What is going on with the Restaurant Delivery Industry?
Restaurants are learning in a hard way how to sell online.
Restaurant delivery is nothing new. Pizzarias have been doing it for the last 40 years. So, why is everyone talking about restaurant deliveries as if something is new here.
What is new is: Everyone has a computer with internet connection in their pocket now - that’s new. These Online Food Delivery Behemoths capitalized on this technology trend and made food ordering insanely easy for regular people. And we all fell for it.
When the first generation online ordering platforms started with GrubHub and Seamless in the US in 2008-09, it was about incremental businesses for restaurants. Online orders to increase revenue in a downturned economy.
The second generation App based delivery companies starting with DoorDash, UberEats employed an army of gig workers for food delivery and made the service even better.
Because of the convenience they offered, restaurants depended on them for all their online sales despite the 25-30% commission they charged. It still worked because overall online sales was still small relative to the dining-in sales.
Now what we are seeing during this pandemic is like a time travel to 2030 in terms of e-commerce adoption. Everyone is ordering online and no one is coming to stores.
We are now forced to act this way because of the virus - but it can be a normal way of life in 10-15 years with more sales from online.
So - the hard question for restaurants: Does relying on 3rd parties still work for you?
The answer is probably a big NO for the majority of the restaurants.
You are serving ghost customers through these marketplaces and paying one third of your sales income as commission. What are you becoming? A wholesale supplier of prepared meals to these marketplace with no connection to end customers.
There is no way you can run a profitable retail restaurant business without owning your online sales now and in future. You have to. It is not your extra revenue that once you thought - it is THE REVENUE! You have to own it to survive.
So, what does the future look like?
Future is bright for businesses that will successfully operate their online sales directly on their website. They will have their regular customers who often can order online for convenience. They can pick up or you can deliver to them - Just like the pizza guys doing for 40 years.
But now you can manage all these with easy to use software solutions that helps you to take online orders and manage deliveries seamlessly.
If you only rely on marketplaces, your profitability will suffer and you will struggle to stay in retail business. Either you have to transform to a Ghost Kitchen, or go out of business.
This current crisis has cracked open a window into the future for us. It’s time for a change if you have not done it yet.