Delivery Apps: Canadian Restaurant’s Silent Killer?
Imagine this: A loyal customer, craving their favorite food from your restaurant, orders through a delivery app. But when the food arrives, it’s cold, the presentation is a mess, and it doesn’t resemble the food they know and love.
This disappointing experience isn’t just an anomaly—it’s a growing issue for restaurants worldwide. As more customers turn to delivery services, the stakes for maintaining quality and reputation are higher than ever.
The convenience of delivery apps has reshaped the restaurant industry, offering an unprecedented level of accessibility for customers. However, this convenience comes at a hidden cost that could be eating away at your profits, customer loyalty, and, most importantly, your brand’s reputation.
The Costly Effects of Convenience
The rise of delivery apps has undeniably transformed how restaurants operate, making it easier for customers to order their favorite meals with just a few taps. Yet, this shift has introduced new challenges that many restaurant owners didn’t foresee.
Consider the following:
High Commission Fees: Delivery apps typically charge commission fees ranging from 20% to 30% per order. For a restaurant operating on slim profit margins, these fees can quickly add up, cutting deep into your bottom line.
For instance, if your restaurant has a net profit margin of 25% on a $20 order, a 30% commission fee from a delivery app could reduce your profit to $5—down from $7.50 without the commission.
Loss of Customer Data: When customers order through third-party apps, restaurants lose access to valuable data, such as customer preferences, contact information, and ordering habits.
This data is crucial for personalized marketing, loyalty programs, and customer retention strategies. Without it, you’re left in the dark about who your customers are and what they want.
According to industry insights, 67% of customers who participate in a loyalty program visit restaurants more frequently than those who don’t.
Brand Dilution: On a delivery app, your restaurant is one of many options. Customers scrolling through endless lists of restaurants may not differentiate your brand from others, especially when your dishes are presented without the context of your restaurant’s atmosphere, service, and story. This lack of differentiation can make it harder to build a loyal customer base.
Quality Control Issues: Once the food leaves your kitchen, you have little control over what happens next. Delivery drivers may mishandle orders, leading to cold, soggy, or damaged food.
When customers receive an order that doesn’t meet their expectations, they blame your restaurant—not the delivery service.
Moreover, a Harvard Business School study found that a one-star increase in a restaurant’s Yelp rating can lead to a 5% to 9% increase in revenue, highlighting the importance of maintaining high-quality standards.
Operational Challenges: Handling a surge of delivery orders can strain your kitchen, causing delays and reducing the quality of both delivery and dine-in experiences.
A kitchen overwhelmed with delivery orders might compromise on preparation time, affecting the quality of the food.
This is particularly concerning given that 72% of customers prioritize food quality above all else when choosing a restaurant.
Inconsistent Customer Experience: The service quality can vary greatly depending on the delivery driver, leading to inconsistent experiences for your customers.
A bad delivery experience can lead to negative reviews and loss of repeat business, tarnishing your restaurant’s reputation.
Research indicates that 73% of guests who had a poor experience shared it with family and friends, amplifying the negative impact on your reputation.
These challenges aren’t just hypothetical. They are real problems that restaurant owners face every day. According to CNBC, 60% of restaurants fail within the first year, and poor delivery experiences can contribute to this alarming statistic.
How to Solve These Problems and Fight Back
Recognizing these threats, many restaurant owners are taking proactive steps to regain control over their operations and customer experience. Here’s how you can solve these problems and protect your business:
Invest in a Direct Online Ordering Platform: By developing your own online ordering system, you can eliminate third-party commission fees and regain control over your customer experience.
Platforms like Toast, Square, and ChowNow offer customizable solutions that integrate seamlessly with your existing operations.
Additionally, owning the customer data allows you to implement targeted marketing campaigns, loyalty programs, and personalized offers that can increase repeat business.
Negotiate Better Terms with Delivery Apps: Don’t accept the standard commission rates without negotiating. If your restaurant generates significant volume through these apps, use that as leverage to secure lower rates.
Some restaurant owners have successfully negotiated rates as low as 10% by demonstrating their value to the platform.
Focus on Quality Control: Ensure that your delivery orders maintain the same quality as dine-in experiences by investing in high-quality packaging and training your staff to handle deliveries properly.
Consider testing your delivery process regularly to identify areas for improvement. High-quality packaging solutions can keep food hotter longer, preserve presentation, and protect your brand’s reputation.
Promote Direct Ordering: Encourage customers to order directly from your website or app by offering incentives like discounts, loyalty points, or exclusive menu items.
Use social media, email marketing, and in-restaurant promotions to drive awareness. Highlight the benefits of ordering directly, such as lower prices, faster service, and supporting local businesses.
Join a Community of Like-Minded Restaurant Owners: Staying informed and connected with other restaurant owners facing similar challenges can provide valuable insights and support.
Consider joining industry groups, attending webinars, and subscribing to newsletters that offer tips, success stories, and updates on industry trends.
According to a study by the National Restaurant Association, 42% of Millennials said they’d be willing to pay to participate in a loyalty program, highlighting the potential of these programs to drive direct orders.
Protect Your Brand, Protect Your Business
In this competitive world, your restaurant’s reputation is everything. Don’t let delivery apps dictate your customer experience and profit margins.
By taking proactive steps to regain control, you can protect your brand, improve customer satisfaction, and build a more profitable, sustainable business.
At CBEST Solutions, we’re committed to helping restaurant owners like you navigate these challenges.
Subscribe to our newsletter today and join a community dedicated to excellence in the restaurant industry.
Don’t let delivery apps hurt your food quality and reputation. Take control of your customer experience and build a stronger, more profitable business today.