Deliveroo, JustEat and UberEats – do the delivery dons really make life easier as an independent food business or reduce your margins significantly?
We take a closer look at why you shouldn’t be tempted to sell your shop’s soul to a third-party delivery partner.
Tempting or too good to be true?
The coronavirus pandemic resulted in a sudden shift of consumer behaviour in the food industry overnight. Without the opportunity to build rapport and relationships with customers physically visiting their premises, food businesses needed a new way to retain customer loyalty and revenue.
In 2020, more than 6 million people ordered from 115,000 restaurants through Deliveroo every month. With a streamlined process for onboarding new food brands and a network of delivery couriers in place meaning no hassle of recruiting or managing a team of drivers, many shop owners were drawn in by the reach larger delivery partners offer them.
Delivery apps also promise to promote your food business to a new customer base outside your local target area without the work of planning logistics or extra marketing. Sound too good to be true?
Commissioned to share profits
Deliveroo, UberEats and Just Eat all charge restaurants and takeaways a commission for each order. Although they’re fairly hush hush about how much this is, Big Hospitality reports it’s generally 25-30% commission – a hefty amount when it comes to smaller takeaways or restaurants.
In 2020, Deliveroo’s net revenues, consisting of mostly fees charged to restaurants and consumers, were up by a massive 54% (£1.2bn) compared to 2019.
Although Deliveroo says it encourages restaurants to use the same pricing model for delivery as for in-house menus, many food businesses feel compelled to charge more to make up for the high commission.
Putting your brand credibility at risk
In a fickle market it’s already difficult to keep customers loyal. Although your food business may now be visible on a larger online ordering platform that doesn’t necessarily mean you’ll get more orders.
With the majority of these delivery firms having more than 100,000 restaurant and takeaway partners listed on their platforms, it means your business will be sat amongst a whole range of other brands.
They’re effectively in the driving seat of your business – you’re completely in the hands of the third party’s algorithm and where you appear on their app.
Customers are also now well versed in scouring multiple delivery platforms to identify the best deals for their favourite meals. This influx of choice across multiple third-party platforms has had a huge impact on customer loyalty. In fact, according to Second Measure, the average 6-month repeat custom rate is just 21%.
Mystery customers could become the norm
Working with a delivery giant will also limit the insight you have into the purchasing patterns of your consumers, as they can retain the rights to your customer data.
This means no remarketing campaigns, no loyalty scheme incentives and no information on who your online customers really are.
Instead, why not consider setting up your own online ordering system on your website? You’ll have control over your brand experience online and have access to any customer data.
Like the sound of being in control?
To help you resist temptation, we’ve outlined three stages to get your food business set up for online ordering – whether that’s for Click & Collect, delivery or both.
Stage 1 – Branching out
A good place to start is setting up your own online ordering system on your website that offers Click & Collect. If you wanted to also offer delivery, consider pairing up with a large third-party to help ease the pressure on your team.
With your own online ordering platform for Click & Collect, you’ll have full control over your customers’ experience, with minimum costs and access to data.
Stage 2 – Expanding your offering
Once you feel confident following the roll out of Click & Collect, next consider how to take ownership of your delivery service. This could involve partnering up with a local firm such as a taxi company to introduce delivery to your online ordering system.
Stage 3 – Take control
For complete control of the journey your food delivery takes – from leaving your kitchen to arriving at a customer’s front door – introduce your own branded mopeds or cars with a team of dedicated delivery staff.
Branded vehicles offer free advertising whilst your delivery team are out on the move, raising brand awareness and showing customers you really care about the whole process from start to finish.
Instead of selling your food business’s soul to a larger third party delivery firm, why not explore the alternative options out there first? From doing it yourself to partnering with a local taxi company, there are plenty of ways you can offer your customers a fantastic experience.