How important is delivery and takeaway for modern restaurant businesses?
Significantly. Just listen to Hudson Riehle, SVP of Research and Innovation Services at the National Restaurant Association:
From the consumer perspective, there’s nothing more convenient than having the restaurant come to them. The off-premise component has been primarily responsible for industry growth over the past decade, and it won’t be decreasing into 2018 and beyond
The world, clearly, is changing when it comes to dining out habits; people increasingly appear to be searching for easier ways to consume restaurant-cooked food from the comfort of their own home.
The stats tell their own story, too:
- In 2017, over half of US internet users would head to a restaurant’s own app or website to order food (source)
- Domino’s Pizza (a stalwart of online food ordering) sales in the UK topped £1.26bn during 2018 (source)
- Just Eat’s revenue hit £779.5m in 2018 (source)
- The average weekly spend on takeaway meals in the UK during 2018 was £5.10 (source)
- Food delivery sales in the US are expected to rise annually by an average of 20%, taking them up to $365bn by 2030 (source)
- 2017 saw a 15% increase in people ordering breakfast online (source)
If you’re a restaurateur, you might be inclined to shrug off the above in the belief that online ordering growth is only of interest to pizza outlets and others that have been on the takeaway list for decades, such as Indian, Chinese and Turkish cuisine.
But that’s missing the point. Thanks to services such as Deliveroo and Uber Eats, virtually any restaurant can tap into a market which is simply colossal and with zero dent on either their brand image or internal processes.
Think about it; as a restaurateur, wouldn’t you love to take advantage of the fact that 60% of US consumers order delivery or takeout once a week?
That’s a huge potential market and one that you absolutely have a right to serve!
Is this the end of the restaurant as we know it?
Melissa Wilson is the principal of Technomic, a well-regarded research firm, and traditional restaurateurs would be forgiven for being a little concerned about her summary of the modern diner:
It’s a lot of people who do not want to go out to a restaurant for the occasion. We hear from drivers how often people answer the door in their pajamas.
Thankfully, if you’re a traditional restaurateur, there’s no need to panic.
Consumers will always have a desire to dine out. As convenient as a takeaway might be, it can’t beat the atmosphere and zero-hassle nature of booking a restaurant table at which to treat a loved one, the family or impress a business contact.
It’s why diners still eat out 4.9 times per week on average.
If you’re an independent restaurateur, this is great news, because it means there’s a latent source of revenue you can take advantage of whilst still maintaining your traditional table service income.
In fact, if you’re looking for a growth strategy, adding online ordering to your business plan is one of the best ways to give your business that all important leg-up to its next chapter.
In this article, you’ll discover the following:
- How each food delivery company works
- The advantages and disadvantages of adding online ordering to your restaurant business
- An insight into each platform’s approach
- What consumers look for in a food delivery company
- How to pick the right delivery company for your business and use it for maximum return on investment (ROI)
To keep things simple, we’ve narrowed down the three delivery companies we think deserve your attention - Deliveroo, Just Eat and Uber Eats. One will be right for your business, but please read on to find out which one that is!
How do food delivery companies work?
We all like a simple solution, and the three delivery companies we’re considering in this blog post offer just that. Granted, they go about it in different ways, but that’s why you’ve reached this page!
Deliveroo, Just Eat and Uber Eats provide restaurants with the ability to accept and process online orders. This is usually done via a listing on their website and respective app. All technical details are taken care of, from the ordering process through to payment processing and delivery of the order to the kitchen team.
In return, they take a commission of the sale based on a percentage of the total order (although there are some other costs to take into account).
The orders are delivered either by the restaurant themselves or by third party contractors chosen by the delivery platform.
The advantages and disadvantages of Deliveroo, Just Eat and Uber Eats
Before we look at each delivery service, let’s consider the pros and cons of this as a business strategy for independent restaurants.
Pros of adding online delivery to your restaurant
- The likelihood of increased sales. Although not guaranteed, take one look at the statistics at the top of this post and you’d be hard-pressed not to assume you’ll see an uplift in sales by simply adding delivery as an option.
- Another marketing channel for your restaurant. Yep, you pay a commission for each order you receive via these delivery companies, but their websites and apps act as another marketing channel for your restaurant, and you can always tempt happy diners to return and either dine out or order direct to avoid repeat commission.
- Customer convenience. If you’ve used an online food delivery service, you’ll know how blindingly simple it is. And what do your customers crave alongside great food? Convenience!
Cons of adding online delivery to your restaurant
- Higher overheads. Adding online delivery to your restaurant will increase costs - there’s no escaping that fact. From the commission you’ll pay to the potential need for additional staff and new menus, this option doesn’t come for free.
- A burden for existing employees. If you can’t afford to bring in more staff to deal with online orders or provide additional pay for existing staff, the latter might become overwhelmed with the new responsibility.
- Brand damage. Online delivery shouldn’t impact the value of your brand (it’s designed to improve it, if anything), but the sudden emergence of a new channel for online reviews can present issues if you struggle to provide a great delivery experience for your customers.
Now, let’s look at all three services in detail.
Established in 2013 and based in London, Deliveroo can now be found in two-hundred cities throughout the world, and you’ll doubtless have seen a few of their brand-adorned cycle delivery staff whizzing past you on the street.
