Prior to COVID-19, the economics of on-demand platforms led by Uber, Netflix, and Amazon Prime, spread to the restaurant industry. Consumers want convenience and practicality in all aspects of their lives, including food. Because all restaurants are different, there is no one answer that applies to all. In this article, we list all the factors, for you to decide; If becoming (or remain) a restaurant with delivery service, is the best decision for your business.
You can read about my experience and how I do online grocery shopping here.
These are some irrefutable benefits of home delivery.
- Higher consumption. Restaurants see an increase in the average ticket of consumption of 20% , in online orders and take away orders versus consumption within the restaurant.
- It compensates for the number of diners that decreased due to social confinement and healthy distance measures. While the restaurants are reopening; they still have to abide by strictly limited capacity regulations. Offering home delivery can help restaurants mitigate the loss of income, having closed the doors or having the dining rooms “half empty.” While, it allows them to reach diners who are working from home or those who still feel uncomfortable with the idea of entering a restaurant, even when the distancing measures have been relaxed.
- More business opportunities. Sometimes diners want to enjoy your menu, from the comfort of their home. By offering delivery service, your restaurant will have greater reach.
- Gain visibility with new diners. Home delivery can help you reach new customers, reach beyond regular customers or neighbors which is especially important when restaurants are operating at limited capacities or are still fearful about going out to eat.
What are the downsides of food delivery?
- Less control. Whether you use your own delivery system or turn to a food delivery app, you have less control over the delivery experience. The diner could get a bad impression of your restaurant due to traffic, street conditions, a bad turn on a street, delays that have nothing to do with your restaurant or your food. If the food arrives cold or the presentation is damaged, it can negatively impact the opinion of the customer about your restaurant. Also, you have fewer opportunities to change a bad experience since you will not be “there” when the customer receives your food.
- More implementation work. If you decide to do the delivery service yourself, you will need to hire new staff, purchase delivery vehicles, and create a new process for successful service.
- Lower profit margins. If you use your own delivery fleet, you should consider payments from delivery people, medical insurance, gasoline, etc. All of these costs will eat up your profit margin. If you outsource the delivery service, there are still costs involved. The well-known delivery apps have been widely criticized for their high fees, both prior to, but especially during the pandemic.
- More points of contact, by offering home delivery, there will be more points of contact from the preparation of the order, until the food reaches the diner’s hands and you will not be there to ensure that the delivery person maintains the standards that you have in each dish. The quality and safety of food is a priority today. Your diners want to feel safe ordering from your restaurant, and any additional points of contact may seem less secure.
If you do not work with an app to provide food delivery service, nor do you have your own system on what to do when you receive your food delivery, you are missing out on a juicy slice of the market. Income from home services does not seem to be going down. Diners continue to demand take-out food, through apps or directly from the restaurant. Your first step will be to evaluate what your options are and determine what works best for your business.