Although there are restaurateurs who are absolutely happy with delivery services, there are also restaurant owners who are resentful towards delivery apps. Most restaurateurs express that delivery companies have poached their customers while exorbitant fees in the form of sales commissions. Even if restaurants personally do not trust third-party companies with delivering their food hot and on time, they feel like they cannot say no, as these delivering app companies have taken over the market by transforming diners into delivery customers.
In this analysis, we focus on the potential impact of delivery apps on your restaurant and your profit margin.
Impact on Quality and Brand
Restaurants claim that poor service during the delivery stage can negatively impact the restaurant's reputation. Through third party food delivering apps, if drivers are not adequately trained to do the job properly, the customers and the food suffer. As a result, restaurants have to take money out of their own pockets, replace the orders, and so on because the restaurants do not have control over how orders get to the customers.
According to the executive chef at Lambretta Pizzeria in Toronto, she states that “[UberEats] gets worse every time we upgrade; we do not have any control over anything, and it is definitely losing us customers.”
Impact on Profits
As delivery apps increase, restaurants’ revenues and orders may increase, but overall profits have been shown to decrease. In 2016, delivery transactions made up about 7 percent of total U.S. restaurants sales. Now, it is predicted that that number could eventually reach 40 percent of all restaurants sales, and an even higher percentage in urban areas. The profit margin for restaurants can shrink by a third due to the shift toward delivery.
Delivery orders replace profitable takeout or sit-down sales with less profitable ones. In other words, most restaurants allow delivery services strictly for marketing purposes, in hope that they will eventually break even on the high commissions.
Delivery Apps as Marketing
While it may be arguable to say that delivery orders are a form of marketing, a good way to expose potential new customers who might eventually convert to “lucrative-in restaurant patrons”, it is starting to replace some restaurants’ core business instead of complementing it.
Using delivery apps increases the range of your potential customers, but attempting to convert them into dine-in or takeout customers has seen far less success.
All In All
Either way, the cost of delivering food is too much, especially with the rise of minimum wage and all the health code regulations and hefty charges from mobile delivery apps.