From San Francisco to Minneapolis to New York City, restaurants, diners, and third-party delivery apps are rewriting the rules for how off-premise dining should work. Restaurants are stuck in the middle of a growing debate about the sustainability of third-party delivery apps, as cities enact limits on service fees and as DoorDash, GrubHub and Uber file lawsuits to oppose them.
While the future of third-party fees is up for discussion, restaurants need ways to grow a sustainable takeout business now. These are three ways restaurants can adapt their takeout and delivery operations to benefit immediately by maximizing profits and delighting diners with convenience.
Two years of modified interaction have changed the way that restaurants operate, and, for many diners, have turned off-premise dining from an occasional luxury or convenience to a regular habit. New consumer trends are bringing the sustainability of third-party apps into focus, since many of them traditionally charge restaurants a commission of 30% or more to tap into their services–while charging diners high fees as well.
San Francisco, the home to many delivery tech companies, became the first to impose a 15% cap on commissions in April 2020 – affecting the amount that apps like Grubhub, Uber and DoorDash could charge to restaurants. Other cities followed suit: New York, Los Angeles, Seattle, Portland, D.C., Philadelphia, Las Vegas and Minneapolis.
After continually extending temporary caps, many cities are choosing to make them permanent. In these places, delivery companies are filing lawsuits to oppose or overturn these fees. Meanwhile, those same apps are continuing to offset costs in the form of additional fees to customers, who shoulder the burden while the political discussions continue.
As the food industry rebuilds towards a post-pandemic future, both restaurants and diners now look for ways to make off-premise dining work for everyone.
Whether your city currently has a delivery fee cap or not, there are many new opportunities to recoup costs for off-premise dining. These are three ways to position your restaurant within the changing delivery landscape to see the biggest payoffs now.
1. Invest in your own off-premise ordering system or app.
Whether that's choosing a more cost-effective online ordering system, building your own, or even developing your own mobile app–something that's becoming more and more common–the time has never been better to reduce reliance on the big marketplace apps.
More than half of diners (57%) now prefer to use a restaurant's own app to order, as compared to third-party apps. Plus, ChowNow's data shows that having your own ordering app increases customer loyalty by 3x—so it's well worth the up-front cost to give customers this ongoing convenience.
2. Add convenience without overhead.
Diners now overwhelmingly prefer curbside or order-ahead models instead of delivery, citing costs and convenience as the main reason for making the switch. In fact, 87% of consumers say that even as pandemic-era measures start to subside, they want businesses to continue offering curbside pickup.
If your restaurant has room for a designated curbside area or parking space, leverage it! The goal may not be to fully replace delivery, but to supplement it with a middle-ground option that's easy and affordable for both you and your diners.
3. Help your diners help you.
While more diners are now consciously choosing to order or dine in sustainable ways that support local businesses, there are even more that want to do so but don't know how. It's been a tough time for independent restaurants and people who want to see their favorite neighborhood spots pull through. If there's something they can easily do to help–like ordering from your preferred channel–they will be more than happy to rally to your cause.
Is there a preferred online ordering vendor for your restaurant that charges you fewer fees? Should they use your new curbside pickup instead of third-party delivery to help out overworked staff? Let them know—on social, via email marketing, in person, with signage—and consider sharing the reason behind the request to drive the point home.
As the role of third-party apps in off-premise dining continues to evolve, the best thing for operators in the near future may simply be to do what restaurants have always done—create strong communities around good food and hospitality. There can be no doubt that the restaurant industry will outlast any current uncertainty, so instead of waiting for legislation to create change, take the action that benefits your restaurant today.
To join a network of independent restaurants and diners who care about making an impact, look for vendors and marketplaces that skip the fees and instead give restaurant operators the tools they need to build their brand and their profits sustainably. ChowNow can help restaurants take control of their brands and grow their profits, while connecting with their diners in a way that's fair for everyone.