According to a National Restaurant Association survey, nearly 60% of restaurant interactions now are for off-premises dining. 90% percent of consumers buy takeout at least once monthly. “Digital platforms have made it very easy to order online in a seamless way from these various restaurants, so it has increased traffic quite a bit,” said James Cook. 79% order delivery directly from restaurants and 53% order through 3rd party apps such as DoorDash or Grub Hub. The fees that delivery companies charge can really eat into restaurant’s profits and many times can make it a zero-sum game. The food delivery business will be one to watch closely into the future as many restaurants look for ways to make food delivery feasible and convenient, all the while still being able to turn a profit.
Expect the food delivery business to morph and evolve over the next 5-10 years. While food delivery companies such as Uber Eats and Grub Hub are convenient, they severely eat into the razor thin profit margins of restaurants. On average, profit margins in the restaurant business hover around 3 to 5%. The restaurant is left with little to no gain when a 3rd party delivery app charges as much as 30% of the cost of the order for the service. In my opinion, I expect many restaurants operators to incorporate their own infrastructure for food delivery direct in order to capture that revenue or for other technology companies to enter the scene for a more cost-effective method in providing a similar service. Drone and Autonomous Vehicles are outliers that could have a drastic impact on costs and logistics of such convenience.
About The Author: Jeff Dervech
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