Since the start of the pandemic indoor dining has dropped drastically. Whether due to government regulations forcing closures or limiting capacity, or a public wary of being near other people, restaurants have had to scramble to make up for the lost revenue.
Being able to deliver food has never been more important to a restaurant. And like them or not, restaurants have joined third-party food delivery services in herds. Delivery apps such as DoorDash, GrubHub and Ubereats have seen their sales more than double since the beginning of the pandemic. Its a pretty simple decision for a customer to use third-party apps, but for a restaurant there is much to consider.
The Pros
Third-party delivery apps can offer a restaurant the chance to grow brand awareness. Without spending money in various other marketing channels, your customers will know you exist. While food delivery services were started as a logistics solution for restaurants that do not have their own in-house delivery staff, the apps have turned into a strong marketing tool that integrate well into most Point of Sale Systems (POS). Most of them offer the restaurant the ability to highlight “favorite dishes” or offer recommendations. A restaurant may analyze their profit margins on their menu items and decide to highlight the items that give them higher margins.
Food delivery service provided by these companies still remains a fantastic logistics tool. If you don't want to double your staff (and take on all the costs associated with employment) these apps provide a network of drivers in close proximity to the restaurant. With the more popular apps it isn't rare to have a meal delivered to the customer within 15 minutes of being prepared. Faster service equates to warmer food and happier customers.
The Cons
The biggest downside to using third-party food delivery is the cost. Fees range anywhere from 7% to 30% of the food list price. When the average restaurant works on a 10% to 30% profit margin, using these services may actually cost you money. The easy solution would be for the restaurant to raise the item costs just for orders placed through the apps. Well, unfortunately companies such as Uber Eats prohibit the raising of prices. So if you decide to go this route, prepare to swallow the costs.
Another argument is that while these companies definitely bring in business, they also cannibalize business that would usually be achieved through walk-ins and people calling the restaurant directly. With such convenience at their fingertips customers are no longer dealing directly with the restaurants. That $10.00 that would usually go to the restaurant is now $7.00 or $8.00. This may not seem significant but added up over time, the loss can be devastating.
Some restaurants have taken to omitting side items such as salads or rice that are offered in-house or for pick up when a meal is ordered using the apps. Seems like a good solution, but can lead to dissatisfied customers. If I order the three taco meal and receive just three tacos, when I was expecting the rice and salad that usually accompanies the dish to arrive as well, it is not Uber Eats or DoorDash that I am unhappy with. It is the restaurant.
Using a third-party food delivery service means giving up some of your brand control. If the driver takes so long that the food is cold, or drops your pizza upside down, the customer is not going to have a good experience. While logically they can deduce that the issue is with GrubHub, the dissatisfied feeling definitely extends to the restaurant.
Another issue many restaurant owners have with the big third-party delivery apps is that there comes a point where you don't really have much of a choice but to join. With so many customers using the apps, people may not even know about your restaurant if you do not join.
Alternatives
Many restaurants have been working on alternatives to regain control of their brand, and their money.
Some have decided to revert their furloughed wait staff to a delivery staff. Even with the additional expenses due to insurance, gas, marketing, etc., they have determined that this is more economical than using the apps. If this is the route you choose to pursue, be certain to choose a POS software that enables Caller ID and Map Routing. PointOfSalePOS.com would be happy to walk you through your options.
Others are offering perks such as free items, or discounts to those who order direct, and curbside pick up to limit exposure.
Only time will tell if these efforts are enough to tip the scale or if they will have to accept that the customer isn't going back to the old ways.
Basically make sure you are well-informed prior to signing up for a food delivery service. If you've ensured that your profit margins are adequate to absorb the added fees, the brand awareness and increase in customers may actually make it worth it.
PointOfSalePOS.com understands that POS Systems are not a one-size-fits-all solution, just like your business is not like everyone else's. We also understand that this is a significant investment and we want to help you ensure a seamless integration. PointOfSalePOS.com has the expertise and experience to answer your questions and support you in this process. We take care of your POS, so you can take care of your customers.