With Covid-19 pandemic still disrupting normal operations for most restaurants, many restaurant owners need to adapt. Yet, adapting to adversity now might lead to more profits after the pandemic is a fading memory. Pre-pandemic, nearly 60% of households ordered delivery or take out once a week. Traditional restaurants that have dine in or carryout only, might be missing out potential profits. Adding delivery to your restaurant does have some initial costs, but they are limited. However, one thing is certain, now is the time to consider implementing delivery as a part of your business model. In this article, we will discuss how restaurants can quickly add delivery.
Platforms Like Grubhub, UberEATS: Costs and Fees
The fastest way to offer food delivery would be partnering with online food ordering platforms, however this convenience also has a cost. Grubhub charges restaurants nearly 30% on the total order, the only way using Grubhub would increase profits would be through sheer volume of sales. While platforms like Grubhub might garner more orders, and improve reach, the fees can severely cut into profits. Here is an example of fees Grubhub charges restaurants:
- Marketing Commission 20%
- Delivery Commission 10%
- Processing Fee 3.05% + $0.30
Using Grubhub nearly 30% of the order plus a processing fee is charged to the restaurant. On a typical order of $30 dollars, with a sales tax of $1.88 with a total of $31.85 the breakdown on costs per this order would be the following:
- Marketing Commission $6
- Delivery Commission $3
- Processing Fee: $1.27
- Total fees: $10.27
- Total restaurant revenue: $19.73
This calculation also does not factor in food, labor, or other related costs. If we take the food industry average for food cost and labor calculations, the profits left would dwindle down further solely relying on Grubhub:
- Grubhub total restaurant revenue: $30 – Grubhub fees = $19.73
- Food Costs: (%30 of revenue total, from $30) = $9
- Labor Costs: (%30 of revenue total, from 30) = $9
- Total Revenue left after Grubhub: $1.73
This does not consider other operational costs, such as insurance, licenses, utilities, etc. If factoring all costs into the calculation, most restaurants operating solely on using a platform like Grubhub would be operating at a loss. While using Grubhub may have benefits, it is not a sustainable model for offering delivery to your customers. It could assist in building awareness and assist in marketing, but it will be important for restaurants to capture their customers information for targeting after their initial use of a third-party platform. Most platforms offer similar models and might modestly differ in fees and costs, however for restaurants, these platforms should only be used to capture new customers and then moving them off these platforms for future delivery orders. The benefits of using platforms like UberEATS and Grubhub is basically not needing to hire drivers, and additional marketing reach. Yet, hiring your own staff would be better.
Benefits and Costs of having In-house Delivery Staff
Although there are labor and insurance costs associated with hiring in-house drivers, there are benefits over relying on third parties. One benefit is control over service, relying on third party delivery services, you are relying on non-employees, you do not have direct control on their professionalism, wardrobe, efficiency, etc. You virtually have no control over their performance yet bear the brunt of any customer satisfaction issues related to their performance. A bad delivery experience could result in a negative review of your restaurant, you must rely on third parties to ensure quality service in a timely manner.
A complaint about your food being delivered cold or by an unprofessional driver will negatively affect your restaurant and not the third-party platform. Hiring your own staff means you can control their training, their professionalism, and your branding. And, relying on third-party platforms to delivery your food often has high delivery times, sometimes upwards of an hour or more. The cost of using third-party drivers are more than the platform fees, it might cost your branding and your customer’s satisfaction.
Costs of hiring your own delivery drivers can be offset by charging delivery fees, the same fees third-party platforms charge customers in most cases. Some fees you should expect to pay is mileage for your drivers, current rates are set at 58 cents a mile. Additionally, increase liability insurance will be necessary to cover drivers. And finally, their hourly pay rates, but drivers upon their return will not be idle and can fill in other roles while not delivering food. However, by hiring your own delivery drivers you are improving quality, efficiency, and customer satisfaction.
beepDelivery for Managing Delivery Drivers
Using beepDelivery provides the flexibility to use both third-party platforms while using your own drivers. It offers the ability to track drivers in real-time, take phone and online orders, and effectively manage delivery drivers at multiple locations and stores. Having your own delivery staff provides you with additional control over the quality of your service. When using gig drivers, you are left with relying on drivers that do not represent your company’s best interest or commitment to quality of service. You want your customers to have hot food that is quickly and reliably delivered. Our system is free to adopt and implement. The only cost is a mere $1 per order while using our system, and this cost can be offset by setting your own delivery fee to your orders, essentially making our system free. For a limited time, we are offering a free trial and zero upfront fees or costs to restaurants.