The (REAL) Cost of On-Demand Food Delivery. In-House VS. 3rd Party Services
👉🏼 TLDR - to long didn’t read version
1. 30% and access to millions of potential customers a world class delivery and logistics infrastructure and your ability to focus on what you do best. Produce product.￼
2. Setting up an in-house delivery platform is a massive undertaking and the vast majority the time will end in lost revenue and a lot of wasted time. Quite simply you can’t execute a similar delivery platform for less than double the highest rate the apps in charge.￼
🔥Spoiler alert: It’s F’ing bargain at 30%🔥
Apps like Uber Eats, Postmates, Grubhub, and DoorDash are charging restaurants 15 to 30 percent of customers’ tabs for every meal delivered. These 4 apps combined have control of 95% of the market.
Let me start by saying all the big delivery companies (even Instacart) do not profit from any delivered order. They lose money on every order even at a seemingly high rate of taking 30% of the sale. (which is another conversation entirely)
On-demand Delivery is the biggest profound switch in the restaurant business that I’ve ever seen. The available opportunities are pretty remarkable. The new customer reach and diversity that these companies are provide immediately is almost incomprehensible.￼ you are walking into millions of potential first time customers and only have to pay in orders are placed..￼
Some of my friends on Facebook remember back to a company that I founded in 2010 called GrubGo restaurant delivery service. At the time we were the second full-service on-demand delivery service in the Midwest. This was before Uber eats, Postmates, GrubHub, anybody.
While this post is not about the viability of a restaurant delivery services it is possible to meet profitability if they are located within densely populated areas with streamlined focus (578 Dine & Food Peddler are good example of well managed profitable local businesses)
These companies are asking only 30% for the complete fulfillment of your order. That is an absolute f’ing bargain. You’re getting an on-demand workforce that ONLY paid when they BRING you a new order. If that’s not magic I don’t know what is.
❌ DOING DELIVERIES IN-HOUSE ❌
The cost for an In-house delivery program would probably be in the 60 to 65% range, if not more. INSANELY EXPENSIVE. If you take delivery in-house, suddenly you are managing a business you know nothing about. It will end up costing you more than 30%. Promise.
There are constantly stories of restaurants and cities and states, going after on demand companies demanding they cut the fees to the end operator.
Drivers demanding a livable wage of $15, credit card processing fees, service fees, these costs do not begin to cover the cost of maintaining an on-demand order network.
- Go all-in with on-demand -
✅ Revise your menu focus on favorites, specialties, family-style type offerings
✅ Manage labor aggressively for business flux
✅ Attempt to get the best rate possible with on-demand services.
✅ Focus on marketing and value proposition
If I was an operation today I would focus all my energy and all my attention on the on-demand market.
✋🏼I can literally create a daily blog on this subject alone. There are so many variables and unique circumstances that come in to play. One size obviously does not at all. I’m speaking in generalities. If you have any questions or if we could be of any value, please don’t hesitate to reach out day or night. Best of luck as always have a safe weekend!