Sometimes our customer’s hunger wars with their busy day or (let’s be honest) their couch potato evening. Delivery is almost expected at this point, even for upscale restaurants and boutique bakeries. So how does an owner choose between an in-house or app-based third-party delivery service? We’ve done the research, and here’s what business owners are saying.
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Third-party delivery apps: the pro’s and con’s
The upside:
Customers enjoy having access to many delivery options that apps like UberEats and Skip the Dishes can provide. They can order food directly to any address, and from a variety of restaurants at one time. It’s not like delivery is a new concept, but the invention of these apps give customers access to restaurants that may not have been able to hire an in-house delivery person, or that they never thought to visit before. A survey of frequent delivery app users found that the freedom to choose between multiple options, the simplicity of ordering, and the price helps encourage them to continue turning to these apps.
The downsides:
While it seems like there are a number of people who enjoy the ability to order their food from their phones, restaurants are actually struggling to find a way to benefit from the apps. Some restaurant owners have gone as far to say that they wish they could quit using it, but are forced to continue in order to remain competitive. There are many reasons why these restaurateurs want to stop relying on these apps.
Downside 1: The apps cost too much
The main reason why so many restaurants are unhappy with these third-party delivery apps is that even though the apps seem as though they encourage more business, the cost outweighs the profit. They are losing in-house customers to those who can just order on the app, and high commission rates eat up their profit significantly. Depending on the app, the commission can range from 10-30%, with the highest commissions being associated with the most popular apps. The profit margins are too low to actually become beneficial. It becomes a daily cost-benefit analysis: the benefit of increased brand awareness vs. the high financial risk.
Downside 2: Increased demand at inconvenient times
The customers want their food fast, and they don’t particularly care that the restaurant is experiencing a lunch or dinner rush. When ordering through an app, they can’t see that the staff is running around and dealing with long lines, they just see that their food isn’t arriving fast enough. Restaurants have reported up to 200% increases in delivery orders, but as the demand grows, so does the strain on the staff.
They are finding it difficult to keep up with the orders while managing the in-house customers. Once again, it falls back to the issue that restaurants feel like they are being pressured into using the apps even if they aren’t capable of handling it, because if they don’t, their customers will turn to the competition.
Downside 3: The app drivers aren’t reliable
Another huge issue is that the drivers are in no way associated with the restaurants they are delivering for. They are paid by the apps without much oversight or responsibility. Customer complaints tend to go to restaurants directly. If the customer receives cold food, the wrong order, or somehow doesn’t ever get their food, they tend to contact the restaurant manager to get a refund. The bad reviews affect the restaurant a lot more than it impacts the driver.
Many high-end restaurants complain that the drivers are not properly equipped to handle the food. Without properly insulated bags, drivers aren’t capable of keeping the food hot and fresh, but there is nothing that the restaurants can do about it.
Another flaw restaurants have noted is that drivers can cancel the acceptance of a pickup order at any time, therefore causing the order to cancel completely–all without the customer’s knowledge. Restaurants find that they aren’t always notified that an order has been canceled until it’s too late, so there can be a lot of wasted food and angry customers–both of which become the responsibility of the restaurant.
Downside 4: Restaurants aren’t able to do proper evaluations
Some businesses have reported that they are not equipped with the right tools or knowledge to be able to analyze the sales and profit reports to actually determine whether or not they should continue to use them. They are just trying to keep up with demand and follow the trends, and there isn’t time to consider whether or not they are making a profit. The start-up costs can be high, and without someone capable of understanding the value of the investment, restaurants may end up struggling to see how this process is dragging them down instead of propelling them up.
Getting the most from your third-party delivery service
Avoiding delivery apps is almost impossible these days. If you want to keep up with the competition, you need to have something to offer your clients on the apps. There are a few ways to make sure that your restaurant is still being seen on the app, without as much risk.
- Implement a smaller delivery-only menu. Ensure that the foods are easy to transport, and will retain their quality even if it’s been a bit longer or isn’t kept in an insulated bag.
- Employ a second assembly line dedicated to delivery orders in the kitchen–especially during meal-time rushes. They can prepare the orders without impacting the in-house customers.
- Some restaurants, chains, and franchises have opened secondary “delivery only” locations. It cuts down on cost because they don’t need to worry about the space for a dining room, instead just focusing all of the attention and budget on the kitchen. This works well for areas where real estate is at a premium, however, it removes the potential of any walk-ins.
While there doesn’t seem to be an extremely simple solution to solving the delivery app dilemma, it’s interesting to be able to see both sides. It’s easy to understand why customers like the apps so much. Being able to order food no matter where you are, without having to know a restaurant off the top of your head is simple and effective. But on the other end, you can see why restaurants are struggling to keep up.
What it comes down to is how these apps impact your overall customer satisfaction and what matters most to your restaurant. Is it more important to grab the attention of potential new customers, or to ensure the quality and consistency of the service? That’s the main decision you need to make when deciding whether or not you want to implement a delivery app in your restaurant.
