Are restaurant delivery apps a blessing or a curse for your business in 2024?
On one hand, they can skyrocket your sales and reach. On the other, those hefty commission fees can take a serious bite out of your profits.
In this article, we’ll dive into the pros and cons of partnering with apps like Uber Eats, DoorDash, and GrubHub. You’ll discover:
How to maximize your visibility and attract new customers
Strategies for streamlining your delivery operations
Tips for choosing the right app for your restaurant
By the end, you’ll have a clear understanding of whether delivery apps are the right fit for your business – and how to make the most of them if you decide to take the plunge.
Food Delivery Services
Food delivery services are expected to grow from $3.7 billion in 2023 to $90.3 billion by 2030
Earn $1,200+/week delivering for local businesses
Driver benefits:
- Steady local business routes
- Weekly pay + tips
- Dedicated support team
- Flexible scheduling
What are Restaurant Delivery Apps?
How Restaurant Delivery Apps Work
Restaurant delivery apps serve as intermediaries between restaurants, customers, and delivery drivers. When a customer places an order through the app, the restaurant receives the order details and prepares the food. The app then assigns a delivery driver to pick up the order from the restaurant and deliver it to the customer’s specified address. Feeling overwhelmed by managing delivery logistics? Delegate your delivery needs by outsourcing to professionals and let your team focus on culinary excellence.
These apps typically charge restaurants a commission fee for each order, which can range from 15% to 30% of the order total. In return for service fee, restaurants gain access to a broader customer base and the convenience of outsourcing delivery logistics.
The Rise of Restaurant Delivery Apps
The popularity of restaurant delivery apps has grown significantly in recent years, particularly during the COVID-19 pandemic. As lockdowns and social distancing measures forced many restaurants to close their doors to dine-in customers, food delivery services became a lifeline for the industry. In addition to utilizing delivery apps, restaurant owners in Los Angeles should also consider local courier services that may offer more personalized and flexible delivery options. Our comprehensive guide on selecting a reliable courier service in Los Angeles can provide valuable insights for local businesses looking to enhance their delivery capabilities.
Even as restaurants have reopened, the demand for delivery services remains strong. Customers have grown accustomed to the convenience of ordering their favorite meals from the comfort of their homes or offices.
Restaurant Delivery App Statistics
Online ordering represented 574 million orders in 2023, a 23% increase from the previous year
The Impact on the Restaurant Industry
The widespread adoption of restaurant delivery apps has had a profound impact on the restaurant industry. While these apps have provided restaurants with new opportunities for growth and revenue, they have also introduced challenges and concerns. As restaurants navigate this evolving landscape, many are turning to specialized delivery services. Companies like Metrobi offer tailored solutions for businesses, including a convenient meal prep delivery service for restaurants looking to enhance their delivery meals. By outsourcing delivery logistics, restaurants can focus on what they do best – creating delicious meals for their customers. Check out more about how Metrobi can help streamline your operations with their meal prep delivery options.
One of the primary advantages of restaurant delivery apps is the increased exposure they provide to restaurants. By listing their menus on these apps, restaurants can reach a wider audience beyond their immediate vicinity. This exposure can lead to increased brand awareness and a larger customer base. Food delivery apps have a strong online presence, allowing restaurants to cast a wider net and acquire new customers they couldn’t attract on limited marketing budgets alone.
However, the commission fees charged by delivery apps can be a significant burden for restaurants. With margins already tight in the industry, the additional 15% to 30% delivery fee can cut deeply into profits. Some restaurants have raised their prices on delivery apps to offset these costs, while others have chosen to absorb the fees to remain competitive. Cities across North America are implementing fee caps to stave off unregulated food delivery commissions. Additionally, for restaurants seeking to enhance their delivery services, it may be beneficial to partner with local courier services. Utilizing a dedicated courier can provide more flexibility and potentially lower costs compared to third-party delivery apps. Consider exploring options like a reliable Denver courier service to manage your deliveries more effectively and maintain control over the customer experience.
Restaurants that previously focused primarily on dine-in service have had to adapt their operations to accommodate the demands of delivery. This adaptation may involve modifying their menus, packaging, and kitchen workflows to ensure that food arrives at the customer’s doorstep in optimal condition. Food delivery apps have also led to the rise of ghost kitchens, which are restaurants that only offer food via delivery and operate out of commercial kitchens, focusing on food preparation and order fulfillment rather than an in-dining experience.
