Third-Party Delivery Services Are Eating Your Lunch

  • Falling into the Trap
  • Reliance to Vulnerability
  • Profiting at Your Expense
  • A Clear Path to Profitability
Photo by @Pedro da Silva on Unsplash

Falling into the Trap

Restaurants are choosing to partner with these delivery services because of the popularity among customers and because of the high cost of creating their own delivery service. Studies show that 63% of young adults use third-party delivery apps according to a study conducted by Zion & Zion. Restaurants want to appeal to this demand by using a third-party app like Uber Eats, DoorDash, and Grubhub. These apps also serve as an excellent marketing tool for restaurants because they provide an online presence and expand your customer reach. In addition, the alternative of creating a restaurant delivery service can be expensive. Small businesses are often drawn to third-party delivery apps out of necessity, being unable to shoulder the costs of independent delivery services. As a result, restaurants feel that third-party delivery apps are the only viable choice.

Photo by @ryoji__iwata on Unsplash

Reliance to Vulnerability

Prior to the pandemic, restaurants were already reliant on third-party delivery apps. However, the dangers were not as apparent since delivery accounted for a minority of the restaurant’s income. Now, restaurants rely almost entirely on delivery revenue, meaning that third-party fees are swallowing nearly all of their profit. This rise in power of third-party delivery services has created a dependency that enables them to take advantage of restaurants.

Photo by @Andrea Piacquadio on Pexels

Profiting at Your Expense

Third-party delivery companies are so successful because they profit at the expense of diners, drivers, and restaurant owners. Restaurants that use companies like Uber Eats, Grubhub, and Doordash get their profits eaten up by a 30% commission fee from the delivery service. To combat the high fees, restaurants raise their menu costs to make up the difference. However, a rise in prices hurts both the customers and the restaurant. Loyal customers are dissuaded from returning, and general customer satisfaction decreases. This means fewer customers and in turn, less revenue for the restaurant.

Photo by @sharonmccutcheon on Unsplash

A Clear Path to Profitability

Since third-party delivery services are swallowing all of the profit, and creating an independent restaurant delivery service can be costly, what can you do to maximize your profits?

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