by The Rise of Food Delivery Apps
The Covid-19 pandemic brought dramatic changes to everyday life and profoundly impacted the restaurant industry. With dining rooms closed and social distancing guidelines in place, restaurants were forced to adapt their business models to focus primarily on takeaway and delivery. This shift accelerated the already booming online food delivery market. Major apps like DoorDash, Uber Eats and Grubhub saw massive surges in orders during 2020 as more people opted to get restaurant meals delivered to their homes. Prior to the pandemic, food delivery was growing steadily but remained a niche segment of the restaurant business. However, the events of the past year propelled it into the mainstream and established online ordering and contactless delivery as a major part of the future of dining.
Convenience and Variety for Customers
For customers stuck at home, online takeaway food became an appealing option for accessing a variety of restaurant meals without having to go out. Online Takeaway Food delivery apps aggregate options from numerous local restaurants onto a single platform, allowing users to easily browse menus, check ratings and place orders from many different cuisines all in one place. This ability to conveniently order from a wide selection of local favorites is a big reason for the skyrocketing popularity of online food delivery during the pandemic. Customers have come to appreciate the ability to have their lunch or dinner choices delivered right to their doorstep with just a few taps on their phone. The additional convenience factors like discounts, deals and cashback offers have also driven customer loyalty to major delivery apps.
Positive Outcomes for Independent Restaurants
While delivery commissions certainly impact profit margins, online ordering platforms have been a lifeline for many independent restaurants that would otherwise have struggled or been forced to close amid the pandemic. By facilitating takeout and delivery orders that may not have otherwise materialized, food delivery services have helped keep revenue coming in for local favorites that invested in online platforms. Delivery also opens restaurants to new potential customers beyond their usual dine-in clientele. It allows smaller, independent spots to compete more effectively against well-known national chains by gaining visibility on major apps. Some restaurants have also seen online orders becoming a more significant source of business even after dining rooms reopened as customers’ habits shifted during lockdowns. Overall, the growth of food delivery demonstrates changing consumer preferences that open doors for creative local entrepreneurs.
Increased Operational Challenges for Restaurants
At the same time, the surge in online takway food has brought operational challenges for restaurants. Fulfilling delivery orders during busy periods requires careful planning and coordination between front-of-house and kitchen staff. Errors and delays can damage customer satisfaction metrics used by delivery platforms. Additionally, surging delivery volumes mean restaurants must prepare more to-go packaging and utensils, driving up costs. Since delivery orders tend to be smaller on average than those for in-house dining, the higher proportion of delivery business means restaurants move fewer items, further squeezing margins. Delivery drivers also parking in front of establishments and idling engines can disrupt other customers and operations. At a time when profits are tight, high commissions charged by third-party apps also pinch restaurants’ bottom lines. While delivery provides a revenue stream, it comes with tradeoffs restaurants must carefully manage.
Challenges of Reliance on Third-Party Platforms
Relying predominantly on third-party apps for delivery also introduces risks for restaurants. Major apps have significant control of customer data and brand visibility. If a restaurant is later removed or “deplatformed” from an important delivery partner, it loses access to an entire customer base built through that channel. Additionally, changes in algorithms or commission structures by delivery platforms can suddenly impact how prominently or profitably a restaurant is featured.
Independent restaurants prefer direct delivery relationships that maintain ownership over the customer experience. A growing number are investing in their own online ordering systems and hiring their own drivers instead of outsourcing to delivery apps. Going direct helps avoid the high commissions charged by third parties while maintaining more control over profits, service quality and the brand. However, building independent delivery capability requires substantial upfront investment that may not be feasible for every establishment.
The online takeaway food boom driven by the pandemic opened many new restaurants to a fast-growing channel that was previously more niche. As restrictions ease, some consumer habits are likely to revert while others may persist long-term. Restaurants will need to determine which delivery solutions make sense for their unique operations and customer base on a sustained basis. Major food delivery apps displaced by smaller upstarts, or more independents taking delivery direct are possibilities as the pandemic accelerated innovation. Although uncertainties remain, online ordering platforms will clearly continue playing a major role in the food industry landscape going forward. How the independent restaurant experience balances accessibility, efficiency and ownership of the new frontier of digital dining is yet to be determined.