As the restaurant industry continues to evolve in response to changing consumer preferences and technological advancements, delivery apps are likely to remain a significant player in the landscape. Understanding the advantages and disadvantages of these apps is crucial for restaurant owners navigating this new reality. To complement the efficiency of restaurant delivery apps, consider utilizing a reliable same-day courier service in Baltimore. This can enhance the logistics of your delivery operations and ensure that customers receive their orders promptly, thus improving customer satisfaction and potentially increasing repeat business.
Metrobi is transforming catering deliveries
Specialized solutions for catering businesses:
- Catering-trained drivers
- Proper handling equipment
- Peak day delivery support
- 23% average cost reduction
Advantages of Restaurant Delivery Apps for Owners
Increased Reach and Sales
Restaurant delivery apps have revolutionized the way food businesses operate, allowing them to reach a wider audience and increase sales. By partnering with popular delivery platforms like Uber Eats, DoorDash, and Grubhub, restaurants can expand their customer base beyond their local area and capture customers who prefer the convenience of delivery.
With delivery apps, restaurants are no longer limited to serving customers within their immediate vicinity. These platforms allow restaurants to reach customers in neighboring towns, cities, and even states, depending on the app’s coverage area. This increased reach can lead to a significant boost in sales, as the restaurant can now cater to a much larger pool of potential customers.
In today’s fast-paced world, many consumers prefer the convenience of having their meals delivered directly to their doorstep. By offering delivery through popular apps, restaurants can tap into this growing market segment and capture customers who may not have otherwise considered dining at their establishment.
Delivery apps can also help restaurants boost sales during off-peak hours, such as mid-afternoon or late evening. By offering delivery during these times, restaurants can continue generating revenue even when in-house dining is slow. This can be particularly beneficial for restaurants with high fixed costs, such as rent and utilities, as it allows them to maximize their revenue potential throughout the day.
Popularity of Delivery Services for Restaurants
86% of restaurant consumers use off-site delivery services at least monthly
Simplified Logistics
Managing an in-house delivery operation can be complex and costly for restaurant owners. By partnering with delivery apps, restaurants can outsource their delivery logistics, reducing the need for additional staff and streamlining their operations.
Delivery apps provide restaurants with access to a network of experienced delivery drivers, eliminating the need for restaurants to hire, train, and manage their delivery staff. This can result in significant cost savings for restaurant owners, as they no longer need to invest in delivery vehicles, insurance, or other related expenses.
By outsourcing delivery operations, restaurants can reduce their staffing needs and focus their resources on their core business: preparing high-quality food. This can lead to increased efficiency and profitability, as restaurants can optimize their kitchen operations without the added complexity of managing a delivery team. Consider delegating your delivery services to experienced professionals to streamline your operations and enhance customer satisfaction.
Delivery apps have established efficient delivery networks, with advanced routing algorithms and real-time tracking capabilities. By leveraging these existing networks, restaurants can ensure that their orders are delivered promptly and accurately, without the need to invest in their delivery infrastructure.
Enhanced Brand Visibility
Partnering with popular delivery apps can significantly increase a restaurant’s brand recognition and visibility, exposing them to a wider audience and attracting new customers.
Delivery apps have millions of users actively searching for new dining options. By listing their menu on these platforms, restaurants can gain exposure to this vast user base, increasing the likelihood of attracting new customers who may not have otherwise discovered their establishment. For example, Wolt, a popular food delivery app, has already become a part of the street view in over 500 cities around the world.
Delivery app listings often include detailed information about local restaurants, such as menu items, prices, and customer reviews. This information can help attract new customers who are looking for specific cuisines or dining experiences. By optimizing their app listings with appealing photos, detailed descriptions, and competitive prices, restaurants can stand out from the competition and attract more orders.
Delivery apps often run marketing campaigns and promotions to drive user engagement and encourage orders. By participating in these promotions, restaurants can benefit from increased visibility and potentially gain new loyal customers. Some apps also offer targeted advertising options, allowing restaurants to reach specific demographics or promote special offers to users in their area.
