Third-Party Delivery Services Are Eating Your Lunch
Companies like Uber Eats, DoorDash, and Grubhub are robbing you of your profits. Their high fees have contributed to restaurant closures across the country. Don’t let your business be one of them. See how you can increase your profit margins while continuing to meet the high demand for food delivery.
In this article, we discuss:
- Falling into the Trap
- Reliance to Vulnerability
- Profiting at Your Expense
- A Clear Path to Profitability
Many restaurants use third-party delivery apps for their online presence because these delivery services are so popular. This use of third-party delivery services can be dangerous though, especially when deliveries have skyrocketed since the pandemic. Third-party apps profit at the expense of diners, drivers, and restaurant owners. Fortunately, there is an alternative way to combat the major disadvantages of these services.
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.
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.
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.
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?
While it may seem like third-party delivery services are an end-all-be-all, there’s nothing that suggests that using these apps leads to greater success. In a study, Restaurant Business found that 78% of delivery orders are placed through the restaurant itself, while only 22% of orders are placed through third-party delivery companies. If you want a delivery system through your restaurant while avoiding the fees of a third-party, Skipli offers an online ordering and delivery system that reduces commission from 30% to 10%. Skipli will also cover digital and print marketing so that you are not dependent on a third-party to grow your customer base. Your restaurant name will no longer disappear among the other hundreds of restaurants that are run by those large third-parties; establish your own identity and flourish independent of large money-making corporations.