Remember the days when delivery food was defined by pizza and Chinese food? If you didn’t have the energy to cook or go out to a restaurant, those were the only two options that seemed to offer a simple solution to what you were having for dinner. That has completely changed over the last few years, and with the pandemic completely shutting down the majority of human contact, delivery apps helped restaurants survive through incredibly tough times.
During the pandemic, business was no doubt in a limbo state, as customers couldn’t leave their homes to go dine without the lingering thought of sickness in their minds. In 2020, DoorDash revealed how much they had helped businesses through the tough times. 67% of restaurants said DoorDash was crucial to their business during COVID-19, and 65% of restaurants were able to increase profits.
Even post-COVID, restaurants are opting to continue using food delivery apps to their advantage and services such as UberEats and DoorDash continue to grow in popularity. While more restaurants are joining the empire of food delivery, some restaurants are keeping it traditional, perhaps not wanting a third-party service to handle their business. Restaurants today might consider committing to something like Uber Eats or DoorDash.
Now, where are we at with the state of food delivery apps? In 2021, Uber Eats generated $8.3 billion in revenue, which is a 72% year-on-year increase. DoorDash controls approximately 45% of the US food delivery market and earned $4.88 billion in 2021. These two juggernauts of the food delivery market have a clear influence over how we eat food, as more and more people continue to order food every day.
The food delivery industry is expected to grow to $320 billion by 2029, while seeing its largest growth in 2020 due to the pandemic. The market continues to grow and with more consumers realizing its popularity, food delivery is sure to stay for the next few years. A restaurant can take solace in knowing that this phenomenon doesn’t just seem to be some sort of trend but is an active part of how customers decide on what to eat for a meal.
Advantages of third party services
Delivery can be a huge boost to your restaurant if done right and is maintained well. Customers will heavily appreciate a restaurant that can provide quality meals in-house and at their doorstep.
DoorDash, for example, provides differently priced plans based on the size of your business. With DoorDash basic, this has the lowest delivery commissions (15% for delivery, 6% for pickup) of any plan that utilizes delivery drivers. This may benefit small businesses that don’t want to invest too much into a third-party service. There are also other plans, such as Plus (25% for delivery, 6% for pickup) and Premier (30% for delivery, 6% for pickup). DoorDash lays out all of the information in an easy and digestible way for the restaurant to weight their options when committing to a delivery service.
Another advantage of third-party services is the marketability of your restaurant. The app makes it easier to be seen by customers who want to potentially try something new, or are loyal customers who want to enjoy your food in the comforts of their homes. With a plan such a Plus or Premier, DoorDash will expand your delivery area by 10% or 15% respectively. It’s hard to resist joining such a service like DoorDash when they’re such an established delivery food service that is used by about 45% of the market. Their discoverability will help you build long-lasting relationships with new customers.
The Real Cost of Third-Party Services
On the surface, it’s easy to see that apps such as DoorDash and Uber Eats can help your restaurant easily reach more customers, but is the benefit really worth it all, and are there cons that you may not be aware of?
If you have never used a food delivery app, you may find yourself potentially swamped with the new influx of customers, and it might slow down your restaurant heavily. Customers may also not appreciate the price increase that comes with DoorDash or Uber Eats. It’s possible that diners may be paying around a 7% to a 91% markup at certain restaurants for the same food they can sit down and order. In an example by Forbes, a customer found that Uber Eats charged about 91% more for two turkey sandwiches from a subway shop in San Francisco. Sometimes, this is completely out of the restaurant’s control, and it poses the question of how much authority can a business have with third-party services.
Trusting a third-party delivery service can often lead to you losing control, and that can be incredibly frustrating for restaurant owners. These aren’t delivery drivers that you hired yourself, these are people entrusted by another company. Customers may find themselves disappointed with long wait times and cold food, but that may be a result of the driver. You may find yourself on the end of negative feedback because certain factors are just not within your control.
Are third-party delivery apps a good fit for your business?
The takeaway is simple. Whatever will boost sales for your business is what you should go after. These third-party apps are a great marketing tool and can help put your restaurant on the map to thousands of people who might’ve never explored your menu until now. The biggest question you will have to ask yourself is, can we budget for these apps? High commissions and credit card sales transactions that take time to process is something to take into consideration. So, high risk, high reward?
If you can overcome the entry fees and commission fees that come with the new business from a large third-party service, then you could find yourself heavily benefitting from the delivery apps. It’s also worth nothing that some smaller third-party apps are very much focused on the owners, and are designed to provide as much support to the restaurant as possible. If you’re not sure about committing to a national company like a DoorDash or a GrubHub, then maybe consider local delivery services that don’t come with corporate baggage.