Increased Customer Insights and Feedback
Delivery apps provide restaurants with valuable data and insights into customer preferences and behavior. By analyzing order trends, customer reviews, and feedback, restaurants can make data-driven decisions to improve their menu offerings, pricing, and overall customer experience.
Delivery apps collect a wealth of customer data, including order history, preferences, and demographics. By accessing this data, restaurants can gain a deeper understanding of their target audience and make informed decisions about menu development, pricing strategies, and marketing campaigns.
Customer reviews and ratings on delivery apps provide restaurants with direct feedback about their food quality, service, and overall experience. By regularly monitoring and responding to this feedback, restaurants can identify areas for improvement and make necessary changes to enhance customer satisfaction and loyalty.
Opportunity for Menu Experimentation and Innovation
Delivery apps provide restaurants with a low-risk platform to test new menu items and experiment with innovative concepts. By offering limited-time specials or exclusive delivery-only items, restaurants can gauge customer interest and gather feedback before incorporating new dishes into their main menu.
Introducing new menu items can be risky, as it often involves investing in new ingredients, training staff, and updating marketing materials. With delivery apps, restaurants can test new dishes on a smaller scale, offering them as delivery-only specials. This allows restaurants to gather customer feedback and assess the viability of new menu items without the full commitment of adding them to their in-house menu.
Delivery apps also provide restaurants with the opportunity to explore innovative concepts, such as virtual brands or ghost kitchens. Virtual brands are delivery-only concepts that operate out of existing restaurant kitchens, allowing restaurants to diversify their offerings and reach new customer segments without the need for additional physical space. Ghost kitchens, on the other hand, are shared commercial kitchen spaces optimized for delivery, enabling restaurants to expand their delivery operations without the overhead costs of a traditional brick-and-mortar location. For instance, Wolt has successfully implemented virtual brands and ghost kitchens to expand its delivery offerings.
Disadvantages of Restaurant Delivery Apps for Owners
High Commission Fees
Restaurant delivery apps charge significant commission fees, typically ranging from 15% to 30% of the order value. These fees can dramatically reduce profit margins on delivered orders, making it challenging for restaurant owners to maintain profitability. For example, if a restaurant typically operates with a 10% profit margin and pays a 25% commission fee to the delivery app, it would lose money on every delivered order. To compensate for these fees, restaurants may need to raise prices or find ways to reduce costs, such as using lower-quality ingredients or cutting staff hours.
According to a study by Restaurant Dive, maintaining profit margins on delivered orders is a significant challenge for many operators, with some even reporting losses due to high commission fees. Similarly, Nation’s Restaurant News highlights the negative impact of delivery service fees on restaurant profits, emphasizing the need for operators to find ways to mitigate these costs.
The Third-Party Food Delivery Market
The third-party food delivery market is expected to reach $24.5 billion by 2022
Loss of Control Over Customer Experience
When customers order through a delivery app, the restaurant has limited ability to control the quality of the food when it reaches the customer. Delays in pickup orders, or delivery can result in cold, soggy, or subpar meals, reflecting poorly on the restaurant’s reputation.
Increased Competition
Participating in a delivery app means competing with numerous other restaurants, often nearby. This increased competition can make it difficult for restaurants to stand out and attract new customers.
Loyal customers who previously visited the restaurant in person may switch to ordering from competitors grocery stores on the app due to convenience or promotional offers. This shift can lead to a loss of valuable foot traffic and a decrease in customer loyalty.
Difficulty Managing Multiple Food Delivery Apps and Platforms
As the popularity of food delivery grows, many restaurants feel pressured to partner with multiple delivery apps to reach a wider audience. However, managing orders from various platforms can be time-consuming and require additional staff training.
Juggling multiple tablets or devices for each delivery app can lead to errors in order processing, causing confusion in the kitchen and leading to delayed or incorrect orders. These mistakes can further contribute to negative customer experiences and damage the restaurant’s reputation.
Strain on Kitchen Operations
The influx of delivery orders during peak hours can strain kitchen operations, particularly if the restaurant is not designed for high-volume takeout. This added pressure can lead to longer wait times for both delivery and in-house customers, as well as increased stress on kitchen staff.
