer engagement and the opportunity to upsell. When customers come into the restaurant, restaurant staff can provide more personable service, which can help them win better customer loyalty compared to the unknown interactions through a delivery driver.
Jared Shimoff, Do Restaurants Really Benefit from Online Ordering (2019).
Julie Littman, Majority of QSR, fast casual diners would pay up to $5 in delivery fees (Restaurant Dive, 2019).
Lauren Manning, 86 percent of delivery app users stop engaging within 2 weeks (Restaurant Dive, 2019).
To summarize, the difference between Online Carry Out and Online Delivery Service could save restaurants money and earn loyal customers in the long run.