Haven't had time to do your grocery shopping? Too lazy to cook? Why not order in?
This is the mindset of many Australians, the convenience of ordering takeaway is trumping the added costs consumers pay for these services providing them with more choice.
Food delivery services are sky-rocketing in popularity as a result of the pandemic normalising the process. Technology has enabled the hospitality market to keep up with consumers' demands for home delivery services. There are multiple online delivery platforms available - UberEats, MenuLog, Deliveroo and Doordash just to name a few.
In 2022, delivery is making up 30% of total restaurant sales with over 5.5 million Australian consumers ordering food online, a huge 66% increase from 2018. Whilst delivery platforms open up many opportunities for restaurants, they also have added costs. In this blog, we will take a look at the costs of these platforms vs. the investment.
- Understand your customers
- Increase sales
- Delivery platform costs
- Protect your profits
- Which delivery platform should you be on?
Understand your customers
Understanding your customers buying and consuming habits is helpful to figure out if the investment trumps the costs of implementing online ordering platforms in your venue. Some questions to consider:
- What age group are your customers?
- What food preference is in demand in your local area?
- Do customers prefer delivery or pick up?
Once you've determined your customer's preferences you can better target and cater to them. This will help attract new customers and maintain existing customers. You can better target your customers by looking at reports associated with your local area or delivery radius.
Statista break down the different age groups using online food delivery services. As you can see from the graph below, 25-34 year-olds are ordering more frequently and 55-64 year-olds are using delivery services the least. This information can help you determine whether or not food delivery might be in popular demand for your target customers.
Knowing where your customers are choosing to spend their money can help you determine which platform you should be on. Canstar Blue research reports that on average customers are spending the most with the delivery platform Deliveroo at $47 a month and Menulog the least with $29 a month.
Being online is important to your customers with 90% of customers conducting online research before choosing a restaurant. Therefore having your social media profiles and website updated is vital. You will want to make sure customers have access to your digital menu and links directing customers to make an order whether it's available for delivery, pick up or dine-in only.
In Australia roughly 68 million food orders are made, translating to 7,000 orders per hour. With the number of customers using online ordering increasing, give your business the opportunity to respond to the demand. Restaurants that don't offer online delivery have the risk of falling behind their competition with their customers opting to go elsewhere.
There’re many benefits to joining popular delivery platforms. A tremendous advantage is the access to new customer pools that you didn't have before, resulting in increased sales.
Customers scroll through the food available on these platforms being exposed to new restaurants they may never have seen before. In this way, the app also acts as a marketing channel for restaurants by providing exposure to new potential customers. With 66% of consumers using third-party delivery services in order to try a new restaurant, they wouldn't otherwise have tried, per the 2019 DoorDash report.
By extending your offerings outside your restaurant you are no longer confined by the number of seats and can further reach customers sitting at home. The convenience allows customers to order food in their own time, easily browsing all the different options available and getting it delivered right to their door. Opening your restaurant up to a whole new market.
Strategically designed digital menus result in customers spending more on each order. Strategic menu design and engineering are reported to grow profits by 10 - 15%. With the availability to upsell and feature item specials with ease.
Delivery platform costs
There are ongoing costs associated when signing up with delivery platforms such as UberEats, Menulog, Doordash and Deliveroo. Each Platform takes a percentage of commissions that your business pays off in each order subtotal. This commission rate is applied to each and every order made. Delivery isn't for every restaurant, it's a different style of service that restaurants need to adapt to. Let's take a look at the breakdown and the pricing between each platform.
Uber EatsEach order that is delivered via the platform has around a 30% marketplace fee on its premium plan. They also charge an activation fee of $350 (excl. GST) when you sign up which covers professional photos to be taken for your menu. Read more on the fees associated with their multiple plans.
MenulogCommission is around 15% on all orders. A Service Fee is applied to select orders. This is equal to 10% of the order value before promotions and discounts, with a minimum charge of $1 and a maximum of $4.
DeliverooFees are around 30-35% of ongoing fees and are deducted from each order that's delivered. Customers are charged for their order and then Deliveroo takes a surcharge from that price.
DoorDashDoordash has a focus on outer city suburbs and their fees include around a 30% delivery fee and 15% pickup commission.
Protect your profits
Increase pricing of menu items
Many restaurant owners are increasing the price of their menu items in accordance with the commission fees each platform charges. This is done to offset the fees that restaurants are paying. That's why consumers may find the exact same menu item price varying across sites with in-venue prices normally being cheaper as they eliminate the delivery service fees associated.
Utilise your digital menu
Things to consider on your menu:
- Menu design
- Reduced offerings
- Meals that require less prep time to make
- Items that will generate more profit with higher markups
Protect and increase your profits by taking advantage of delivery platform features such as their online menus. Design your menu with stunning food photography to encourage more sales as after all, you eat with your eyes. Deliveroo claims items with images next to them sell 6.5% more than those without.
Keep your menu short, offering limited food offerings will help the kitchen streamline the prep and cooking time of these meals. You need to consider the time it takes to make each meal, opting for items that are faster and easier to prepare. These menu items should also take into account the profits you are making after the raw ingredients. This will help identify the foods that are generating the greatest profit.
Technology makes it easier
Having advanced and reliable hospitality technology helps you better manage your online orders. Being on multiple delivery apps has previously been a challenge for restaurants to manage with staff members needing to manually accept and re-enter each order as they came in across multiple tablets. For example, if your restaurant is listed on 4 delivery platforms, this means you’ll have 4 tablets, on top of your own hardware. Well no longer, replace all the messy tablets and printers with Deliverect, an online aggregator that connects multiple online ordering platforms to your POS working together with OrderMate. This allows you to save time and money when considering implementing delivery services.
Which delivery platform?
Do some research into the different delivery platforms before you decide to sign up with them, as each may benefit your venue in different ways. An important question to ask yourself is where are my customers spending their money?
Choosing the right platform for your business is the key to delivery success and that comes down to understanding your customer.
Be across multiple platforms
However, you don't need to just commit to one delivery platform. Signing up with multiple platforms using an aggregator such as Deliverect helps you manage incoming orders easily allowing businesses to run smoothly.
It’s important to look at your reports to see what percentage of sales are coming through takeaway orders before expanding the platforms you are on. This is because you’ll want to make sure it’s the right move for your business.
Whilst many business owners may be concerned about the costs associated with delivery services it's important to assess the increased sales that can be associated. Play off the costs vs. the investment to your business.
Contact OrderMate to talk about integrating your POS with Deliverect to help streamline delivery operations and better manage all your online orders.