To manage the increased volume of delivery orders, restaurants may need to invest in additional staff, equipment, or even kitchen space. These investments can be costly, especially for smaller establishments, and may not always yield a positive return due to the high commission fees associated with delivery apps.
Costs of Restaurant Delivery Apps
Commission Delivery Fees
One of the most significant costs associated with restaurant delivery apps is the commission fee. These fees typically range from 15% to 30% of the total order value, which can quickly eat into a restaurant’s profits. For example, if a customer places a $50 order through a delivery app that charges a 25% commission, the restaurant will only receive $37.50 from that order.
While these delivery and service fees can be a necessary evil for restaurants looking to expand their reach and customer base, they can also pose a significant challenge when it comes to balancing costs and benefits. Restaurant owners must carefully consider whether the increased sales volume generated through delivery apps is enough to offset the commission fees and other associated costs.
In some cases, restaurants may be able to negotiate lower commission rates with delivery app providers. This is particularly true for larger or more established restaurants that have a strong brand presence and a loyal customer base. For instance, Uber Eats charges restaurants a commission of 25-30% of the order value. However, smaller or newer restaurants may have less leverage when it comes to negotiating fees.
The Most Popular Food Delivery App
DoorDash was the most downloaded app for food delivery and takeout in 2023, with over 21 million downloads
Additional Expenses
In addition to commission fees, partnering with restaurant delivery apps can also lead to several other expenses for restaurant owners. These may include:
Packaging Costs
Delivery orders often require specialized packaging to ensure that food arrives at the customer’s door hot, fresh, and intact. This can mean investing in sturdy, leak-proof containers, insulated bags, and other packaging materials. These costs can add up quickly, particularly for restaurants that do a high volume of delivery orders.
Dedicated Delivery Staff
Some restaurants may choose to hire dedicated staff to handle delivery orders, particularly if they are partnering with multiple delivery apps or have a high volume of delivery sales. This can mean additional labor costs, including wages, benefits, and training expenses.
Technology Integration
To work seamlessly with delivery apps, restaurants may need to invest in new technology or software to integrate their point-of-sale systems with the app’s ordering platform. This can involve upfront costs for hardware and software, as well as ongoing maintenance and support fees. For example, integrating with Grubhub API or Square API can require significant investments in technology.
Weighing the Costs and Benefits
Ultimately, the decision to partner with restaurant delivery apps will depend on each restaurant’s unique circumstances and goals. While the costs can be significant, the potential benefits – such as increased sales, expanded customer reach, and greater flexibility for diners – may make it a worthwhile investment for some businesses.
Before making a decision, restaurant owners should carefully review their financial data, including profit margins, labor costs, and overhead expenses. They may also want to conduct market research to gauge demand for delivery services in their area and assess the competition from other restaurants offering similar services.
Restaurant and Food Delivery App Marketing Strategies
Optimize App Listing
Your restaurant’s listing on the delivery app is the first point of contact with potential customers. To make a strong impression and entice users to order food from your establishment, focus on the following:
High-quality, visually appealing photos of your dishes can significantly influence a customer’s decision to order from your restaurant. As Samantha Jones, a food photographer and marketing consultant, states, “In the world of online food ordering and delivery, a picture is truly worth a thousand words. Investing in professional food photography can set your restaurant apart and drive more orders.”
Emphasize what sets your restaurant apart from competitors, such as locally sourced ingredients, signature dishes, or special dietary options (e.g., gluten-free, vegan). As John Smith, a restaurant consultant, notes, “In a crowded delivery app marketplace, restaurants need to communicate their unique value proposition clearly to stand out and attract customers.”
Offer Promotions and Discounts
Promotions and discounts can be powerful marketing tools used to attract new customers and encourage repeat business. Consider the following strategies:
You can offer a special discount code for first-time customers who order through the delivery app. This incentive can help overcome initial hesitation and encourage users to try your restaurant.
You can create urgency and excitement by offering limited-time promotions, such as seasonal specials or holiday-themed packages.
Many delivery apps run their marketing campaigns, such as “Restaurant Week” or “Free Delivery Days.” Participating in these promotions can increase your restaurant’s visibility and attract new customers who are actively seeking deals.
