Benefits and Drawbacks of Providing Food Delivery Services

With the explosive growth of food delivery services like DoorDash and Uber Eats, the on-demand economy—which was first introduced by Uber, Netflix, and Amazon—has undoubtedly permeated the restaurant business. Indeed, since 2017, the value of the worldwide food delivery sector has more than tripled, reaching a total of $150 billion today.

Trends in Food Delivery

The New Yorker claims that in 2016, meal delivery orders accounted for 7% of restaurant sales in the United States. The number of diners placing takeout and delivery orders increased substantially during the ensuing years. However, the pandemic was the catalyst for this trend’s acceleration. In actuality, the epidemic more than quadrupled the revenue from meal delivery apps.

Even if meal delivery may not be as popular as it was during the epidemic, restaurants may still make great use of this channel. According to our 2023 State of Restaurants Report, restaurants now generate a substantial amount of revenue from online ordering—roughly 25% of total sales.

Naturally, not all restaurant websites offer the same online ordering experience. Some restaurants utilize an in-house or direct online ordering system (perhaps lesser volume but cheap or no costs), while others rely on third-party applications for both takeout and delivery (high volume and higher fees). Still other restaurants employ a combination of the two. You’re losing out on a crucial source of income if you’re not completing any of the aforementioned tasks. Investigate your alternatives and choose which one best suits your business as a starting step.

Ghost Restaurants’ Ascent

The restaurant business has already been significantly impacted by food delivery. Indeed, it has spawned an entirely new genre of eatery: ghost eateries.

Eateries known as “ghost restaurants” exclusively provide meal delivery services. They don’t have physical premises where you may dine in or occasionally even pick up, unlike typical restaurants. Since they usually operate out of industrial kitchens, food preparation and order fulfillment take precedence over the whole experience.

Thanks to technological advancements and the proliferation of meal delivery apps, ghost kitchens are probably here to stay. In addition to providing restaurants with a more viable business model, ghost kitchens enable owners to diversify their menu and satisfy customers’ increasing demand for takeaway and delivery.

Having said that, you don’t have to own a haunted restaurant in order to benefit from meal delivery services.

The Benefits and Drawbacks of Setting Up a Food Delivery Service

So, does it make sense for your business to provide meal delivery services?

Let’s examine the benefits and drawbacks of food delivery services.

Five Benefits of Takeout Delivery Services

These are a few strong advantages of meal delivery services.

larger checks. When compared to dine-in orders, online and delivery orders result in 20% larger checks for restaurants.

more chances for business. Customers may want your cuisine served in the comfort of their own home at times. You may cater to a larger clientele by providing delivery.

Less overhead. You may consider shrinking your facility to save on rent or hiring fewer front-of-house staff members to save on labor if deliveries start to make up the majority of your company or if you go to a ghost kitchen model.

exposure to fresh clientele. Deliveries can help you expand your consumer base beyond your loyalists, neighbors, and other locals. Furthermore, it’s much more crucial in cities where potential clients might not have access to a car. Since third-party applications serve as marketing platforms, they can aid in expanding this reach. You are presenting your business to the millions of users that Uber Eats, DoorDash, and Ritual have combined. Hello to new regulars! Your menu will be seen by customers who are not within easy walking distance.

Cons of Having Your Restaurant Offer Food Delivery Service

What drawbacks do meal delivery services have?

Reduced authority. You have less influence over a customer’s delivery experience whether you utilize a fleet that is owned by you or one that is contracted out. Due to delays that are unrelated to you or your cuisine, such as traffic, poor road conditions, or making the incorrect turn, customers may have a negative perception of your restaurant. Customer perception of your restaurant may suffer if food is served cold or is presented shoddily after being transported. Additionally, since you aren’t present when clients consume your meal, you have less options to make up for a negative experience.

Implementation will require further work. If you decide to handle delivery fulfillment internally, you will have to deal with the headache of hiring new employees and buying new cars while setting up a system that will ensure a successful service.

reduced profit margins. You are responsible for covering the drivers’ expenses for petrol, insurance, and other costs if you are employing your own delivery fleet. These expenses all reduce your profit margin. There are fees associated with using third-party delivery providers. You need a large number of orders to turn a profit, as even the finest food delivery app businesses take a large portion of each meal that is delivered.

Greater error margin and increased sites of interaction. There will be additional points of contact when using a meal delivery service between when the order is being produced and when the consumer receives their food, which might lead to more opportunities for mistakes. You won’t be present to make sure the driver is upholding the standards you’ve set for your restaurant, whether you hire a third-party fleet or employ drivers in-house.

With the explosive growth of food delivery services like DoorDash and Uber Eats, the on-demand economy—which was first introduced by Uber, Netflix, and Amazon—has undoubtedly permeated the restaurant business. Indeed, since 2017, the value of the worldwide food delivery sector has more than tripled, reaching a total of $150 billion today. Read More: delivery near…