You're all set at the restaurant, expecting the usual 100 or so people on a week night. What if you have to cook for 120, and the extra 20 are for delivery, not sit-down customers. Do you need extra staff? Probably not – most shifts have some excess capacity. The rent and the service staff are the same - you'll use a fraction more fuel, and the extra food needed for additional meals.
If your food costs are a well-managed 25%, adding the 30-35% fee of a delivery service like UberEats or Deliveroo still adds up to 55-60% of the total sale price. Let's add 10% for fuel, extra cleaning and a few more kitchen hours - we still have a margin of 30%. If each of those 20 deliveries was worth $25, that's another $500 of sales and a Gross Profit of $150, or $900 over 6 days. The numbers can work.
Can we really turn our back on food delivery services? Try telling that to the dad who's been told to organise dinner by a frantic mum, or a hungry traveller in a hotel. Food delivery services are growing rapidly because people love the convenience – ignoring this just hands business to competitors. There’s good money to be made, but not by operating the same way as usual - pizza shops and Asian restaurants have known about the delivery bonanza for years!
Let’s think through the options to make delivery work for you, not against.
You could run the service yourself, adding a white-label order system to your website. They can be branded to look like your own, accepts payment and notifies customers just like UberEats, MenuLog and the others. You pay a small service fee, not 35%. Delivery can be made by your own drivers – there are local people with a motorbike and ambition, looking for steady work.
If you don’t want to hire delivery staff, consider using a service like Yello to do it for you, paying them for the hours worked. Deliveroo has also announced a modified system called Deliveroo+, with lower fees if you provide the driver – worth exploring.
Offer a menu that cuts food costs to the bone. Pizzerias and Asian restaurants sell high-profit items, avoiding expensive protein and focused on flour, rice and noodles. You don’t have to offer your whole restaurant menu for delivery, just items with the best margins. You can also increase the delivery selling prices.
Improve your kitchen productivity. Most back of house operations still use the same equipment and systems that were in place thirty years ago, while there’s been a revolution in cooking methods and technology. One glaring example – it’s rare to see order screens (bump screens) in kitchens. Why not? These allow for precise tracking of orders and cooking times – once you know these, productivity can be measured and improved. As long as chefs insist on sticking to paper printers, we’re stuck in the 80’s. Modern delivery services can be integrated with your POS, so the production of orders is smooth and organised. It’s time to get more productivity from the kitchen, and do it with less stress.
Keep building customer connections through Facebook, Instagram and asking for contact details. Businesses complain that delivery services steal their customers, but they’ve usually done very little to build their own list. Constant marketing is essential for a successful operation.
Negotiate with the delivery services – 35% seems to be the top rate, but are you offering something different to all the others? Most people want the convenience of using one app, and they like the convenience of UberEats, MenuLog and Deliveroo. There’s money to be made by joining the party.
This article by Silver Chef’s Ken Burgin was first published in Hospitality Magazine.