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Your Food Delivery Has Arrived… Does it Come With a Side of Profits?

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It’s no coincidence that the word ‘app’ appears in the word ‘appetite’. In an era where our smartphones dictate pretty much every aspect of our daily lives, from when to wake up; who to unfriend; how to pay; and what to watch next; it’s no surprise we’re quenching our appetites through mobile applications at unprecedented rates.

The fact of the matter is, delivery services are here to stay; as convenience and accessibility take preference for young diners who are short on time and now more akin to a good Netflix binge on their couch than dressing in anything fancier than PJs or trackies to consume their meals.

The Data

Hospitality Magazine’s 2019 Eating Out in Australia report showed that more than half of the 500 Australian businesses surveyed were partnered with delivery services. Uber Eats came in at the top of the list, followed by Deliveroo, and Menulog as the third favourite.

Similarly, a 2019 report by data website shows revenue in the Online Food Delivery sector in Australia amounted to over AUD $2.4 billion, which also showed an expected market volume of close to AUD $3.5 billion by 2023.

The Effect

So, what effect is all of this having on restauranteurs and business owners?
According to Deliveroo, restaurants who partner with them see an average of 30% sales increases, and with access to a vast array of clientele, partnering with a food delivery service is a no-brainer for businesses who struggle with reach and therefore need these sorts of apps to get exposure. However, with an average commission cost of 30-35% by these delivery companies, it’s not always a case of ‘getting your cake and eating it too’. With such a high percent of your margin being taken by the delivery companies, smaller businesses may find the home-delivery models challenging. Particularly if you don’t have a well-oiled operation in your kitchen and keeping up with eat-in and delivery services start causing issues with wait-times.

The Resolution

The food and beverage industry is obviously morphing under the weight of changing community expectations, given our technology and the globalisation of opinion, trends, and economy. Which begs the question: how is your business going to react to the future of food?

Things for business owners to consider:

– Where is your business located and does your delivery reach via these apps justify the profit margin?
– Is your menu cheap to make but in popular demand to justify a higher price-point?
– Travel time. Choosing the best dishes that will save you cooking time but also travel well over time as they’re transported, will ensure your ratings and reviews will remain positive and result in more sales.
– Maximise kitchen resources to ensure a high load of deliveries won’t negatively affect the time it takes your in-house diners to receive their food.

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