01 May Capped at 15%, Food Delivery Apps Are Still Murder. Time to Let Them Go.
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In an effort to help San Francisco restaurants stay afloat in this unstable economic reality, Mayor London Breed has recently capped the fees food delivery apps can charge restaurants at 15%. “In these tough financial circumstances,” Breed said in a statement, “every dollar counts and can make the difference between a restaurant staying open, or shuttering.”
The commissions of apps like UberEats, Postmates, GrubHub and DoorDash have always been high, sometimes reaching a staggering 35%, which is a hard pill to swallow for a tight margin industry such as the foodservice business.
Before the COVID-19 pandemic, restaurants that could afford it enjoyed the additional marketing and new customers outreach service these apps provided. But now that pickup and delivery is their only option, restaurants simply cannot continue to rely on a service that is eating away at their bottom line.
The time has come to drop the apps and set up your own delivery system that will be profitable now and in the future.
Encourage Customers to Order Food Directly from Your Restaurant
Customers are eager to support their favorite mom-and-pop restaurant by ordering takeout food. What they don’t know is that every time they place an order via a third-party food delivery app it’s costing the restaurant money. So the first thing to do is ask customers to order directly from the restaurant.
To encourage them, launch a frequent diner loyalty program. Include gift cards, coupons or a thank-you item into each package you deliver. Show loyal customers your appreciation by offering discounts or free-dinner vouchers to use at a future time once you reopen.
What Are the Alternatives to Food Delivery Apps?
There are other ways to make ordering directly from your restaurant as convenient as ordering from apps like DoorDash or UberEats.
Some customers might even feel safer knowing their food was delivered directly to the back seat of their car without being touched by a stranger from a delivery app. SFMTA is now offering to convert adjacent parking spots into temporary loading zones as a way to assist restaurants in providing contactless service. For the free form visit here.
Explore new technology and services that are available in your area. There are many companies that let you build your own mobile ordering app. Others let you group orders and deliver them at a set time, or simply make the delivery or pickup process much easier and cheaper. Also, check with your POS company to see if they host a no-cost or low-cost ordering feature.
For both an immediate and long run solution, consider setting up your own food delivery system. This will help you minimize your dependency on apps like GrubHub or Postmates and will promote a more loyal and personal connection with your customers.
How to Set Up Your Own Delivery Service
Designate a staff member for deliveries who can receive or oversee orders, preparation and packaging, and double check orders before they go out.
Organize a delivery place for prepping, storing and managing deliveries.
Make sure you’re equipped. Carry sanitary, food-grade containers and insulated bags for keeping food hot and fresh en route. In the long run, packaging should also carry your restaurant brand.
Turn waiters and other staff members into drivers. You’ll need delivery cars, bikes or scooters. Take additional costs into account, like parking and gas.
Make sure you and your employees are protected by car, general liability or workers compensation insurance. Consult your insurance provider to learn about the policy that’s right for you.
Keep your tech up to date. If you cannot invest in an online POS system, ask customers to call, text or email their order in instead. You can even set up a Facebook Messenger or WhatsApp chatbot for taking orders. All the information they need should be readily available on your website, including the takeout menu, realistic delivery times, opening times and so on.
Experiment with the most convenient way to communicate with couriers. This will help you track their progress, better manage wait times and minimize delivery overhead.
Stay safe. Offer contactless delivery and instruct couriers to wear face coverings, keep their vehicles clean and use hand sanitizer before and after delivering meal bags. For more tips on how to keep both customers and food delivery workers safe, visit the SF official guidelines here.