Third Party food delivery apps such as Uber Eats, Skip the Dishes and Foodora have increasingly become more popular over the past few years. These apps have made it easy to order delivery from your favourite restaurants in the comfort of your own home by partnering with a variety of different restaurants. In the GTA alone, UberEATS has about 1,000 restaurant partners and foodora has 550.
Delivery apps are popular amongst restaurants because they are known to bring in new customers and provide marketing. However, there are a few downsides in using such apps. One downside is frequent complaints from about customers receiving their food cold, late, or the wrong order.
Equally as concerning for restaurant owners are the service fees that take a sizeable chunk off of each order. Typically, most food delivery apps tend to charge 20-35% per order. These large commission fees can have a serious impact on operator’s profit margin. As a result, this has caused some restaurants mark up prices on the food delivery apps while keeping the same portions in order to make up for the amount they lose in paying high commission fees.
Uber Eats discourages raising the prices on their menus to make up for commission fees as this practise does not promote a positive customer experience. However most restaurants have ignored this and increased their prices to offset the commission fees. This will result in negative customer experience and an overall rising of food prices, which will be bad for both the restaurants as well as the customers.
Another downside to using the apps is the lack of understanding they provide to restaurants about new customers and recurring customers. Uber eats, Foodora, Skip the Dishes and DoorDash argue that they give restaurants access to more customers, yet none of these companies are able to provide data to back up the claim for the typical restaurant partners. So business owners are not entirely aware if the apps are bringing them in new customers, and this makes it difficult for them to dictate if they will benefit from having their own in-house delivery systems.
While using these apps can get frustrating, owners still find them useful as staying online can bring in extra business. When customers order online they are not taking up available parking spaces, there are also no dishes to wash. Delivery is an excellent option to sell your food without worrying about cleaning up after the customers and saves your employees time. Customers will easily be able to place their orders online if no employees are available to answer the phone.
So then what should business owners do if there are some benefits to using food delivery apps? While food delivery apps can be great to get your name out there, the harsh economics reveals that it is not feasible for restaurant owners to have this be their only method of taking these orders. Restaurants should consider additional online channels that can streamline the ordering process for their loyal customers. Having an online ordering system of your own can help reduce the hassle of paying commission fees to third party apps and can help you stand out from their competition by making it simple for individuals to order directly on a restaurants website, facebook, or google page. Plus, you will be able to see who your new customers are and your recurring customers so you are in full control of the logistics of your business.
FreshBuy is a Toronto based food-tech company that is revolutionizing the restaurant industry with its aim to provide online delivery systems with no commission fees to restaurant owners looking to ramp up their online presence and sales.
Click here to see how FreshBuy is giving the power back to the restaurants to grow their business.