Article contributed by Vromo
The relationship between marketplace apps and restaurant operators can be best described as love-hate.
On the one hand, marketplace apps have revolutionized the food delivery industry by bringing exposure and increasing customer acquisition opportunities for restaurant brands.
On the other hand, they charge high commission fees (anywhere from 15-30% on each order) and offer limited control over the delivery process. This makes it difficult for restaurants to generate profits and build relationships with their customers when it comes to delivery orders.
According to BusinessofApps, Doordash had 25 million active users and 390,000 merchant partners as of 2021. With restaurant delivery growth in double digits, marketplace apps will only grow their share of a restaurant’s business.
Therefore, restaurant operators should start optimizing their relationships with marketplace apps instead of avoiding them.
In order to make the relationship more sustainable, operators must find a solution that reduces delivery fees, helps them to take back ownership of customer engagement, and improve service levels.
The opportunity at stake
The restaurant food delivery industry in the US is predicted to reach $231bn by 2023. If restaurants don’t find a better solution, their dependence on marketplace apps will increase while their margins continue to dwindle.
In order to address the high-cost fees and visibility issues associated with marketplace fleet delivery, many restaurants are turning to delivery management software.
The right software solution can help restaurant brands to drive down their delivery fees, automate their dispatch efforts, and dramatically improve their end-customer experience.
Low-cost delivery
When it comes to marketplace delivery, the economics fail to stack up.
Paying up to 15% to capture more order volume makes sense for restaurant brands. However, paying an additional 15% for delivery means sacrificing most of the remaining margin to be made.
Luckily, however, delivery management partners can help you to achieve more favorable rates for your marketplace delivery. This is the most sustainable solution for restaurants that wish to continue using marketplace fleets without compromising their revenue.
By using a delivery management solution with extensive partnerships, restaurants can save up to 24% on delivery fees while continuing to access new customers and revenue from the marketplace platform. Ultimately, turning delivery into a profitable channel
for restaurants.
Greater visibility over the delivery process
When a delivery driver from a marketplace fleet fulfills an order, the restaurant has no control over the service level the end customer will receive.
In light of this, having delivered an order to your customer, a delivery driver could have also fulfilled multiple orders along the way. This often results in late delivery times, cold food, and negative reviews for operators who are ultimately blind to the issues at hand.
Using a delivery software solution can help to provide the restaurant with detailed data and analytics on delivery orders – even the orders fulfilled by third-party fleets, giving operators full visibility over the entire delivery process.
With access to this information, restaurants can identify areas for improvement, make data-driven decisions, and optimize their delivery operations accordingly.
A more flexible approach toward delivery
The key is to establish a successful relationship where both parties benefit.
In order to achieve this, there needs to be some flexibility within the ecosystem.
As a result, there are two scenarios in which both the restaurant and the marketplace can benefit:
- The restaurant continues to use its own fleet of drivers with a system that enables them to overflow excess deliveries, at a reduced rate, to 3rd party fleets when their own drivers are at full capacity.
This scenario means that a restaurant can fulfill all orders without worrying about expensive fees or poor customer engagement. With this, the marketplace also has the opportunity to capture new order volume and fulfill overflow orders that once may have not been available to them. - The restaurant continues to exclusively use 3rd party delivery fleets for fulfillment but incorporates a system that helps them to manage orders, track performance, and avail of discounted delivery rates.
This alternative scenario structure allows restaurants to continue benefiting from the convenience of marketplace delivery in tandem with driving down their delivery costs. It also ensures the continued need for marketplace apps while offering them the chance to become the priority fleet for that restaurant brand.
In summary, the relationship between marketplace apps and restaurant operators is complicated.
Both parties depend on one another but in order for the relationship to remain structural, both sides need to be profitable.
For restaurants that are looking to increase profitability, the solution is to list with all marketplace apps but be selective with how you manage the delivery aspect of those orders by using the right delivery management software.
By availing of low-cost delivery, gaining greater visibility over the delivery process, and taking back ownership of customer engagement, restaurants can drive down their costs and make their delivery channel more profitable.
If you’re interested in learning more about making delivery more profitable for restaurants, visit our website.
