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Is service fee 35% sustainable for restaurants?

The explosion of food delivery companies like UbearEats, Deliveroo, and Foodora has opened up a whole new world for both customers and restaurants. Suddenly, customers don’t have to resign themselves to just ordering Chinese or pizza for delivery: there’s a smorgasbord of delicious options that can be brought to one’s door. Similarly, businesses that previously didn’t have the staff or logistical tools to offer food delivery have also been given the chance to showcase their dishes to even more customers.

Handing over money to someone else

Win-win, right? But don’t forget, the food delivery companies are businesses too, some charging restaurants a service fee of as much as 35% of the order total. Is it worth it to restaurants?

More customers

Picture Joe Bloggs. Joe lives a 10 minute drive away from Sushi Palace, but Joe doesn’t have a car. Joe has always wanted to try Sushi Palace, but previously found it too hard to get to. Joe discovers Sushi Palace on his online ordering app - bingo! Obviously the best case scenario is that using online ordering will open up the restaurant to a wider geographic audience, thus bringing in more customers.

More clout

Competition is tough in the restaurant biz, so it’s vital that businesses stay on top of what their competitors are (and aren’t) doing. Offering a delivery service could give a restaurant an edge over their competitor down the road who is still relying on dine-in orders.

More seamless

Many online ordering services integrate with a restaurant’s point of sale system, so orders are all going through to the one spot. Having everything on the one restaurant pos can help ensure the kitchen and front of house staff are all on the same page.

More data

Many online ordering companies can offer valuable information on customer insights, including hot-spot suburbs and high growth areas. This is a powerful data set, and one that might not otherwise be available without an online ordering system.

But more risk

The positives sound great, but they’re not without their drawbacks. Yes, restaurants will likely get more customers, but what if there’s a glitch with an order and they lose that potential new customer forever? Restaurants also need to be cautious about teething problems while the new system is getting set up: they’ll need to account for the time it will take staff to figure out how the system will integrate with their workflow, or whether they need to train them on using a new POS device.

So can businesses cop the 35%? They should certainly try. It’s best they tread carefully, and ensure they find the right online ordering solution that fits their business.

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