Food Delivery Service’s Negative Impact On Restaurants

May 3, 2021

woman receiving food delivery from a doordash driver

You’ve heard of the rise in food delivery apps. In fact, you’ve used them. But did know there’s a darker side not many people talk about in the restaurant industry. Well, not yet anyway. Third-party delivery promises high profits, continuous customers, and ease of use. 

Yet, in essence, the restaurant gives away all control to an outside delivery company for lukewarm promises. Food delivery apps have a negative impact on restaurants, and the truth is in the numbers.   

Eats Up Your Profits

Profit margins in any restaurant are notoriously thin. There’s no universally accepted agreement on how big your net profit should be. Still, a restaurant business usually has a much lower net profit than other businesses, leaving little room for error. 

Then come third-party apps offering food delivery services without a hassle. The dangling carrot is appealing and readily available. But the restaurant owner may not be aware of how much a bite the delivery fee or commission fee adds up. 

The charges restaurants have to suck up quickly eat into that already thin margin. By most estimates, it’s 30% of each food item delivered. Yeah, how does that taste? 

Before the Covid-19 pandemic, third-party food delivery made up 30-40% of the restaurant’s daily business on average. During the pandemic, food delivery soared to about 80-90% for most companies. And so did the fees paid to the food delivery service. 

Plus, by all accounts, food delivery at high levels is here to stay. The National Restaurant Association 2021 Annual Report showed that only about 50% of people planned dining in post-pandemic. So, third-party delivery apps still plan on eating most of your profits which is why a solution like native delivery can help retain profits for restaurant delivery.

Takes Away Brand Loyalty

There’s something comforting about settling into your local restaurant. The nice, comfy booths. The familiar ambiance. Your favorite waiter. But a delivery guy in an unmarked car dropping off food curbside doesn’t really give you the same feeling. 

The restaurant doesn’t even know what the delivery experience was like for the customer. A delivery driver comes in, grabs the food, and then disappears. The restaurant has no idea what impression their brand made on the customer, except for some nasty reviews left on the app. 

Even though the customer isn’t dining in, the customer experience should represent who you are as a restaurant. This way, you can build brand loyalty, despite a lack of face-to-face contact. Don’t you think you deserve someone trained in your brand, delivering your food? Yeah, I bet you do. 

Swallows Up Your Data

Food delivery apps are hungry, and one thing they’re hungry for is your data. For them, your restaurant is the commodity, and your data is valuable. Data helps drive food delivery trends and puts a face and background on a customer. 

When you first open your restaurant, picking the right point of sale (POS) system is oh so exciting. You’re closer to opening your doors. The restaurant POS system for any restaurant is critical for tracking orders to making short to long-term decisions. 

It’s essential for tracking takeout and delivery as well as on-premise dining. Now, the POS is the food delivery service, not the restaurant, and all that tracking becomes harder to do. The restaurant is not only giving away a hefty chunk of the profits but all their customer data. 

The food delivery app can now use that valuable data to open virtual restaurants offering similar food or help the competition show up first in the app. The possibilities are endless. Except not for you. 

Gobbles Up Customer Service

One bad experience can determine whether the customer comes back. The number varies, but by most estimates, it takes over 10 positive experiences to overcome one negative one. And restaurants are breeding grounds for bad experiences. So many things can go wrong from the kitchen to the table. 

But it’s easier to solve a problem when you can see and talk to the customer. Hey, can we comp your drinks or bring you an appetizer while you wait? Or just a simple apology. But food delivery changes all that. 

If the customer has a negative experience, how do you know? How do you reach them to turn it around? Even the best restaurants have customer complaints. Like profit margins, the customer experience is a fine line. But you need a delivery platform that allows you to speak directly to the customer in real-time. For the most part, online ordering systems don’t let this happen.

Creates A Reliance on the Middleman

When Johnny says, “Nobody puts Baby in the corner.” in the classic movie Dirty Dancing from the 1980s, he meant she doesn’t deserve to be silenced by anyone. And that’s what happens when restaurants rely on third-party delivery apps restaurant technology. 

It turns the food delivery app into the middleman, and any conversation between the restaurant and customer comes from them. The restaurant relies on the delivery driver employed by a third party to represent their brand and solve problems. Isn’t it time to say see ya later to the middleman and find your voice?

Say Hello to Native Delivery

Restaurant delivery hurts restaurants by demanding fixed costs that eat into profit margins. The delivery app controls menu management and diminishes brand loyalty. 

What if there’s a better business model that helps the restaurant keep more profits and provides the ability to solve problems while preserving brand loyalty?

It’s called native delivery. Native delivery takes back food delivery by moving it in-house through ShiftPixy. The delivery drivers are on-site workers trained in your brand and understand the differences between breadsticks and caesar salad. 

Native delivery gives restaurants the ability to keep their data and stop wasting money on an outside delivery app that only sees your restaurant as a blip on a screen. 

Native delivery means self-delivery with a twist when you partner with ShiftPixy. And the twist is that you’ve now turned the negative aspects of food delivery into ones so positive they’re hard to resist. The demand for food delivery is here to stay, and so is your restaurant with native delivery.