To Deliver or to Defer...That is the Question

June 14, 2021
Food delivery service drop-off. Courier is passing off a food delivery to a woman.
Food delivery apps have seen a massive revenue upswing, especially since the COVID-19 pandemic. This leaves restaurant owners wondering whether to stay on the apps or to put together their own delivery service. So what's next? How can restaurant owners find a way through these murky waters?

No matter where you live, the local economic landscape has undergone a massive transformation this past year. Amongst these changes is the surging prominence of food delivery apps. In nearly every major city in the world, you can see app-branded bags mounted on rear bike racks, with couriers racing toward the next pick-up or drop-off location. If you’re reading this, chances are that you’ve placed an order from a local restaurant through a third-party delivery app. 

As these apps continue their reign over the food delivery market, restaurant owners are left wondering whether this is a symbiotic relationship or if they’d be better off starting their own delivery service. 

How'd We Get Here So Quickly?

The user-friendly interface of food delivery apps has incentivized users around the world to place orders en masse. On top of that, independently owned restaurants have used these apps as a lifeline during the COVID-19 pandemic. After the global economy went into a freefall at the behest of stay at home orders in 2020, countless small businesses worldwide were forced to shut down. Many restaurants would have met the same fate had it not been for third-party delivery apps. Major players like GrubHub, DoorDash, UberEats, Just Eat, and others gave restaurant owners the opportunity to put their names and menus in front of a much larger audience in their cities when they needed it most.

The trend of massive worldwide increases in food delivery services is here to stay. If anything, their relevance is only going to grow as time passes. Yet, as the economy reopens, the glaring question for restaurant owners looms: do we continue paying fees to these apps, or should we devise and deploy our own delivery service?

Between a Rock and a Hard Place...

As COVID restrictions loosen and restaurant owners rethink their delivery model, let’s take account of the cost for partaking in the delivery app ecosystem.

There is a real catch 22 at hand here. First, restaurant owners are hit with exorbitant fees from third-party apps, typically paying on a per-order basis anywhere from 10% all the way to 35%. This means that small, independently owned restaurants can expect to break even at best on most meals when all is said and done. This was manageable pre-pandemic, when app orders constituted a markedly smaller percentage of a restaurant’s total business. During the pandemic, however, these restaurants felt the brunt of these added fees in a pronounced way. At the same time, restaurants wouldn’t have received or retained a fraction of their pre-pandemic business had the apps not provided quick access to the infrastructure needed to transition into an exclusively delivery-based model. In the wise words of an NYC restaurant owner, "If it starts becoming 30%, 40%, 50% of your business, it is not incremental business — it is your business."

See how quickly the waters get muddied here?  

What’s Next?

Since food delivery services have become a major staple of the modern dining experience, it wouldn’t make sense for restaurants to outright dismiss the delivery option. Considering that third-party apps charge up to a 35% “finders fee” per order, that isn’t a tenable long-term solution either. Further complicating things is that third-party apps have a majority of local couriers on payroll while providing them a level of flexible scheduling that independent restaurants can’t provide. Considering all that, shifting to an in-house delivery model seems like a daunting proposition for independent restaurant owners.

However, this doesn’t mean that a transition into the self-sufficient delivery model is out of reach. For one, going in-house gives restaurants a level of self-reliance that ensures they won’t be overshadowed by third-party delivery apps. In fact, your customer-base will likely support your new delivery model as well. It has been reported that 70% of consumers prefer to order directly from their choice restaurants over a third-party app, knowing that 100% of their purchase goes to the restaurant.

Practically implementing a new delivery system is a whole other game. Workforce management platforms like Ubeya are a great way to start. Look for platforms that include features such as timesheets, scheduling, payroll, and communication to make this sort of business expansion less daunting. Making sure that your teams are connected across differing positions and roles is an essential aspect to getting your delivery service in full swing. No matter the size of your restaurant, there are platforms to help you better manage such a major business transition.  

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