If you are thinking about introducing deliveries from your restaurant, but a quiet voice in your head is telling you that this may not be the best investment – ignore it! Delivery is the future of the industry, and in today’s article, we will try to prove it to you!
New consumer habits
Fast, convenient, immediate. These slogans scream at us from the TV screen, the radio, and from billboards that you pass on your way to work. The 21st century is the era of consumer convenience. Consumers may not wish to make their way to the town center, wait for a free place in their favorite restaurant and instead opt to stay in their pajamas and slippers surrounded by the familiar walls of their apartment. There is no need to go out. In 30 minutes, hot butter chicken will appear at the door.
What does this mean to you, restaurateur? This means that if you do not provide a customer with the proverbial “butter chicken,” a restaurant around the corner will supply it instead.
As an owner, you need to be up to date with how your clients’ needs change – and the changes are significant! Read our statistics, see how fast the online food order market is growing and how it can affect your business.
Is delivery profitable?
1. Revenue is expected to show an annual growth rate (CAGR 2020-2024) of 6.8%, resulting in a market volume of €69,075m by 2024. Restaurateur – get the most out of this trend!
2. In global comparison, most revenue is generated in the United States (€12,647m in 2020) (restaurant to consumer delivery). Second and third place was taken by Europe, with revenues of EUR 11.614 million and China – EUR 11.112 million.
3. In 2012, in the USA, pizza slowly gave way to other takeaway dishes. In 4 years, the number of orders other than pizza increased by 33%.
4. 3.5B was invested in food delivery start-ups in 2018 alone. It is no coincidence that the food delivery market attracts people with extra cash in their pockets.
5. The use of online food delivery options depends largely on age. 55% of people aged 18-24 placed at least one online delivery order in a year. Think about this when you are planning your promotional strategy. The results for individual age groups are presented in the table below:
Should I associate with intermediaries?
6. In restaurants with their own drivers, one customer contributes an average of around $184 a year. In restaurants that outsource delivery – around $121. The lower value of profit per customer cooperating with agents is the result of the commission they charge, which ranges from 10-30% of the value of each order. Forecasts for restaurants with their own drivers are very optimistic. Their profit is expected to grow by $12 per client by 2023. The profit of restaurants cooperating with companies like UberEats will increase only by $8 per customer.
7. 25% of restaurants say that they pay over 20% commission on the order to services like Grubhub.com. The commission can reach up to 30% if the restaurant uses its drivers. Only 16% of restaurants pay less than 10%. Each year, the percentage collected by intermediaries increases.
8. 82% of restaurant owners say the fees are too high, and 33% say the fees make delivery unprofitable.
9. In a survey conducted in 2017 in the USA, 52% of customers used restaurant sales channels (e.g. websites or dedicated applications) to order delivery. The remaining 48% of consumers placed orders through portals such as Grubhub, UberEats or Delivery.com.
10. In 2018, in a survey conducted by Trendsourse, consumers declared that the likelihood of them ordering delivery through a restaurant’s sales channels is higher than using the sales channels of intermediaries. The results of the study are presented in the table below:
Data indicates that having your own website or application can become more profitable than using third-party services (see points 7-12).
What do consumers value in online orders?
11. The highest-volume days for online platforms were Friday, Saturday, and Sunday, when 74% of orders were placed.
12. 45% of consumers say that offering mobile ordering and loyalty programs would encourage them to order more often, which would generate higher revenues.
In addition, the clients surveyed rated:
- loyalty programs,
- online reservations,
- mobile or web order-aheads
as restaurant technologies most important to their guest experience.
Meet their expectations:
- Allow your guests to order your dishes online. You can do this through your website or marketplace portals. You will learn the pros and cons of individual solutions here;
- Do you already have a website? Great! PAPU can help you start selling on it!
- Make the online booking option available on both your social media and website;
- Reward regular customers, and encourage the rest of the audience to visit more often through loyalty programs.
13. On average, 60% of consumers say that the speed of delivery is a key factor impacting their satisfaction. It is estimated that the optimal waiting time should not be longer than 60 minutes – only 25% of customers are ready to wait more than an hour, and about 30% think that it should not take more than 30 minutes from the moment of placing the order to its delivery.
Interestingly, up to one-third of respondents would be willing to pay more for delivery if it was faster. This is important information for you – the owner. If your customers are ready to pay more – give them a chance to do this. Think about introducing priority order status. Remember – its price should be quite high! You do not want to find yourself in a situation where dozens of orders arrive and each of them has to be completed this very moment.
14. Almost three-quarters of delivery orders were placed by phone.
15. 82% of orders were placed from home, while only 16% were placed from work.
What should I do to see satisfactory results?
Thanks for staying with us till the end! We hope that you have discovered some valuable facts. What you do with the information depends entirely on you. You can, if you wish, simply shrug your shoulders and get back to your chores, forgetting what you have just read.
You may also find a way to use this knowledge and start working. Working a little slower but more in-sync with concrete data.
At PAPU, we are aware that supply management is not a piece of cake. However, we know that the benefits far outweigh the costs.
- Loyalty programs, the ability to place an order online and reserve a table without calling – these technologies are a must-have for your restaurant,
- Ensure fast delivery – control drivers’ delivery time and their location with the right POS tool. The system integrates orders from various sources and automatically determines the delivery zone,
- Make sure that your offer includes promotions and discounts addressed to a younger group of customers,
- Diversify your sales channels. Use social media and websites, but don’t forget about the good old phone – it will still generate most of your orders.