The Bottom Line
When to Go into the Delivery Business
The delivery business is booming. GrubHub, UberEats, DoorDash and countless others that venture beyond compound words have taken a dining segment ruled by pizza and expanded it to every cuisine under the sun. On the surface, delivery is an excellent opportunity that allows restaurants to sell to guests who may not have visited them in person. Add in the fact that drivers are on-demand contractors and require no additional head count and you’ve got a pretty good deal.
Delivery still isn’t for everyone, however. A number of factors exist that restaurant owners should consider before going into the delivery business.
While delivery has undoubtedly gotten trendier, it still carries a stigma that can drag down the overall image of a restaurant. While delivery aligns perfectly with most any casual restaurant, the area gets grayer as the average check rises. Steakhouse patrons may question the quality of the food at their table if they see that the restaurant also delivers. While this example is a bit extreme, it’s up to you to assess where your restaurant sits on the premium spectrum and whether delivery is a fit.
On the other end, if you have a high-volume restaurant known for a line out the door, and that line is actually part of ‘the experience,’ delivery may hurt that element, not to mention burden your staff with additional orders and slow the line to a dangerous extent.
Food quality is always at risk in a delivery setting. The longer the delivery, the longer the food sits. Temperatures cool, sheen fades and your food can go from beautiful to unappetizing before the guest can even get a chance to look at it. In most cases, presentation can never match what you’d prepare onsite, especially when you’re at the mercy of speed bumps, sharp turns and other elements that will shake around whatever’s in the back seat.
If you’re comfortable with leaving your food on the counter for a while before a server can pick it up, delivery could be a viable option. If you tolerate nothing less than dishes going out the moment they’re ready, you may not want your food sitting in the back of a car for however long it takes to get to your guests.
Food delivery services can be very expensive, with commissions as high as 30–40% in some cases. This, no doubt, eats significantly into your bottom line. It’s critical to assess whether food delivery will actually be profitable to the point where it’s worth your time.
Determine the minimum amount needed to justify your costs, factoring in any holdups that take place for your dine-in patrons since your kitchen staff will be taking on more orders. If these thresholds are met, then any delivery orders that take place will deliver positive returns.
If you decide to go the delivery route, keep tabs on your revenues and average checks of dine-in vs. delivery business. If you see dine-in revenue slip dramatically, it could be that your dine-in guests simply switched over to delivery. Taking commission into account, this move is not beneficial for your business.
To remedy this situation, experiment with different minimum check requirements for delivery as well as dine-in promotions and events in order to distinguish your restaurant experience while retaining delivery as an additional revenue stream rather than a substitute revenue stream.
Most delivery services have streamlined processes that allow owners and staff to manage deliveries swiftly and efficiently. Even so, take note of the time it actually takes you to manage your deliveries and whether that’s affecting you or your staff’s ability to manage in-store operations.
Pressure on cooking staff is an ever-present factor, as is management needing to handle incoming delivery requests alongside pressing guest issues and handling the inevitable broken dish on the dining room floor. This assessment will likely be less analytical, but take time to consider whether your delivery business is truly manageable or more burdensome than it seems.
If you decide to go into delivery, monitor these factors on a regular basis. By taking a holistic look at how delivery is affecting you financially and operationally, you will be able to make beneficial, proactive decisions as needed to manage this revenue stream.