How to Bite Back at Hidden Delivery Fees While Still Boosting Online Orders
By Stuart Smith, Engineer at Saritasa
While food delivery has been an option for restaurant customers for several years, the pandemic accelerated its popularity and increased demand for online food orders. The increase in popularity and demand has led to an estimated $365 billion industry growth by the end of the decade.
A major driver of the growth of this sector have been food delivery apps (i.e. Seamless and Grubhub) where restaurant owners can easily sign up and add their name to the list of community eateries users can order from. But because demand is high and city markets require a variety of food options, a new restaurant could be buried below several other popular options, making it difficult to compete. This issue leaves ample opportunity for restaurant owners to provide their customers with their own ordering apps so that they can have more visibility and control of their customer’s ordering experience.
The benefits? Attract a more loyal customer following as these folks have your app on their phone, and both parties can avoid excessive charges and delivery fees on future orders. Offering homegrown apps to users can generate more revenue by giving customers a faster, customized way to order food without the mountains of fees charged on standard delivery apps. Often, restaurants mark up their prices on apps like Seamless and Grubhub to cover some of these fees. With their own apps, restaurants can reduce the added charges from third-parties, which can be up to 50% of the order.
The Problems with Standard Delivery Services: Algorithm Biases and Fees
As a restaurant owner, your first thought might be to simply add your business to the other food delivery apps already available. This might seem like a foolproof strategy but adding your restaurant menu and delivery service to Uber Eats, Postmates, Caviar, or DoorDash comes with its own set of hidden challenges.
Your restaurant and its ranking in search are completely dependent on the third-party app’s algorithms. This means your restaurant must compete against large enterprise chains that can pay to dominate visibility across all general online ordering apps. Apps such as DoorDash categorize restaurants by favorites for both the individual user and nationally. National favorites could be dominated by popular food chains in certain cities, hiding your restaurant below the many other large food chains. Even if customers know where they want to order from, they must scroll through a long list of restaurants to find the one that they want.
Another issue is the fees added to delivery in addition to any costs your restaurant charges. These hidden fees can deter potential customers and even current ones. In some cases, an app such as Postmates charges an additional 40% on top of the restaurant’s charges, which can deter them from completing an order.
Restaurants also experience high fees for every order. Some apps charge as high as 50% fees on orders. Most hover around 15-30%, and others like Seamless lets restaurant owners choose between four commission options. Higher commissions will get the restaurant higher ranking in the app’s search. This “pay to play” model can be expensive and cut into a large chunk of a restaurant’s return on investment.
Competition through Custom Ordering Apps
In standard food delivery apps, restaurant owners have few strategies available to differentiate from other restaurants in the app. Restaurant owners can offer professional pictures and ensure that they have everything in place to handle online orders, but this does not differentiate between potentially dozens of other competitors who also advertise on these apps.
An alternative strategy is to use custom apps that allow users to directly order from their phone, opt for pickup or delivery, and reduce costly fees. For restaurants with a current local reach, this approach to marketing and online ordering can increase revenue much more than simply adding food delivery services to popular apps. It cuts down on significant commission fees and gives the restaurant owner a better ROI for their marketing.
Instead of a simple website with order functionality, custom restaurant mobile apps provide ways to attract online orders. For example, app design and programming can be used to give users a personalized ordering experience where they can build their order from a list of available toppings, cooking instructions, and added extras. The app can be animated, intuitive, interactive, and give restaurant customers a much richer experience than the standard delivery.
Using a bespoke, customized app for your restaurant can automatically begin to create an organic community of brand ambassadors and loyal restaurant fans; these customers will have your specific app downloaded. This can enable you to target more effectively in newsletter or coupon outreach. Push notifications are available in these apps where restaurant owners can announce discounts and daily features increasing sales potential.
Differentiating Your Restaurant from Competitors
Typical food delivery apps give you instant visibility, but you can’t differentiate your restaurant from the numerous others. Instead of listing your business with DoorDash, Postmates, Uber Eats, and any other popular apps, you can build an app for direct orders. The result can be more customer orders, a better user experience, the added ability to use push notifications to customers, better marketing return on investment, and a way to benefit your customers by reducing their online order costs.
About the author Stuart Smith, Engineer at Saritasa
Smith is a technology professional for 30 years ranging from operations/systems management and software development. With a diverse background in tech, Stuart capitalizes on software applications and systems ranging from avionics, web applications, disaster recovery, license plate recognition, content management, and systems monitoring.
With five office locations and over 1,700 successful projects, Saritasa’s mission is to empower global brands with innovative, customized solutions to fit their needs and support an ever-evolving technology ecosystem. Fueled by a mindset of ingenuity; Saritasa’s team has long standing partnership with major tech brands such as: Microsoft, Amazon Web Services, AT&T and Medium One. The company provides a wide array of services such as custom software development, mobile development, AR / VR development, IoT solutions, web and database development and DevOps. https://www.saritasa.com/
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