The pros and cons of online delivery services

Not so long ago if you wanted food delivered to your house you had two options: lukewarm pizza or stodgy Chinese food. But the past couple of years, and the arrival of food delivery apps like UberEATS, Menulog and Deliveroo in Australia, has radically changed the foodservice industry.

 
The vast majority of millennials prefer to use online delivery services when ordering dinner (or any other meal for that matter). With more people using third-party platforms rather than ordering with venues directly, apps like UberEATS are becoming unavoidable for many venues.
At face value, online food delivery seems like a no-brainer but many hospitality business owners are rightfully hesitant, so we’ve done the homework for you…
 
Pro: Increased exposure
Food delivery apps guarantee greater exposure for small businesses, with little marketing effort
required for their food to be seen by vast numbers of potential customers. This often extends a
business’ customer base well beyond its immediate neighbourhood.
 
Con: The case of the empty restaurant
One of the main causes for concern for restaurateurs is the effect of online delivery services on
seated guests. Will your dine-in customers suffer because your kitchen is overwhelmed with meeting online orders? Will your walk-in numbers decline because the restaurant looks empty and ‘vibe-less’ (even though your kitchen staff are run off their feet)?
 
Every online delivery order means one less customer dining in the restaurant. So while online
ordering might be generating more sales, is it affecting your bottom line because you’re missing out on impromptu orders of ‘just one more drink’ or dessert?
 
Pro: Provides a taster for new customers
Of course, one of the biggest pros to online delivery apps is that it is a great way to attract new
customers. Instead of customers being confined to the restaurants around their neighbourhood,
apps make it very easy for people to discover new places that they might like. This often encourages customers to be a bit more adventurous as well.
 
A good way to combat the issue of the empty restaurant and attract new customers is to only offer only a portion of your menu online. Develop a limited menu for online apps that includes meals that are easy to create, your most popular in-house and that travel well. This provides a ‘teaser’ of the full menu so if customers enjoy it they must visit to try out the full range.
 
Con: No control over quality of delivery
Using a limited menu also partially combats one of the largest disincentives for venues when
considering online food delivery apps: lack of control over the delivery service. Make sure you only offer for delivery food that will travel well and still taste great after a car or bike ride.
 
But that doesn’t account for the service itself. Many venues claim that poor service during delivery is impacting on their own reputation (rather than that of the delivery app) and the time spent dealing with customer complaints (and refunds) was more trouble than it was worth.
 
Simply put, restaurant owners also have no control over the delivery service and are not able to
guarantee the quality, temperature or state of the food after it leaves their restaurant.
 
Pro: increased business in down times
In the past year, food delivery apps are said to have contributed to a 2% increase in restaurant
revenue. A lot of these orders, are actually in times when the restaurant would not usually be busy (say between lunch and dinner). These ‘downtime’ orders are evening out venues’ business and providing constant work throughout the day which helps justify that limbo time between 3pm and 4pm for example.
 
This is also true when the weather is not conducive to walk-in guests. Inclement weather can have a huge negative effect on a restaurant’s bottom line. Potential customers stay indoors to avoid the elements and restaurants are empty. But food delivery apps are solving this problem as order flood in from cosy customers who want to stay on the couch.
 
Con: Delivery cost may outweigh benefit
A major factor for consideration is the fees associated with each platform. Restaurants must pay a percentage fee for all orders received through the app. Food ordering apps often demand delivery commissions of up to 40% so using your own delivery service may actually be more profitable.
 
Food delivery apps are seemingly unavoidable for small Australian foodservice venues who need to extend their business into new markets, but before you jump in, consider the pros and cons and if your venue is ready for a significant change in the way it works. Most importantly, consider the costs associated with each order and figure out if it is a sustainable business model for you.
 
Do you use online food delivery apps like UberEATS and Menulog? We’d love to hear from you.

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