Restaurant Delivery: What can restaurant operators do to drive profitability?
Is restaurant delivery here to stay? I'd say so. Customers love the convenience, but operators hate the commissions. For those of you in the hotel world, I bet this sounds familiar--gee, just like OTAs!!!!
I recently wrote a short article for Channel News Asia talking about delivery in Singapore. I hope you find it interesting.
But, on a practical note, what are some things, other than opening their own cloud kitchen, that restaurant operators can do to make paying the delivery commission less painful? The challenge is what can be done to make delivery profitable. I will focus on some things that you can do immediately:
Manage your demand. Your kitchen can only handle so many orders. If you find that you’re getting up to that limit, stop taking delivery orders. Otherwise, you risk falling into the ‘Mother’s Day’ issue that occurred last year in Singapore.
Encourage takeaway: Takeaway orders are more profitable because you don’t have as high of a commission cost. Encourage them by offering lower prices or other discounts. Even a discounted price will probably be more profitable than having to pay the delivery commission. If your delivery service providers offer a lower commission rate for takeaway orders (as in they’ll still list your restaurant on their app), strongly consider doing this.
Think about your menu: Most of the major food delivery providers give you some flexibility in how your menu items are written and presented. Here are a few best practice ideas:
Limit the # of menu items: This helps make it easier for customers to make a selection.
Choose your menu items carefully: Choose your best sellers and high margin items that travel and reheat well. Also, items that you can prep ahead of time will help you be able to fulfill the order in a timely fashion.
Use categories to organize and simplify your menu design: Consider offering categories such as Combo Meals, Dinner for 2, Popular Items or Best Sellers. This can make things easier for your customers and also help you increase your average order size.
Use good photos: Research done on this by Door Dash, a US Delivery Service Provider, has shown that the inclusion of good photos of your menu items helps immensely.
Write compelling menu item descriptions: Research has shown that how you word the description matters. Keep the description short, but make it sound as good as it tastes.
Be sure to offer modifications and add-on items: Your customers will want to know the spice level of their food and be able to customize their meal. Research by Door Dash has shown that menus that offer more customization options are able to drive more orders.
Think about your pricing: According to my research, customers are perfectly fine with higher prices for delivery and for paying a reasonable delivery fee. If your contract precludes you charging different prices than what you offer in your restaurant, consider offering a different menu for delivery.
Think about your customers: Many of them are probably ordering for their families or perhaps having a couple of friends over for dinner. Design your menu with this in mind. Consider offering family packages and bundles. If a substantial percentage of your customers are families, be sure to offer ‘kid-friendly’ food options.
Think about your packaging: Be sure that your packaging is leak proof and that it has partitions that keep your food from getting soggy. Also, consider whether your packaging will fit into the delivery driver’s bag.
Promote your restaurant: Make sure that you include some sort of mention of your restaurant and provide some sort of flyer or promotion that will give the customer an incentive to patronize you again.
Double-check your orders: In the study I did last year on delivery, about 40% of customers had had some sort of problem with an order. The most common problems were missing items or the wrong order. Be sure to double-check all orders before you send them out.
Make sure that you are set up for pickup: Make it easy for your takeaway customers and delivery drivers to get their orders. This also involves making sure that the orders are ready for them when they arrive.