Which Food Delivery Solution Is Best For Your Restaurant

By now your restaurant is more than likely signed up with one or more of the popular food Delivery companies on the Market. Here is the shortlist of Food Delivery companies out there:

  • UberEats
  • GrubHub
  • PostMates
  • DoorDash
  • Seamless
  • Slice
  • Delivery.com
  • Eat24

 Some restaurants are still enjoying the benefit of being listed on one or more of these platforms without incurring any cost (Freemium Phase). This is made possible only through a limited-time introductory offer that many of the platforms listed above offer. Do know that the Freemium Phase will soon come to an end. You will soon get a phone call from these companies and they will offer a combination of deals ranging from flat delivery fees to commission-based fees that can run as much as 30% per order.

After The Freemium Phase: What To Do When It Ends!

The Delivery companies that are offering Freemium listings over a short period of time to build a loyal customer following for your business. However, do be aware that these customers are the consumers of the delivery platform. This means when the limited time offer ends these customers have no way to access you for ordering. The offer the delivery platform will make to your business is simple - pay 30% or lose access to the platform and the customers they built for you.

Before jumping into how to avoid Freemium Phase expiration/discontinuation from ruining your companies revenue stream takes into consideration that many consumers utilize these platforms to bargain hunt. Your business gets not more exposure than the next. Paying extra on the platform or running your own promotions highlighting your companies participation on the platform will give your business a competitive advantage. Remember your business will not remain on this platform for free forever (You need to explore your premium options).

The Premium Phase

Your business needs to make a decision after the Freemium Phase ends here are your options:

  1. Pay Commissions in upwards of 30% to the delivery platform and rely on the platform for advertising and its subscriber network.
  2. Pay Commissions in upwards of 30% to the delivery platform plus deploy paid advertising in addition to the platforms advertising and subscriber network
  3. Launch your own ordering platform and leverage the “deliver-only” features of one of these platforms. You will need to also deploy paid advertising for best results
  4. Launch your own ordering platform plus, leverage the “delivery-only” features of a delivery platform, deploy advertising and launch our own restaurant app.

Here is a cost analysis of the proposed solutions above:

If you completely leave all the online order processing and marketing up to the delivery service providers you can save a little money and earn a bit more revenue when compared to alternative options. Our model illustration assumes that your restaurant business will see an increase in revenue of at least 20% over a period of 12 months as a result of offering online order and food delivery services.

Option 1

If your business can afford to do zero advertising and rely solely on the subscribers of the delivery service providers and their marketing of the platform (not your business exclusively) then option 1 will work for your business.

Option 2

If being on the platform appeals to you and you are serious about being successful then be prepared to invest a sizeable amount of your revenue back into helping your business thrive on the delivery platforms. In our model projections, we estimate the cost could be as much as 57% of your online order and delivery revenue if you explored option 2. Option 2 does, however, provide for advertising which can benefit your in-store sales as well as online ordering.

Option 3

This option assumes that your business will launch its own online ordering system. We recommend looking at companies, providers or online presence management agencies that can provide you with on-boarding services. Option 3 also provides a way for your business to invest in advertising which can provide an added benefit to in-store sales, not just online ordering.

Option 4

This option provides the best of all solutions. With option 4 our business will launch it’s own online ordering system plus deploy an app for customers to download. Again, we recommend looking at online presence management agencies that can provide you with a service solution that addresses all your needs from digital advertising, solution development, and ongoing support.

Who will handle the delivery?

Some of the delivery service providers provide a connection gateway into their platforms enabling developers to leverage application programming interfaces (APIs). These APIs allow ordering systems to pass along delivery details so that the delivery service provider can fulfill the delivery request. PostMates’ delivery solution is a great example. Postmates, similar to a few other delivery service providers, provide developers with access to the backend of its platform to strictly utilize for “delivery-only”.

So, why does PostMates allow agencies, with developers, to access their system for delivery only? In order to maintain your listing on its platform, handle the credit cards, keep the software updated, market the app and support prospecting efforts they need more than what delivery fees generate in revenue. For this reason, many delivery service providers apply commission-based feeds. However, when an agency connects to the platform's backend the associated platform expenses are non-existent. The Delivery Service provider does not have to worry about ongoing expenses, therefore, the cost is just the delivery fee. In most cases, the restaurant can pass along 100% of the delivery cost or absorb a maximum of $2 - $3 of the delivery fee.

What’s Holding restaurants back from choosing this solution?

So, why don’t more restaurants just interface directly with the backends of these delivery companies?

Lack of knowledge regarding associated expenses. The assumption is the delivery company has a better price and solution. Many believe a custom ordering system that leverages the delivery power of companies like PostMates is cost-prohibitive. The Fact is it is very affordable and much more effective in the long run. Your restaurant can’t afford to utilize a platform or solution that will keep your customers from you. The cost associated with having your own solution is worth the additional investment.

If your business selects option 2 as the solution to handle your online ordering your revenue gains will be slow and in the end, should you decide to change platforms or if the platform dissolves your business will lose out.

Option 3 and 4 are the best solution for your business because your business owns the customer database plus you get the added benefit of marketing for all aspects of the business. If you leverage custom development you can have your own restaurant app. Not to mention the benefits that an online ordering system introduces such as:

  • Integration into your Email Marketing List
  • CRM integration
  • Loyalty Rewards
  • SMS Marketing
  • Push Notifications
  • Extended Delivery Coverage
  • Exclusivity (no competitors in order system)

 

Which solution did you decide to release for your restaurant? Let's talk more about your restaurant's online ordering strategy.