Encourage Customer Reviews in The Food Delivery Service Apps
Positive customer reviews can greatly influence potential customers’ decision to order from your restaurant. To encourage reviews and manage your online reputation:
Consistently provide high-quality food and service to inspire customers to leave positive reviews. Train your staff to prioritize customer satisfaction and address any issues promptly. As restaurateur Michael Lee states, “Happy customers are your best marketers. Focus on delivering an outstanding experience, and the positive reviews will follow.”
No restaurant is immune to occasional negative reviews. When faced with a negative review, respond promptly, professionally, and empathetically. Acknowledge the customer’s concerns, apologize for any shortcomings, and offer a solution or invitation to discuss the matter further offline.
Showcase glowing customer reviews on your restaurant’s website, social media profiles, and promotional materials. Positive testimonials can help build trust and credibility with potential customers.
How to Choose the Right Restaurant Delivery App
Evaluate Commission Fees
When choosing a restaurant delivery app, one of the most critical factors to consider is the commission fees charged by the app. These fees can significantly impact your profit margins, especially on delivered orders. It’s essential to compare the fees across different apps and determine which one offers the most competitive rates.
Keep in mind that commission fees can vary depending on factors such as order volume, restaurant location, and the app’s popularity. Some apps may offer lower fees for high-volume restaurants or those in certain areas. It’s worth reaching out to the app’s sales team to discuss potential negotiation options if you believe your restaurant can generate significant order volume.
Assess Market Reach
Another crucial factor to consider when selecting a delivery app is its market reach. You want to choose an app that is popular among your target customer demographics and has a strong presence in your local area. Research the app’s user base and download statistics to gauge its popularity.
You can consider the potential for attracting new customers through the app. Some apps have a larger user base and may expose your restaurant to a wider audience. However, keep in mind that this exposure may also come with increased competition from other restaurants on the platform.
Review App Features and Support
When evaluating delivery apps, take a close look at the features and support offered by each platform. A user-friendly interface and smooth ordering process are essential for ensuring a positive customer experience best food delivery app. Test out the app’s ordering flow to ensure it is intuitive and easy to navigate.
You can consider the app’s customer service and issue resolution processes. Inevitably, there will be times when orders are missed, delayed, or incorrect. It’s important to partner with an app that has a responsive and helpful customer support team to minimize the impact of these issues on your business.
Another key feature to look for is the app’s ability to integrate with your existing restaurant management systems, such as your point-of-sale (POS) software. Seamless integration can streamline your operations and reduce the risk of errors when processing orders and payments.
Some apps offer APIs or direct integrations with popular restaurant POS systems, making it easier to sync menu items, prices, and order data. If you already have a POS system in place, check with the app’s support team to ensure compatibility before signing up.
Evaluate Marketing and Promotion Opportunities
Many restaurant delivery apps offer marketing and promotion tools to help restaurants boost their visibility and attract new customers. Look for apps that provide features such as in-app advertising, targeted promotions, and email marketing campaigns.
Some apps also offer loyalty programs or discounts for frequent customers, which can help encourage repeat business. Consider how these marketing features align with your overall restaurant marketing strategy and whether they can help you reach your target audience effectively.
Assess the App’s Reputation and Reviews
Before committing to a delivery app, take some time to research its reputation and read reviews from other restaurant owners and customers. Look for feedback on the app’s reliability, user experience, and customer service.
You can also reach out to other restaurant owners in your network to get their firsthand experiences with different delivery apps. Their insights can help you make a more informed decision and avoid potential pitfalls.
Maximizing Success with Restaurant Delivery Apps
Optimize Menu for Delivery
When offering delivery through restaurant apps, it’s crucial to adapt your menu to ensure dishes arrive at customers’ doorsteps in the best possible condition. Focus on items that travel well and maintain their quality during transit. This may involve making adjustments to your recipes or cooking methods to prevent sogginess or temperature loss.
You can consider the packaging and presentation of your delivery items. Invest in high-quality, leak-proof containers that keep food secure and visually appealing. Include any necessary utensils, napkins, or condiments to enhance the dining experience. You can also create delivery-exclusive items or combos to entice customers and differentiate your offerings from dine-in options.
