Delivery apps are costing restaurants; how can restaurants avoid their fees?

For many restaurants, third-party delivery apps are becoming a serious concern. It has become increasingly necessary for restaurants to have the ability to take online orders. Customers expect it and, moreover, those restaurants that manage to launch their online ordering systems successfully are able to achieve new growth.

However, complaints about cold food and long waits threaten customer experience which when paired with service fees, sometimes as much as 30% of an order, makes the complex logistics of serving customers through an online portal seem hardly worth the effort.

Online ordering though, offers restaurants an additional revenue stream to their traditional in-store service. Pre-COVID this was fine. Restauranteurs would sign on and not ever really worry about delivery app costs, instead, relying on in-store profits to cover their operational costs and count those online orders as extra. 

COVID-19 though has threatened restaurants livelihoods and highlighted the more obviously harmful methods of some delivery app providers. Instead of innovating their products for the betterment of their customers and the end-user they continuously tag on additional fees to achieve top-line growth. 

With these barriers in place restauranteurs need to create efficient systems to move their reliance away from third party providers and ultimately increase the number and value of their online transactions.

Passing fees to customers

One strategy that has been embraced by a number of restaurants who have made the move online is attempting to offset service fees by charging more for online orders. This approach isn’t perfect. As the increased online value of a restaurant’s food can upset otherwise loyal customers and allow your competitors to undercut you.

This being said, most restaurants and customers would agree that a small additional cost for at-home eaters makes sense because of the added convenience and associated cost.

Increasing your restaurant's average online order value

Equipped with the right technology to manage online orders restaurants have the power to utilise the same tactics that have been mastered by online retailers over the past few years. It starts with targeted marketing and well-managed customer communications. To seal the deal though restaurants need titillating food photography and an online ordering platform that not only allows them to upsell but actively supports that ability and process.

Additionally, to increase both online order numbers and order value many restaurants have extended their loyalty programs to their online restaurants. This, when done through the likes of Uber Eats or Grubhub can and does quickly become a veritable hole for restaurant profits taking those already slim margins and whittling them even further. A better option is utilising your own online ordering platform and integrating with dedicated loyalty program technology.

Refined online menu

Not all food is created equal and this is especially true in terms of deliverable foods, though the rules are slightly different here. For example, soup comes with logistical challenges around its transportation. Steak needs to be treated in a certain way once it’s been cooked for the best result. There are numerous other examples, the point being that by the time some meals arrive after 30 minutes on the back of a moped they are no longer as good as they should be. 

This decline in quality, paired with increased costs and delivery fees could easily have a negative impact on your brand and dissuade all but the most loyal customers from ordering from you again. To combat this, chefs need to tailor their online menus to two factors. One, will it travel well, and two, will we lose money on the item if we pay a service fee? 

Slimming down the menu to items which will travel (eg. avoid ice cream) and are relatively fast to make, will ultimately increase profits for online orders, as well as improve the customer experience.

Innovation and MOBI

Despite the rapid growth of the online food industry, or perhaps because of it and the fierce competition that it has generated, delivery companies are chasing top-line growth through promos, discounts and other give-aways. Innovation on core product has fallen by the wayside. These companies need to evolve to better support their customer growth as supposed to adding on hidden fees and services costs in vain attempts to achieve profitability at the cost of the local restaurant. We recognised this years ago, which is why our pricing is transparent, and we are continuously developing our products based on customer feedback to help lift our customers to that next level of growth.

We build you your very own online ordering system that lets you take unlimited, orders through your website and custom mobile apps (for both iPhone and Android). This allows you to take control of your online ordering to maximise profits. Plus we have a number of intelligent integrations such as major POS systems as well as loyalty programs and delivery services.

Final words

The online food economy is hurtling towards stratospheric heights with a value that will soon surpass $200 billion USD. Those restaurants that can capitalise on it will see rapid growth along their bottom line. However, current third-party delivery app services have shown, time and again, that they feed off of that opportunity rather supporting their customer’s growth. For many restaurants during COVID-19 this approach has been harmful to their survival, which is why so many are looking for a better alternative.