- Commission-based (reportedly a third of each order)
- Courier fleet size of 6,500-7,00 (estimated)
- Administration fee of 4% for drivers
- Allows restaurants to use their own drivers
Deliveroo claims it could increase your sales by up to 30%. Genuine insight thanks to their experience in the market or marketing hyperbole? It’s difficult to say, but few can deny the presence of their brand on the high street; you’re unlikely to take a walk down many city streets without seeing one of their drivers or cyclist pass you at some stage.
They’ve thus far partnered with over 80,000 restaurants across the world, and offer a great app for customers. By tapping into their rider network you can reach customers quickly, but they’re just as happy for you to use your own delivery method if you have drivers on hand.
Just Eat can currently be found in 12 markets across the world and is now listed on the FTSE 100. It’s been around the longest of our three comparative platforms, having launched in 2001.
- Claims to take 4,000 orders a year on average
- Offers partner discounts with wholesalers, utilities and insurers
- Provides ordered tablet
- Joining fee (around £700 + VAT) plus commission of circa 14% and admin charge (50p)
Chances are, if you’ve had a takeaway or two within the last few months, you (or another member of your party) will have ordered the food via Just Eat.
In the UK, it’s arguably more ubiquitous than the US, but they’re expanding rapidly and are definitely worthy of your attention if you want to add online delivery to your restaurant’s range of services.
They’ll ‘do the marketing’ for your restaurant, which essentially means you can benefit from their no doubt considerable spend on Google advertising and SEO by having your listing on their website appear prominently within relevant local searches.
Just Eat claims to offer savings of up to £13,000 per year thanks to partnership discounts with utilities providers, insurers and more. Will that help offset the commission you’ll pay for their service? Possibly, but it pays to do your sums before diving in!
From the founders of the now ubiquitous taxi service, UberEats was launched in 2014 and is based in San Francisco, California.
- Commission of up to 35% on each order
- They have around 15,000 restaurants on-board
- Big-money backing from the owners/investors of Uber
- Driver service fee of around 30%
Love it or loathe it, Uber has arguably transformed public transport. And, for as much as they have angered traditional taxi services, the company’s ability to disrupt markets with ultra-convenient digital services for customer cannot be underestimated.
Are they likely to do the same in the food delivery sector? Possibly. With typical Uber confidence, the US-based firm claims to help restaurants deliver orders in an average of fifteen minutes while maintaining the best possible food quality.
Restaurants can also track orders from the point of receipt to the customer’s door and benefit from the service’s promotional work and continual iteration of the service.
What do consumers look for in food delivery?
Most of us have used an online food delivery service at some stage - or been on the receiving end of an order placed by a friend or relative.
It’s a near ubiquitous part of modern day life, but what do modern diners look for in an online food delivery service? We think it boils down to 5 key elements:
- Immediate availability. Menu browsing and ordering should be available on any device they have to hand (be it a smartphone, tablet or laptop).
- Superior ease-of-use. Food delivery apps should be instantly usable without having to refer to a user guide. Like the best smartphone apps out there, they need to be immediately familiar by taking advantage of the latest tools and APIs software developers are given by device manufacturers.
- Ease of payment. The best food delivery services will offer the most convenient forms of payment, from Apple Pay to cash on collection.
- Delivery status. Where is it? How long ago did we order? How do I contact the restaurant? Such information should be immediately to hand.
- Feedback. If you’re either exceptionally delighted or dismayed by your takeaway, you’ll probably want to tell the restaurant (and world) about it. As scary as that might sound if you’re a restauranteur, online reviews are vital if you want to draw in more customers (read our tips on how to encourage great online reviews).
How to pick the right delivery company
We’ve hopefully gone some way to convincing you that online food ordering is a smart move for your business.
But, how do you pick the right delivery company? More importantly, how do you use them effectively to ensure they’re doing the right job for your restaurant?
Here are 5 tips for finding - and using - the perfect delivery partner for your restaurant.
- Look for a partner that matches your brand ethos. This is one we can’t really help you with, other than to say that you’ll know when you’ve found the right delivery partner. The look, feel and customer service approach of each platform differs, so try and pick the one that best matches the ethos and experience of your brand.
- Consider ALL overheads. We’ve already mentioned a number of the fees that are associated with delivery company partnerships. From sign-up fees to commissions and driver surcharges, make sure you have everything covered, including anything you’ll need to invest in to manage the online ordering process in-house. Ensure there’s enough room to make a satisfactory margin.
- Make sure your team is ready to handle online orders. Hopefully, you’ll have a dynamic, energetic team that is ready to take on the additional requirements that come with online ordering. Thankfully, most platforms make the process relatively easy, but sit down and have a good chat with your team beforehand to ensure they’re ready to buy into it and take on the extra responsibility (even if pay rises have to be delayed until the additional revenue starts to take hold).
- Try to avoid long-term commitments. You may not pick the right online delivery platform straight off the bat, so ensure you’re not tied into any long-term contracts. This will enable you to switch and try others if you’re not satisfied with your current partnership.
- Keep track of your ROI. Adding online ordering should enable you to bring in more revenue and grow the business, so keep a close eye on those costs and the income generated specifically by online orders. If it’s slipping or non-existent, step back and re-think.
We hope this post has proved useful. Online ordering may or may not be right for your restaurant - that’s entirely your call.
However, we’d recommend seriously considering adding it to your service, not least because the process is made far easier with the support of one of the platforms we’ve looked at today.
The right platform for you depends entirely on your brand, customer base and ability to absorb the delivery company charges and operational overheads. Pick the right one, though, and you should find a very healthy new source of revenue and growth for your independent restaurant.