Food delivery apps: think twice before joining hunger games

As consumers, let’s not fool ourselves, food delivery apps are handy. Whenever hungry and running out of time, Postmates, UberEats, Bolt Food, Wolt, you name it, are here for us. All we need is a smartphone, the right app and the most challenging part, to decide on the food we want to enjoy.

How to? Of course, scroll through the list of restaurants... Restaurants which, eventually, have fallen victim to these apps. Yes, yes. You have got it right. Some could start thinking of already giving up on this article, but before you do it, let us provide some intense arguments. And reveal alternatives.

Industry of massive investments

Food delivery apps are the innovation that has made our lives easier in many ways, indeed. We do admit it and take our hats off to the inventors, developers. Guys, you did a splendid job.

The applications are engaging and simple in use; some even offer gaming options while waiting for the food to come. Only God knows what else will arrive shortly. Not to omit effective and quick deliveries, which could be tracked real-time. Is there anything more convenient to wish for?

Behind these well-polished apps, therefore, we have tech companies. Investments into the development and unrivalled user experience here are huge. Forbes provides that over $9.6 billion was pumped into these companies in 2018 alone. What to say about 2020 then… No numbers are available yet, but we do not need to be Nostradamus to know already that the sum would be astronomical.

The report of Research and Markets provides that the global online food delivery services segment is expected to grow to $111.32 billion in 2020. Up until 2023, this value is projected to reach $154.34 billion (just to compare, the gaming industry of today is a nearly $200 billion behemoth).

Of course, investors see it as a promising niche, and for a reason. It is a tool offering convenience. Convenience has already become the asset of the same value as time is. Both are money.

However, delivery companies still struggle to achieve profitability. And the answer as to when they will begin their way towards it is still pending.

CORONAtion of food delivery apps

Even before the COVID-19 started triggering headlines around the world, online food delivery was a very successful case. But well, it is hardly possible to eliminate the COVID impacts - when the moment of glory for food delivery apps comes. During the global lockdown, these were the primary source of non-kitchen food for those stuck at home, and a saviour for restaurants. Admit, you have also seized the chance to order something delicious at least once?

This way, it is normal that the apps have dominated the stage. The demand for it was somewhat forced but still organic. For example, Grubhub, a gigantic US delivery platform, reported that the number of its active diners grew to 27.5 million in Q2 2020 from 20.3 million in Q2 2019. It is an increase of 35%. It is insane.

To stay afloat and maintain at least half of the activities, a lot of ‘ghost’ restaurants onboarded food delivery technology. For restaurants, these apps served as a mainstream solution, an immediate remedy. In an extraordinary situation, there is not much space for thorough calculations, though.

Restaurants can skip their marketing and leave it to the companies developing apps. Restaurants can also stop worrying about deliveries; the app service also covers this part. People like it, people use it.

At this point, from the business perspective, food delivery apps seem to have no drawbacks as well. HOWEVER. There are two sides of the same coin. It costs a lot to restaurants. And not only to restaurants. You pay for this convenience, too.

High commissions as one of the biggest loose ends

If you think that by ordering meals through the app, you support your favourite restaurant, you are quite wrong. For instance, the New York Times reveals that each meal ordered for takeaway through the app costs from 7% up to 91% more than the one ordered and tasted at the restaurant. Have you ever imagined it?

The reason - high commission fees, up to 30%, charged by the app services for every single order. Who pays this? Restaurants and the app users, of course. Restaurants pay for delivery and marketing services; you pay delivery fees. Unequal partnership, isn’t it?

Why so high?

  • To pay for being included to the app, for sign-up to use the platform.
  • To pay for promotions offered by the app to customers.

Let’s not forget about the competition, which is very intense, even within the platform. A restaurant pays to get promoted and still has to make its advertising to stand out. So, the app service is quite an expensive feature to benefit from.

Of course, the tech companies must make for their living, too. To carry on development, to implement improvements, to pay their fees and primary, to have sufficient financial balance to secure its employees with salaries.

Usually, restaurants can negotiate a contract when opting in food delivery app services. For example, suppose a restaurant goes in favour of only one food delivery provider. In that case, it might have exclusive terms with lower commissions. But it does not always work.

What is the solution? Most probably - a compromise - reduction of commissions. The problem has been apparent and before the pandemic outbreak. But agree that the problem is less painful when delivery orders are 15% of a restaurant’s sales (like before the COVID-19), and not 50% or even more (like now).

However, according to the most prominent food delivery companies, this, at first sight, little change would alter the way their business is run. Thus, it is not a solution — a vicious circle instead.

Restaurants barely know their clients

Yet another painful spot is the data about you that, in most cases, does not reach a restaurant. How does it happen? You submit your personal information while installing the app and share it only with the app provider. Unless it shares it with a restaurant for additional costs.

In fact, from the data protection side, it is all secure and the proper way to store your information. However.

This way, a restaurant loses direct contact with its customers, and you, as a customer, do not interact with your food supplier eye to eye. It is not the employees of a restaurant who define your preferences and make suggestions according to your previous picks. It is a robot who communicates with you and traces your order history — simple magic.

For you as a customer, maybe it is not that relevant, but believe us, for restaurants it matters. By knowing the clients and following the changes in their preferences, restaurants can adapt better, improve their customer experience and unlock further growth potential. How?

  • Independently create individual customer profiles and improve the experience.
  • Analyse the data to figure out what exactly customers want and how restaurants can create new dishes or tweak existing ones.
  • Tailor marketing activities to boost sales.
  • Send personalised push notifications from the restaurant’s app.

By storing the data, restaurants can more effectively use their budget and wisely invest in the enhancement of their business. With food delivery apps, restaurants are losing the lion’s share of their clients. Simply because they do not know who they are and what they expect.

Alternatives do exist. Now is the time for changes

There is no situation with no alternative solution. And we are talking not only about lower commissions, but entirely other ways of doing deliveries.

One of the options - to create a restaurant's own e-commerce platform using such tools as GloriaFood, Shopify or Wix and serve the clients directly. These platforms enable restaurants to create their own websites powered with ordering features.

Why is it worth doing?

  • Same convenience offered
  • Same delivery speed and efficiency
  • No commission fees

Once a restaurant runs the website with ordering capabilities, then it has a choice: to build its own fleet for deliveries or integrate an alternative delivery platform such as ZITICITY which charges NO commissions.

ZITICITY integration is super simple in use and requires NO additional development to make it work. A restaurant can easily set it up and introduce a delivery option just in one evening.

Through such delivery platforms, a restaurant pays no commissions, but purchases a particular logistics service at affordable rates and flexible terms.

This way, any business, from a small pizzeria to an exclusive three-meal restaurant for only gourmands, can embark upon efficient deliveries. It is convenient, flexible, and most important, cost-effective.

As you can see, solutions do exist. Everything depends on the restaurant’s approach, and willingness to introduce changes, bravery to have more autonomy. Now it is the most suitable time to embrace the new strategies and concepts. Every single restaurant can provide its customers with a chance to enjoy the meals anywhere anytime and at excellent prices.