The pandemic has put the restaurant industry into serious trouble. First it was the lockdown.
Then the restriction on opening times, the restriction on seating capacity etc.
Many people estimate that 30% of the restaurants may not survive this pandemic and will close down permanently.
However government has allowed restaurant food delivery and take away’s and some restaurants are finding solace in the fact that they can atleast generate some cash with tie up with online food aggregators.
If you are deciding whether to deliver through these aggregators or by yourself, it is a decision that you need to take very seriously.
Pros and Cons of Both delivery mechanism
|Points to consider||Inhouse Delivery||Food Aggregators|
|Investment||Upfront capex - Vehicle||No|
|Control over experience||Yes||No|
|Recurring expense||Salaries of staff and maintenance||Commissions.|
|Ability to establish customer database||Yes||No|
|Ability to get in front of people||Limited||Yes|
Lets discuss each of these points in details here:
Upfront investment and the maintenance is one of the key factors that many restaurants opt for 3rd party food aggregators.
In order to start restaurant food delivery, you will need to buy the delivery vehicle and staff it. If you consider delivery, you may have to purchase enough vehicles as most of the meal delivery will be concentrated over a particular time frame.
Then is the matter of distance to be covered. If it takes 45 minutes to deliver and get back, in a typical meal period, with every vehicle you can deliver 3 or 4 orders.
That puts a significant stress on your investment capabilities.
With food aggregators, you do not have that problem. The 3rd party will send you as many delivery vehicles as required to meet your demand.
Control over the experience:
If you start your own service, you are responsible for the level of service. Restaurants have long been a place where customers came because of the recognition they received.
You can actually control the experience, reward loyal customers, and ensure they keep coming back.
With the food aggregators, you have no control over the experience after the food leaves the restaurant. There has been instances of food reaching late, the delivery person eating the food etc in the press. While these news article harm the aggregators, it also has a ripple effect on your business.
In case you decide to run your own program, it will have a recurring expense of salaries, fuel etc. With the aggregators, you have to pay them commission on the sale.
These commission percentages are not fixed and have to be negotiated. It can range from as low as 12% to as high as 32%. Depending on your volumes, you may be able to lower your commission.
However you can be stuck with lower margins and higher commissions for a long time, eating away your profit margin.
This is the biggest reason for developing your inhouse delivery mechanism. You control the database.
Any good restaurateur knows that they need to make a database of their customers, so that they can engage with them, let them know about their specials, etc. With you own delivery, you can do all that.
With food aggregators, you do not know who ordered the food from you. All you get to see it the order and the revenue.
Once you get hooked to the system, your dependence on the aggregator platform keeps increasing. You then are at their mercy to get the orders
Ability to get in front of people:
These aggregators, backed with funding are able to spend money on advertising, that many of you may not be able to spend.
Plus the fact that many of the customers are already locked into their system, it makes it difficult for you to set up an individual presence.
However with many stories of the aggregators setting up base kitchens, there is a clear conflict of interest. At busy times, there complaints that their algorithms, prefer showing their own white labeled food in prime placement.
This will eventually affect your business and put tremendous strain on your business if you are on page 2 or 3 or even further.
What to do?
If you have read till here and are now thinking what to do, here are some solutions and thoughts.
If you are a restaurant and thinking of delivery as a quick way of getting some cash flow, do sign up for the aggregators. They will help to bring some much needed cash into your business immediately.
However in the long run, you need to take charge of your business and treat delivery as an integral part of your business, that you are able to control.
It is one of the segment of your business. Slowly ramp up your restaurant food delivery platform on the side to deliver 3 or 4 orders a day and see if it works.
To do that you will have to:
Decide on your delivery range:
Most aggregators deliver till 4-5 km and then charge extra for delivery to far away places. You can also start with a delivery range of 3-4 km . That is a big enough radius for you to handle on your own.
Set up SOP to collect orders, and delight guest:
A smile, a personal connection and some person on your side of the line showing empathy goes a long way in establishing trust and loyalty in your restaurant business.
Set up the SOP to collect orders, and reward loyal customers.
Set up a website, and your social media pages
Invest in a website, and social media pages. Your website need not be just a static menu page. Make it dynamic by adding a blog, sharing a recipe, sharing photos of your dishes and behind the scene.
By keeping your website as the focal point of attention, you can get 100% attention. By curating a social media page or twitter feed or a whatapp broadcast, you can be in front of your loyal fans every time you have something important to say.
Set up Google My business:
Google has a solution for your business called Mybusiness that you should list your restaurant in. That will help you to get your website and business in front of some people.
Keep the information upto date. Your images, menus and most importantly your phone numbers and website details.
However this is not a set and forget operation. You have to keep watching to ensure that your details are correct all the time. Do an audit once a month to check this.
Restaurant food delivery is an market segment that is here to stay. To take advantage of it completely, you need to develop a strategy to develop your own presence and some online aggregation as well.
That will give you the best of both worlds and not leave you at the mercy of some algorithm that can decide the fate of your business.
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