Tips for Optimizing Your Delivery Menu
Test your dishes for delivery to ensure they maintain quality
Use separate packaging for hot and cold items to maintain temperature
Include reheating instructions for dishes that may cool during transit
Offer meal kits or DIY options for interactive dining experiences
Streamline Delivery Operations
Efficient delivery operations are key to success with restaurant apps. Dedicate staff members to handle delivery orders, ensuring they are well-trained and equipped to manage the unique challenges of off-premise dining. Establish clear processes for order fulfillment, from receiving orders to packaging and handing them off to delivery drivers.
Invest in technology that integrates seamlessly with your chosen delivery apps. This may include a dedicated tablet or device for receiving orders, a kitchen display system (KDS) to streamline order preparation, and a point-of-sale (POS) system that syncs with your inventory and reporting. By automating and optimizing your delivery operations, you can reduce errors, improve speed, and enhance overall efficiency.
Key Elements of Streamlined Delivery Operations
Assign specific roles and responsibilities for delivery staff
Create a dedicated space for packaging and staging delivery orders
Use technology to automate order acceptance and kitchen workflows
Regularly review and optimize your delivery processes for continuous improvement
Prioritize Customer Service
Exceptional customer service is essential for success with restaurant delivery apps. Train your staff to handle delivery orders with the same care and attention as dine-in guests. This includes ensuring accuracy, promptness, and friendly communication throughout the ordering and delivery process.
Monitor and respond to customer feedback on delivery apps and review platforms. Address any concerns or complaints promptly and professionally, working to resolve issues and maintain a positive reputation. Go above and beyond to surprise and delight delivery customers, such as including personalized thank-you notes or small gifts with their orders.
Ways to Enhance Customer Service for Delivery
Provide clear, accurate descriptions and photos of your delivery menu items
Offer real-time order tracking and communication with customers
Include personalized touches, such as handwritten notes or small desserts
Follow up with customers post-delivery to gather feedback and address concerns
Leverage Data and Analytics
Restaurant delivery apps provide valuable data and insights into your delivery performance and customer preferences. Regularly review and analyze this data to make informed decisions and optimize your delivery strategy. Monitor key metrics such as order volume, average order value, customer ratings, and delivery times to identify areas for improvement.
Use data to identify your most popular delivery items, peak ordering times, and customer demographics. This information can help you tailor your menu, staffing, and marketing efforts to better serve your delivery audience. Continuously test and refine your delivery approach based on data-driven insights to maximize your success with restaurant apps.
Key Delivery Metrics to Track and Analyze
Order volume and revenue by day, time, and menu item
Average order value and item count per delivery order
Customer ratings, reviews, and feedback on delivery experience
Delivery times, from order placement to customer receipt
Promote Your Delivery Offerings
To drive delivery sales and attract new customers, actively promote your best food delivery services and offerings through various channels. Leverage your restaurant’s website, social media profiles, and email marketing to showcase your delivery menu and any special promotions or discounts. Encourage satisfied delivery customers to leave reviews and ratings on the app platforms to build social proof and credibility.
Partner with the delivery apps to participate in featured promotions, such as limited-time offers or free delivery campaigns. Consider offering loyalty rewards or incentives for frequent delivery customers to encourage repeat orders and build long-term relationships. By consistently promoting and incentivizing your delivery offerings, you can expand your customer base and maximize your success with restaurant apps.
Effective Promotion Strategies for Delivery
Feature your delivery menu prominently on your website and social media
Offer exclusive deals or discounts for first-time or frequent delivery customers
Encourage customers to leave reviews and ratings on delivery app platforms
Collaborate with influencers or local media to showcase your delivery offerings
Participate in app-sponsored promotions or featured restaurant listings
Food Delivery Services
Revenue from food delivery services could reach about $85 billion by the end of 2024
Navigating the Delivery App Landscape
Restaurant delivery apps offer a mix of advantages and disadvantages for owners in 2024. While they can increase reach, boost sales, and simplify logistics, they also come with high commission fees, reduced control over the customer experience, and increased competition.
To make the most of these apps, carefully evaluate commission fees, market reach, and app features before making a commitment. Optimize your menu for delivery, streamline operations, and prioritize customer service to stand out in the crowded marketplace.
Is your restaurant ready to tackle the challenges and opportunities of delivery apps head-on? By weighing the pros and cons and implementing strategic approaches, you can harness the power of these platforms to grow your business in the digital age.
