Introducing Food Delivery to Your Hospitality Business
According to Roy Morgan’s latest industry research, nearly 4 million Australian’s aged 14 and over have jumped on the meal delivery bandwagon. With the extension of Melbourne’s COVID-19 lockdown, the demand for food delivery services has skyrocketed! This trend has given hope to the struggling hospitality industry allowing many cafes and restaurants to continue operation throughout these unprecedented times.
For hospitality businesses that have refrained from introducing takeaway and food delivery services, the time is now! Prior to the coronavirus pandemic, food delivery services were on the rise with sizeable growth projections. COVID-19 restrictions and lockdowns have created an even larger surge in demand. Melbourne currently has Australia’s second largest demand for for meal delivery services, falling behind Sydney by a miniscule 0.2%. With meal delivery services like Uber Eats, Menu Log and Deliveroo, it has never been easy to bring your business into the future and stay competitive.
The pros and cons of becoming a food delivery service partner
Meal delivery services are far from being a new concept; however, until recently, the introduction of meal deliveries came with substantial costs for business owners. Prior to the creation of delivery platforms like Uber Eats, businesses would be required to have drivers on payroll, identifiable delivery vehicles, a website supporting e-commerce and potentially an app for easy access. These expenses were not feasible for small business owners. New food delivery platforms take the hassle out of the process by providing the necessary infrastructure with no capital investments for participating hospitality businesses.
Another huge benefit to using food delivery platforms is the exposure to a pre-established customer database. With 4 million Australian’s utilising the benefits of home delivery the potential to tap into this market has never been more beneficial. Food delivery apps compile all participating business’ in your delivery area to compare price, customer satisfaction and delivery time allowing the consumer to feel confident in their purchase. By getting involved you are exposing your business to a new and vast customer base allowing your business to grow its following and expand its reach.
While the decisions to partner with these delivery services may seem like no-brainer, the main deterrent is the high commission rates. Delivery services generally charge a commission rate varying between 20-35% of the sale price. Market research shows that the average restaurant takes a net profit of less than 10% making the compulsory commission rates exorbitant. To work around these costs whilst providing your customers with a delicious meal delivered straight to their door, food businesses have been introducing premiums in accordance with commission rates to ensure they are not sacrificing their already marginal profits.
To avoid customer complaints about inflated delivery menu prices, consider designing a new menu exclusively for delivery. This menu should use minimal cost ingredients like chicken oppose to lamb. Try to offer only your most profitable and popular menu items (or variations of these). Keep them simple for minimal preparation and cooking time.
Once you have decided to introduce delivery to your business, you will need to complete an application from the relevant delivery service provider and await approval. If you are introducing delivery, consider also introducing an online order and payment system on your website for takeaway orders. Having an easy to navigate website with an online ordering feature provides your pre-existing and newly established customers with the freedom of picking up their order themselves to avoid inflated charges and view your larger meal selection. Consider also including a subscription option for exclusive offers. This will allow you to compile customer information to secure your businesses reach if you decide to sever your partnership with your delivery provider in the future. This also allows you to gather direct customer feedback to improve your business and increase customer satisfaction.
While delivery remains the only option for cafes and restaurants to continue operation during lockdown, it is vital to consider this path to keep your business afloat.