In today’s busy world, many of us don’t have the time to shop, prepare, and cook meals for our families every day. More and more of us are taking advantage of food delivery services from our local grocery store, fast food, subscription services, and our favorite restaurants. Does your food and beverage business offer a delivery service? Let’s look at some of the pros and cons of adding delivery to your restaurant.
Pros:
Targeting a new customer base. By offering a delivery service, potential customers can discover your restaurant. Connecting to new customers is one of the biggest benefits when adding delivery to your restaurant, and it allows consumers to try a new spot that just might turn out to be their new favorite place to dine. You widen your customer base, your customers have more choices; it’s a win/ win!
Can be a good investment. According to industry insiders, three quarters of all restaurant industry traffic is off premises in today’s marketplace. That is a number that cannot be ignored. Investing in a delivery service can mean an added income stream, without the overhead of hosting those consumers at a physical restaurant location.
Helps avoid weather problems. No one likes to go out to eat when the weather is bad. By offering restaurant delivery to bring their favorite food to their homes, your customers will have the best of both worlds. The ability to enjoy a meal from your menu without the need to brave bad weather conditions is very attractive to today’s consumer.
Convenience/customer satisfaction. The convenience of adding delivery from your restaurant and having it sent straight to their door holds the greatest appeal for the consumer. Busy moms and dads can help the kids with their homework and other nighttime rituals without taking time out to prepare, cook, and clean up after everyone. More quality time with family and loved ones equals greater customer satisfaction.
Digital accuracy and efficiency. By offering online ordering to your customers, there’s less margin for error. Online ordering also gives you a valuable database of customer information. You can use this information to tailor your marketing efforts to increase sales, and, by adding restaurant delivery, it lets the restaurant owner see which menu items are the most popular.
Third-party platforms make it easy. If you are trying to expand your customer base but don’t want to go through the hassle of incorporating a delivery service internally, you should consider bringing in a third-party delivery service, such as UberEats or DoorDash. The only work required on your end would be the initial paperwork and setup – the personnel needed and actual delivery is all done by the hired delivery service, making it very easy to incorporate into your current restaurant operations.
Cons:
Expense. There is a cost to adding a full-service restaurant delivery option. You’ll need extra labor to cover the kitchen while drivers are out delivering food, there’s the cost of delivery driver’s insurance, and other associated costs. You may need to purchase delivery vehicles and insulated food containers, as well.
Kitchen issues. If you don’t hire extra labor to deliver your meals, you could experience a slowdown in your in-house service. That can mean unhappy customers who do dine on site, and that’s never good for business.
Limited space. If you’re not already set up for adding restaurant delivery and meal prep, you’ll need an area within your current space that is designated for meal prep of delivery orders only. Unless your current kitchen footprint allows for this space without infringing on space needed to take care of in-house customers, you’ll have to consider a remodel.
Quality of food. Although the meals may leave your restaurant piping hot, there’s a chance they won’t arrive that way. Your drivers can be unavoidably detained, especially during inclement weather. That won’t matter to the consumer if their meal arrives cold. Using a third-party delivery service also means a lack of control over adding delivery drivers for your restaurant.
Can negatively impact in-house environment. The benefit of increasing your customer base by adding a delivery service may be offset by decreased foot traffic coming in the door. You might consider offering smaller, specialized, for-delivery-only menus to increase delivery orders and still bring consumers in the door for the other items on your menu.
Third-party platforms can be expensive. Delivery services such as UberEats and DoorDash may be less work, but they can also come at a very high cost. The commission rate for these companies varies anywhere between 15-30%. With UberEats, a restaurant is not allowed to increase the cost of the items to account for their commission to the delivery service, either. Most restaurants only see net profit margins of 2-10% on a good day. The profitability of third-party delivery service platforms varies from restaurant to restaurant, so it’s important to do a thorough financial analysis before making any decisions about adding delivery for your restaurant.
At Gilkey Restaurant Consulting, we offer our clients the professional restaurant management recruitment services that will help ensure your business remains strong, healthy, and profitable. Our experienced staff brings a unique depth of industry knowledge and experience to every project and will help you ensure quality in every aspect of your business. Contact us today and learn how our consultants can help you achieve results that exceed your expectations.