Are delivery apps bringing you real profit?
Before this pandemic situation, most people liked to dine in your restaurant. However some of them preferred to enjoy your food in the comfort of their own home. They were either calling you or using delivery apps to get their meals directly to their door.
Now we find ourself in a very different situation. Over the past couple months, dining habits had to change drastically, and restaurants that stayed open had to rely on takeout, curbside pickup, and delivery apps. We will now talk of the two distinct sales funnels and focus on the profit margins.
There are a lot of delivery apps out there, four main ones cornering the market even before the health crisis started. They are offering traffic to restaurants adding a new vertical with their own channel to get more orders. This is great on a discovery model when people are trying out your restaurant and you gaining access to a new customer’s information, but that would defeat the whole purpose of those apps business models.
Now let’s look at you restaurant, those apps are taking between 15% and 40% of your revenue from commissions and fees. Average is over 30%. Ok, they are bringing orders and traffic to your restaurant. They are also taking your hard earned benefits from you. Also, something to keep in mind is that the client is also getting charged additional fees. Let’s look at something. For $10 order – let’s say you get $7 to you… that’s already a hit, now with fees, the client pays $13… You get almost the same amount in your account than the app ($6 for the app)… You purchase food, pay rent, employ a workforce… and you make barely more than what they do.
With the current situation, and in the upcoming months, the delivery activity will be a large part of your revenue stream. There are 30% of revenue you could manage otherwise. And you could also save some money to your end client (who could also spend it on tip).
Look at the results below – the clients would have had to give $10k in commission to delivery apps for that amount of revenue, take action now.
Pickup – Takeout
Pickup and Takeout can either be organized through apps, or directly by your staff. The Apps side of things could be handled through Phone routing. The apps will take a commission for listing a phone number on their website for some clients to call you. When the client places an order, they will charge you for the phone routing. Yes, they are looking to make profit.
Now if clients find you on google, Facebook, Instagram, or any other channel, you will have no fee. However, your phone line will be busy for a certain amount of time and your staff will be busy getting the order through.
Own your ordering platform
Since the beginning of stay at home order, we have setup multiple restaurants in California, Minnesota, Hawaii with our ordering system. It has worked wonders for ALL of them, they have consistently upped their record sales week after week.
All clients have it setup as a Pickup platform at the moment, however we have a delivery module available to setup in a few hours. The thing is that it needs logistics, you need to schedule drivers, and if you are getting a lot of orders, you will need a lot of drivers. Keep that in mind, but it will save you a lot of money and all the revenue (minus the 2.9% + 30cents credit card processing fee) will go to your restaurant.
The clients are also able to tip online, directly to your staff! That makes a difference for your workers. While on the delivery apps, the tip goes to the delivery drivers contracted by the app.
You have a clientele, an audience on social media. You will gather your new clients emails on an email marketing database , allowing you to send follow up emails to your clients in the upcoming weeks after their orders. That is value in the long term.
Let’s summarize how delivery apps are not helping your restaurant
Delivery apps take a hefty commission, it’s normal, they are the middleman. They will not give you access to your newly acquired client’s information. Delivery apps will now allow you to build an a clientele because they want to keep ownership of the client. They are offering a channel to you, one channel per app.
Our clients have been maximizing their own platforms, and lead sources through social media. Using their audience and their community to grow. Organic reach has allowed them to maximize their profits, and keep their business as profitable as possible. They are able to analyze all their data and become even MORE PROFITABLE than before the pandemic. That is something to keep in mind.
Contact us to develop your own pickup and delivery platform and knock out the middleman. Take full ownership of your pickup and delivery business.
You have a chat icon on the bottom right of this page, you will be in touch directly with the Founder or the Lead Account Manager to have immediate assistance and be up and running in less than a week. You can also fill in the form below and we will get back to you very shortly.
Additional Media References
- May 16th article from the Los Angeles Times
- Eater Chicago Article
- NPR article about Delivery Drivers
Examples of Websites we have built