With the rise of delivery services apps in more metropolitan areas across the country, more Americans than ever were turning to delivery. Then, when COVID-19 resulted in shelter in place orders, delivery app use increased by 24% year-over-year. Apps like DoorDash, GrubHub, Postmates, Seamless, and Uber Eats make restaurant delivery a breeze for customers – while passing the cost onto the restaurants they serve.
Luckily for restaurants, many delivery companies waived their steep fees to help restaurants remain afloat during coronavirus distancing. However, with the return to “normalcy,” there’s a good chance people will still rely on delivery apps – even after they begin costing restaurants money again.
More Guests Turn to Delivery
As of March 2019, 22% of Americans had used delivery apps; in March 2020, that percentage leapt to 28%. That means that 6% of Americans began using delivery apps for the first time during the pandemic. With huge adoption rates like this, there’s a good chance that many of these first-time users will continue using them even after stay at home orders are lifted.
The anonymity of online ordering can lead to add-ons and customization helping to boost a pizza take-out bill. However, for restaurants that serve appetizers, alcohol, and desserts, guests ordering delivery could be spending much less than they would at a table dining in. But smaller tickets aren’t the only way deliveries cut into restaurant profits.
The Cost of Delivery
According to ChowNow, Restaurants are often charged 30% per delivery from companies like GrubHub and Postmates. If the restaurant budgets 50-75% on food and labor alone, not counting rent and utilities…it’s easy to see how third party deliveries can actually hurt restaurants in the long run.
However, a quarter of Americans getting food delivered on average once a week. It seems restaurants are caught choosing between paying out steep delivery commissions and losing out on a huge customer base. There are two other ways to still get delivery business while keeping costs low.
How to Reduce Restaurant Delivery Commissions
Update Your Phone System
When customers call to place an order, do they get a busy signal? When you put them on hold, do they hear dead air? Both of these are a recipe for losing callers and revenue. When a customer reaches a busy signal or loses confidence that their call will be answered, they hang up and call their next choice.
Digital phone services include a number of features to keep your callers on the line until you can take their order. IVR menus will help direct calls to the correct line, whether callers need to place an order or change a reservation. Custom hold music and messages can share current specials and upcoming events to encourage your customers to dine in in the future.
Plus, with modern integrated features you can get even more out of your phones. Call history and analytics can help you track when you’re busiest to plan for backup, while texting and mobile forwarding provide more flexibility in how you interact with guests.
Cut or Lower Commissions from Orders
Your restaurant’s highest priority should be working to drive pick-up orders over the phone. After all, phone orders don’t cost you any commission fees. And if you can encourage customers to pay in-person at the restaurant instead of over the phone, you’ll also cut down on some credit card fees since in-person charges are billed to you at a lower rate. However, you still need to offer a way for customers who prefer to order online.
Many POS systems like Toast and Square also offer online ordering add-ons for less than $200 per month (though you may also need to pay additional processing fees). These will allow you to take orders on your website, mobile app, or Facebook. You then choose to either employ your own drivers or integrate third party delivery apps, which are then charged on a monthly basis instead of per-order to help reduce costs overall. You can also use a service like ChowNow to build a custom app for your restaurant, including email marketing, loyalty programs, and promotions.
Do some math to find out if it makes more sense to spend a little more on your POS to enable online ordering instead of listing your company on delivery apps. Meanwhile, find how you can increase your marketing budget to drive phone orders and offer special promos for pickups over delivery.
Be Transparent with Your Customers
With the current volatility of the restaurant industry, you might be surprised to find that your loyal customers will be happy to support you. If you remove your restaurant from some of the delivery apps with the highest commissions, don’t be afraid to tell your customers why. Let your customers know, either explicitly or through promotions, that pick-up orders placed over the phone help your business.
Consider the success of Domino’s carry out promotion. In 2012, they launched a deal Monday-Thursday for a $7.99 large pizza for carryout only. In 2016, they launched an even bigger promo announcing that this deal was available every day. They both get to boost business on weekday nights and cut down on driver demand on the weekends by incentivizing customers to place carryout orders.
Brainstorm ways that your business can also subtly have your customers help you – whether it’s through giving local bars your take-out phone number, offering a free appetizer to pickup orders, or updating your website to have clear calls to action pointing to your phone number.
Develop Your Proactive Restaurant Delivery Plan
With almost a third of Americans accessing third-party restaurant delivery apps on their phone, it’s clear that demand for delivery is on the rise. But with high commission rates hitting already low margins, it’s important to assess the best way for your business to meet the delivery need. Don’t wait until you feel like you’re drowning in delivery fees. Make a plan now to make delivery a revenue builder for your restaurant.
Updating your restaurant VoIP phone system is one of the most cost-effective ways to keep happy customers calling back for more. You won’t lose customers to busy signals and can manage incoming calls more efficiently. Learn more about how Vonix helps restaurants and multi-site franchises connect to their customers or set up a consultation today.