Grow Your Business with On-Demand Delivery Service Apps
The way people eat their meals has not changed much in recent centuries. Yet, the way people interact with restaurants, especially in urban environments, has evolved dramatically. Customers now use on-demand delivery service apps and websites to order food more seamlessly (pun intended) than ever before. Customer reviews also play a significant role in customer perception of your business. Over the past few years, the number of on-demand delivery service options has exploded. According to the National Restaurant Association, 70% of all restaurant traffic will be outsidme of the establishment by 2020. The customer experience for food delivery is a top priority for restaurants hoping to stay competitive.
However, to enter the delivery market, you need to have a basic understanding of the complexities of the food order ecosystem. Before you choose which service is right for you, learn more about some of the top delivery and ordering services available today.
As the two dominant delivery services in New York City, GrubHub and Seamless are leaders in the restaurant delivery space with about 86% market share. Though separate entities, these companies are owned by the same parent company, Grubhub Inc. Each works as a concierge service. These demand aggregators match customers with restaurants and leave restaurants to fulfill customer orders. As a restaurant, you are responsible for fulfilling the physical delivery of each order. On top of this, GrubHub and Seamless take an average commission of 12.5% from restaurants, including delivery fee and tips. Despite the hefty commission structure, this partnership is critical for brand visibility, particularly in New York City. If you are not listed among your competitors on the most popular duo of food delivery apps, you are missing out.
DoorDash Taking on Delivery
DoorDash, one of the newer on-demand delivery services on the scene, has a slightly different commission structure. Unlike GrubHub, DoorDash handles delivery on its own; they have a network of drivers and a fleet of company vehicles to handle delivery demand. With DoorDash, there are no setup fees. Instead, DoorDash charges delivery fees and partner percentages. As a restaurant, you pay for the service through a “partner percentage” or commission that ranges between 10 and 25 percent of the order total. Customers pay a fluctuating delivery fee that is dependent on factors like delivery location and size of the order.
Higher-Tier Delivery with Caviar
Caviar’s business model works like DoorDash’s but caters to a pricier, higher-end market. With Caviar, delivery is calculated by distance and is paid for by customers, and the drivers are employed by Caviar themselves. Caviar also takes up to a 25% commission from restaurants for its on-demand delivery service. However, this higher commission can be justified by the service itself. Its website is clean and modern, presenting engaging menus. Caviar, through its parent company and commerce ecosystem company Square, also hopes to offer restaurants added value by delivering more than just food. Square CFO Sarah Friar, Caviar’s parent company, believes an omnichannel experience for restaurants to “fully serve their customer regardless of where the customer shows up.” Caviar seems well-positioned to serve as a mainstay in the New York City market.
For Postmates, Restaurants, and Beyond
Unlike the rest of on-demand delivery service apps above, the Postmates service is not exclusive to restaurants. You can use Postmates to order food from a restaurant, get a prescription delivered from a pharmacy, or get groceries. Regardless of the business, Postmates’ business model is the same. Customers pay for the items they choose through Postmates and the business pays a processing fee. Then, the business receives a weekly direct deposit in a bank account. Essentially, as Postmates Partner, you pass along most of the cost to the customer. Additionally, you do not process the payment. Already valued at $1.85 billion, the company recently announced their intentions to file for an IPO (initial public offering) according to Bloomberg News.
Benefits and Liabilities of In-House Delivery
Navigating the nuanced on-demand delivery service from your restaurant to someone’s dinner table is a complicated endeavor. It is also costly. In some cases, in-house delivery may be a more profitable choice for your business. To start, you’ll need a simple and convenient way for customers to place an order. Taking orders over the phone can take significant time and energy for you and your staff. If you anticipate strong demand for delivery, you may consider hiring a web developer to create a simple web page or app for your customers.
The Logistics of In-House Delivery
Secondly, you need to hire a delivery team. Relying on your employees to use their cars or bicycles can work out, provided you have coverage of all liabilities. In determining your potential exposure to risk with your in-house delivery service and any future gaps in coverage, ask a restaurant insurance expert. If taking delivery on yourself seems to make financial sense, then go for it. With a bit of foresight and strong planning, your delivery service plan should lead to a strong revenue stream for your business.