A way for restaurants to make food delivery profitable is to avoid the 15% delivery charge. Read on to find out how!
Making food delivery profitable has always been a challenge for restaurant operators.
And with the ongoing societal changes post Covid-19, the need for restaurants to make their food delivery service more profitable has never been greater.
The growth of marketplace brands such as Uber Eats and DoorDash has undoubtedly helped to drive revenue growth for restaurants as a short-term solution.
But taking a look at the other side of the coin, many restaurants have become over-reliant on marketplace brands for delivery.
In doing so, restaurants face many challenges, particularly when it comes to paying huge delivery fees and service fees.
Today, the immediate concern for many restaurants is the inflated costs associated with this delivery solution and the impact it’s having on their bottom line.
Restaurants, on average, make 30% of the ticket price (transaction value) of a delivery order. However, the commission they pay on each order received from these food delivery apps is 15% of the ticket price.
Then, if the restaurant opts to have the marketplace brand use their delivery drivers to fulfill that order, they typically pay an additional 15% (sometimes less for the big restaurant chains).
This means that the profit from delivery is effectively eroded to nothing on the service charges, pickup fees, etc have been added on.
Pre-Covid, when the delivery channel only accounted for a small part of the overall business’ revenue, profitability was less of an issue.
Today, however, delivery to customers is currently a restaurant’s primary revenue stream.
As a result, it’s critical for restaurants to make the delivery channel more profitable if they wish to stay in business.
The only way for restaurants to make delivery profitable is to avoid the 15% delivery charge.
How do they do this? By hiring their own drivers and finding an effective restaurant delivery management system to manage their fleet in the most efficient way possible.
Not only will this increase delivery profitability, but restaurants will also be able to maintain control over their customer delivery experience.
So right now it makes sense to hire internal drivers, but what about the software? How can a delivery management system solve my problems?
The delivery window is narrow – typically between 6-9 pm. Trying to ensure a high number of orders are delivered on time, without hiring an army of drivers whom you don’t have a schedule for outside of this window is impossible to do without a software solution to streamline the operation.
Not only does it allow you to automate the entire dispatch process, but team members also spend less time organizing delivery routes and dealing with angry customers on the phone.
In addition, your food delivery drivers are kept busy which means they are happy because they are earning more.
For the kitchen, knowing when the driver will arrive due to reliable ETA’s and delivery instructions means food is prepared at the last minute. As a result, no food is gone to waste, the driver isn’t being paid to waste delivery hours waiting in the restaurant, and the food quality for the customer is at its optimum.
For the customer, knowing when your food will be delivered is key.
This is just as important as making sure your food is delivered on time and in tact!
Restaurant-focused delivery features such as auto-dispatch and order-tracking capabilities all lead to a great delivery experience for your customers.
One that will keep them coming back for more.
On top of that, you can really lock in their loyalty by sending delivery promotions via SMS to your customers once their order has been dispatched.
Not only will they be able to avail of special offers or discounts, but this feature will also enable them to contact their driver in they want to avail of contact-free delivery or change their delivery address.
‘Integrations‘ is the word on everyone’s lips. But what does it actually matter?
In order to ensure a seamless experience with delivery management software you need to make sure you choose one that integrates with some of the biggest leaders in the industry.
Not only will this streamline the onboarding process, but it will also help you to make more informed decisions, particularly when it comes to analyzing your delivery data.
Did you know that delivery performance data can be fed back to the marketplace system? This means that the marketplace is happy to promote that restaurant by moving them up the search rankings on the marketplace website.
The higher up the rankings, the more orders you get.
Without the delivery data, the marketplace cannot know how good the restaurant is at delivering the marketplace orders. As a result the algorithm assumes you are giving a poor delivery experience and drops your restaurant way down the search rankings to avoid giving the marketplace customer a bad delivery experience.
Order tracking in its simplest form allows the restaurant to track, in real-time, its delivery orders.
Delivery management software takes this to the next level.
It actually allows the restaurant to equip the customer with their own order tracking link, sent via SMS, while offering them the ability to brand the entire delivery experience. Not only will the customer be able to see their delivery location, they can interact with your brand too!
This can be done by adding customizable content to the order tracking link.
In addition to branding, the restaurant can embed any type of digital content in the tracking links sent to customers, restaurants can use this media opportunity to encourage customers to order more frequently, spend more, bring new friends, or order from a more profitable channel.
Using such a solution is no-brainer!
The administration that goes into calculating weekly pay for delivery drivers is painful.
And time-consuming.
This is because drivers are often paid according to a combination of variables such as hours worked, deliveries made, distance travelled so on and so forth.
These calculations will take multiple hours each week to do. Eating away at profits and time that could be spent on what truly matters to restaurants, the food.
The right delivery management solution will automate your payroll calculation. This will totally streamline payment calculation and enable restaurants to redeploy team members if necessary.
In conclusion, making restaurant food delivery profitable requires careful planning, strategic decision-making, and ongoing monitoring of key metrics.
By implementing the right technology solutions, optimizing delivery operations, and focusing on customer satisfaction, restaurant owners and operators can not only generate new revenue streams but also strengthen their brand reputation in a highly competitive market.
It is important to remember that the delivery landscape is constantly evolving, and businesses must be prepared to adapt to changing consumer preferences and market trends.
With the right approach and a commitment to continuous improvement, restaurant delivery can become a lucrative and sustainable part of any foodservice operation.
So start today and put together a foolproof food delivery strategy for your restaurant!
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