Skip to content

What Third-Party Food Delivery Is Really Costing Restaurants

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

Do you know what delivery is really costing your restaurant business?

What if I told you there’s a cheaper way to deliver on-demand to your customers? 

We’re going to cover why delivery fees will drag you down and how to avoid them!

When you sign up to partner with a delivery app there is $0 or very little upfront cost. That’s because they don’t do anything for you unless you receive orders! 

What Third-Party Food Delivery Is Really Costing Restaurants 1
Photo Credit: Square

As you probably know, third-party delivery apps charge you and your customers a fee per order they deliver. This fee is a percentage of the order total, and typically ranges from 20-35% depending on the specific app, their delivery structure, and your relationship with them. You should know these numbers before you commit to avoid ending up in the red. 

For example, I know that UberEats charges around 30%, unless you can negotiate it down. So, if you do $10,000 in sales on UberEats, they’re going to pocket up to $3,000 of your profit as their fee! If you fail to understand these fees involved before you commit, you’re going to end up losing money unless you manage them properly.

Typical restaurant profit margins are only around 5-10%. While packaged food and beverage businesses usually fare better, you’re still only looking at a rare 15-20% if you’re a super efficient operator and accountant. 

For this reason, it’s difficult to see delivery apps as a way to increase your profits. They mostly function as a marketing strategy to bring you more exposure and new customers that you can then convert into regulars.

I know what you’re thinking…

It’s still cheaper than creating my own delivery platform and hiring my own delivery drivers, and I’ll never have the audience that the major apps do! 

But what if I told you there was another way… 

On-Demand Delivery

You can still offer on-demand delivery without exclusively partnering with third-party apps or hiring your own staff!

Square Online offers an on-demand delivery service that connects directly to your ordering site! They use established delivery services like DoorDash or Uber in your area to fulfill your orders at a fraction of the cost.

When a customer places a delivery order through your website, you can use Square’s on-demand delivery feature which will automatically match and send a courier to your location to pick up and deliver your customer’s order! The customer will receive text alerts with live delivery tracking, just like the biggest third-party apps. 

What Third-Party Food Delivery Is Really Costing Restaurants 2
Photo Credit: Square

This allows you to take your orders through whatever platform you may be using without paying the marketplace commissions! This is perfect for food businesses selling packaged goods, hot food or even alcohol on platforms like Instagram.

Square on-demand delivery allows you to own your own customers, instead of the delivery apps, without having to hire and insure drivers!

Because Square Online partners directly with the big companies like DoorDash and Uber, you only have to pay $1.50 per order! You can also pass delivery costs along to your customer, subsidize a part of the fee, and/or offer free delivery on orders over a specified amount. 

What Third-Party Food Delivery Is Really Costing Restaurants 3
Photo Credit: Square

The flexibility doesn’t stop there! You can also assign a maximum delivery fee, minimum order amount to quality, and add additional service fees to cover any extra delivery costs like packaging, heat/cold packs, etc. No-contact delivery is enabled by default, but is also customizable. 

If you’re not already working with Square Online, it’s super easy to integrate it into your existing website or POS system! If you already have a Square account, just log into your dashboard to enable On-Demand Delivery from the item details. 

Once on-demand delivery is set up, you’re ready to manage incoming orders! Just like any other orders placed through your Square Online service, on-demand delivery orders go directly to your POS and kitchen printers!

You can learn more about setting up Square On-Demand Delivery Here: https://www.youtube.com/watch?v=vJ9Wh73A-JM&ab_channel=Square and you can sign up for free now.

For more great resources on starting or operating a virtual kitchen, you can read more blog posts here or check out my YouTube Channel

You May Also Like