In the huge arena of online food delivery—a sector with a hearty revenue of £4,215 million as of 2020—there are three key players: Deliveroo, JustEat and UberEats. These third-party apps partner up with restaurants to run their delivery services for them, and give the impression that these relationships will consist of mutual respect and (more importantly) mutual gain. But are small businesses really getting a fair piece of the pie, or is this a deal that leaves a bitter aftertaste?
The lure of a big-name delivery partner is certainly understandable for a restaurant. As of 2018, the UK’s current most popular delivery app JustEat had an average of 499,603 users placing orders with them daily, and this number is bound to have risen to an even more unbelievable scale as a result of restaurants being unable to open during the COVID-19 pandemic. Having the chance to connect with such a well-established customer base has an obvious appeal for any business. For a small restaurant that has never tried running its own delivery service, having a third-party partner to sort out the logistics of providing deliveries is another clear benefit, and being listed on an app that is already in existence will certainly be tempting for those who recoil in horror at the thought of having to create an app themselves.
But amongst the pros of delivery apps lie some undeniably major cons. The most damaging drawback of partnering with a third-party delivery service is the often extortionate commission rate. UberEats charges restaurants a 30% commission on their orders (previously 35%), Deliveroo takes between 20-25% on average but can go up to 30%, and whist JustEat’s commission rate sits at a more attractive 14%, that rate excludes VAT and the sneaky 50p admin charge they add on top of every order. These rates may be feasible for large chains with the fortune of comfortable profit margins, but they’d certainly be a sting in the tail for your average small business.
And it’s not just high commission rates that can make these delivery partnerships go sour. Having a third-party app running your deliveries risks errors in communication between the partner and the restaurant, which could lead to mistakes in customers’ orders. You also have no way of monitoring an independent courier to ensure they’re giving your customers a high quality experience, unlike if your own staff members were doing the deliveries. But the big kicker here is that even if a customer’s problem is the result of the delivery partner and not your restaurant, a 2018 study showed that 82% of customers will still blame the restaurant. This could result in your business losing precious customers, whilst the third-party app is able to get away scot-free—ouch.
The particularly hard-to-swallow pill in all of this is that whilst JustEat, Deliveroo and UberEats appear to be supporting small businesses, the only businesses that actually get a good deal are the larger restaurants and chains. More established businesses are able to negotiate lower commission rates, as well as having the money to spend on tech that will smoothly integrate the delivery service within their usual practices to minimise errors. Small businesses are not afforded these same privileges, and are far more likely to lose out as a result.
There’s no mistaking that customers genuinely want to support independent restaurants, but the irony is that by placing orders through these delivery apps—as well-intentioned as this may be—they might be indirectly causing their favourite places to suffer. This doesn’t mean that consumers aren’t willing to change their habits, however. When surveyed, 60% of consumers said that they had tried to support local restaurants during lockdown via a third-party app, but 70% of people then went on to say that they would prefer to place orders directly to help out small businesses after learning the high commission rates that delivery apps charge.
So, you’re looking for the ease and convenience of partnering with a delivery app, but without the potential errors or high commission rates eating into your revenue. What’s the solution? MyEPOS Order allows you to easily set up a clean, simple app that your customers (and staff) will quickly get to grips with, but your business will have complete control over. We provide the software, you provide the delivery service—and all for a single monthly fee with no hidden charges. Enquire now (01905 790615) and ditch the dodgy delivery partnerships for good.