To Deliver or Not to Deliver?
After our article about the changes to Uber Eats terms of service we have had a number of people interested in more information about it – some about the food delivery apps available, but mainly, is delivery the right option for them? Well, I thought it would make sense to create another article to answer this question.
Firstly, let’s be positive and look at the benefits of offering delivery.
It is a booming market.
According to the MCA Foodservice Delivery Report 2018 food delivery was worth £8.1 million that year, with a steady increase of 13.4% year-on-year. It makes up 8% of the food service market as a whole. This is a huge market portion and is only growing! As of the beginning of 2019 60% of UK adults are active delivery customers – ordering on average twice a week at £9.50 per head per order. Delivery has the highest level of growth in the foodservice industry. Just Eat is partnered with 30,000 restaurants and Deliveroo and Uber Eats are partnered with 10,000 restaurants each. And they are reporting that this number is growing every day!
It does not lower eat in and takeaway rates – if anything it helps raise them!
Food delivery has risen by 5% in the last six months – from 31% to 36% – but studies have shown this has not affected the number of people eating out, reveals Morar HPI. 75% of diners are more likely to eat in or grab a quick takeaway from a restaurant they have previously had a delivery from. This same study shows that 57% of diners who have eaten out less have also ordered less takeaways. This indicates that the people who are more likely to order delivery are also more likely to eat out and grab takeaways in general.
With the increasing popularity of the mobile apps this means that you are introducing yourself to potential customers in your area who are more likely to be repeat customers and keep giving you business!
People, in general, are prepared to pay more for delivery
People are prepared to pay extra for a modern convenience. Just Eat allows you to put in your own delivery cost – typically recommended to be at £2.50 for delivery – and many businesses who use Deliveroo and Uber Eats have at least a 25% mark up to cover the cost of using one of those companies’ independent delivery drivers. This means that an average family of four are paying a minimum of £10.50 extra for the food to be delivered at their convenience. The food delivery market is made up of customers who have more disposable income but have less time so are prepared to pay extra for the value of convenience.
It could be a stepping stone
Something that has become a massive trend for people using the apps is that when they deliver to customers, they leave their information on a flyer with cheaper prices or offers so that customer will call them directly and then you don’t pay service fees to the delivery service apps. Whilst this is something not encouraged by the delivery apps there isn’t much they can do about it and it is a great way of growing a loyal, local customer base. But some people don’t bother because they are more than able to absorb the costs of the service fee and they get more business through the app than without it.
Okay, so let’s now be fair and look at issues with delivery.
Delivery times must be quick
The UK average delivery time is 30 minutes and customers do generally expect this as a standard. If your delivery time will have to be longer you need to make sure it is something they are expecting. Delivery time is such an important factor that customers will never order from someone again if they took too long to deliver. So, you need to make sure you clearly explain delivery times and it might be better to under promise and over deliver.
Presentation is important – and not always in your control!
Because they are not judging your product based on anything but what they receive, the presentation of your food and the quality is very important. Spillages, wrong orders and mishaps will put a customer off you immediately and potentially permanently. And if you are using an independent delivery driver from Uber Eats or Deliveroo they may not be as careful with your product as you would like. So, you need to make sure you plan how to counteract this. Or have your own delivery driver.
You will be competing on delivery times, delivery fees and offers
With a growing market and mobile apps gathering them all in one place, you are going to find it difficult to stand out from the crowd. The only options available to you are to have a bonus that makes you better than the others. Do you have the shortest delivery times? Is your delivery fee less than others in the same area? Do you have some great offers people want? Remember, there is still the ability to add your mark up into the menu, so you don’t price yourself out of your margin, but it is good to know the competition. If you get new customers, they are encouraged by the apps to stick with you – you are a favourite, you are one of the first to appear when they search in the app.
Is it right for you?
Now, let’s get down to the brass tacks – should you be offering delivery? Should you be on these apps? And which ones should you be on?
Do you have the facilities to?
Will you be able to handle if you get requests for deliveries? Do you have the equipment, staff and space? Do you have the EPOS to handle these extra orders? Have an honest look at your resources and see if you need to upgrade anything before you start. It is better to be prepared than struggle to catch up.
Do you have the margins to?
Make sure you do your maths. You need to make sure you are covering your costs and giving yourself a good enough margin. This typically means that delivery orders are stocked up and then delivered in one go to cut down on fuel and staff costs. Very often a delivery driver will have other jobs so that if they are not out, they are doing something useful in the shop. Will you need to create a second set of pricing for delivery? Remember, people are prepared to pay more for the convenience of delivery.
Do you already have someone who could deliver?
Do you have someone on staff who could become your delivery person? Or will you need to get someone? If you are not sure about hiring someone to fill that role you might want to look into Uber Eats or Deliveroo as an option because they offer drivers with their service. And remember Uber Eats have changed their service terms so you can use your own drivers – which means you could start using their independent drivers and then add your own later.
Where are you located?
If you are in a busy town or city then Uber Eats and Deliveroo will be able to cover your area, however if you are in a smaller town or village then they will not work for you and your customers. Whilst they are expanding all the time, they can only operate within areas the independent drivers are available and willing to work.
Who do you want buying your food?
Almost 30% of under-30’s order more food for delivery than the 6% of those aged 50 or above. This is becoming an increasing trend each year as more customers are technological savvy, prefer using apps and have more disposable income. So, whilst apps aren’t the “be all and end all” they are something to consider in the future. At the moment it is good to have the traditional phone number available, as well.
Lots to mull over but I would like to leave you with a final message – this is not something you need to do. Not every business will benefit from offering delivery and foodservice delivery will not “crush” the takeaway and eat in trade. But somethings to keep in the back of your mind are the rise of delivery apps and changing consumer habits.
When done right, delivery can help cultivate customer loyalty, enhance profits and expand your market.