How to build a profitable pickup and delivery business for your restaurant?
If your restaurant has an ordering website or an ordering app, you’re able to serve hungry customers that want to order pickup or delivery. Your restaurant is benefitting from the increased demand for food delivery and pickup. Especially with the COVID-19 pandemic spreading across the world, the demand for food delivery and pickup has been greater than ever. But how to move into pickup and delivery? And how to make it profitable for your restaurant business?
Building your own, 1st party ordering channels versus 3rd party delivery platforms
When moving into the pickup and delivery business, you have simply put two options. Option one is submitting your restaurant to 3rd party delivery platforms like Doordash, UberEats or Grubhub. It’s an easy solution with a huge base of hungry potential customers to sell to.
The second option is to build and grow your own, 1st party ordering channels. It’s more difficult to do but in the long run more profitable.
If you build your own ordering channels you’re less dependent on the 3rd parties. Lowering your dependency on these external platforms is good in 3 ways. First, you avoid commission fees that 3rd parties charge you. These fees differ anywhere from 15% up to 35% on every order. If you have loyal customers that order a 2nd and 3rd third time, the total fees you pay per customer are adding up quickly.
Secondly, if there goes something wrong with an order, the question arises on who’s going to compensate the customer. E.g. in case that a delivery driver is late and therefore the food is cold. You would assume that the 3rd party delivery platform would compensate for it but often this is not the case. The customer will complain at your restaurant and your restaurant has to send a new meal to the customer. Besides the costs of sending a new meal if more of these mistakes happen there is even the risk of brand and reputational damage for your restaurant. Something potentially more expensive than sending a new meal.
Lastly there is the lack of data sharing with your restaurant. Companies like UberEats, Doordash and GrubHub are data driven companies. These companies use customer data to optimize and drive revenue for their platforms. Therefore, they are not willing to give up and share customer data with restaurants. Here it’s a matter of who’s owning the customer. Is it the restaurant that made the food or is it the 3rd party delivery platform? Well it isn’t the restaurant in this case and therefore you’re not able to reconnect with your customers again if they order via 3rd party delivery platforms.
How to do delivery for your own, 1st party ordering channels
There is a lot to say on building your own ordering channels for your restaurant. But taking orders is one thing, what about delivery? If you don’t have a delivery fleet, don’t worry because there are options. For example, if you have a restaurant location in a dense area like in city centers, you can make use of e-bikes. These e-bikes are significantly cheaper to operate than a car or a scooter and they’re good for the environment and planet too. You can turn your e-bike delivery into a brand and marketing story. E-bikes are good for delivery in a 2 mile radius from the restaurant.
If you have a wider delivery area and you don’t want to buy or lease cars, you can make use of 3rd party delivery platforms but only for delivery services. Platforms like UberEats, GrubHub or Doordash offer delivery only for a fixed rate. Depending on the distance these rates are something like $ 5 for 2 miles, $ 8 for 10 miles etc.
The advantage here is that it’s a fixed rate. You pay the same delivery fee for a $50 order as well as for a $100 order. Delivery fees can also easily be passed on to the customer. Next, you own the customer relationship and you own the customer data. Using delivery platforms like this is like hiring DHL for food delivery.
You can negotiate rates with multiple delivery providers like Doordash, UberEats and GrubHub. Special delivery fleet software can help you to book delivery realtime for each order.
How to drive traffic to your restaurant ordering channels
Now you’ve covered delivery for your orders, it’s time to think about how to drive traffic towards your ordering channels. How do you make people aware that they can order directly at your restaurant?
First you can make use of your social media channels. It’s a cheap and fast way to inform your base of followers. The trick here is to repeat your message, don’t stop with just one post but keep repeating. The best way to do this is by making a content calendar and schedule your posts and messages.
Another way to drive traffic to your ordering channels is via in store promotion. Put up a banner in your restaurant or add a flyer with each pickup and delivery delivery order. Think about a clear message you want to communicate and how customers can reach your ordering channel. QR codes are often used as an easy way to scan and go to your ordering channel.
A third way to drive traffic to your ordering channels is via paid media. With Google Ads or Facebook Ads, you can target people down to a zip code level. Google has some very useful tools to find out how much traffic is searching on your brand name or other relevant keywords. Facebook can create lookalike audiences of people that match your customers profile. Mind you that costs can increase significantly if you’re not on top of it. Tracking conversions and calculating ROI is important here.
Finally, ranking on top in search engines or search engine optimization is also a way to drive traffic. It requires more effort than e.g. Google Adwords, but when done properly it’s a gift that keeps on giving. There are multiple tactics you can use for search engine optimization but it often comes down on writing interesting articles about your restaurant.
Perks, promotions and loyalty points to make customers stay with you
When you’re driving traffic to your ordering channels, it’s necessary to think about what kind of perks you can offer your customers as a thank you. You need to appreciate the people that take an effort to order directly at your restaurant. They could have gone straight to a 3rd party delivery app.
You can give away free perks like a can of soda or discounts. When playing with prices, and your restaurant is also selling via 3rd parties, keep in mind that there is often a parity clause in place. It means that 3rd party platforms can match your prices if you’re offering the same meal at a cheaper price via your own ordering channel.
A more advanced way of rewarding customers is via a loyalty program. Saving points for extra discounts has always been a good method to make customers more loyal to your brand. In this case to make them stick to your own, 1st party ordering channel.
Messaging channels for ordering pickup and delivery as an engine for growth
Besides an ordering website and or an ordering app, there are also other sales channels that help you drive your pickup and delivery business. Chatbots for example that can take orders via messaging platforms like WhatsApp, Facebook Messenger or iMessage. There are two main advantages a chatbot has over a website or app. First it’s simple and easy to use, it’s like chatting with friends. Where websites, especially on a mobile device can be sometimes difficult to use, a chatbot can take orders by simply typing what you would like to order.
Secondly, a chatbot makes use of messaging apps that are already pre-installed. You’re using Facebook, WhatsApp or iMessage in your day to day life. Compared to a restaurant ordering app, there is no need to download something.
An ordering chatbot is also a great channel for upselling and repeat purchases. Your customers interact with the chatbot having a conversation with it. The beauty of a conversation is that a chatbot can say something to steer the conversation and to sell something extra. It can also send messages at a later time to trigger repeat purchases. Something like “Hi John, it’s Friday night. Do you want to reorder your favorite pizza again with a $2 discount?”. Who can refuse an offer like that?
At Table Duck we build ordering chatbots for independent restaurants and restaurant chains. Our chatbot handles delivery, pickup and dining in orders, so there is one channel for customers for all types of orders. With smart upsell and reminder messages, we drive a restaurant’s food delivery and pickup business. The chatbot is branded in your restaurant’s look and feel and you have full control over customer data.
Robbert Bregman | Co-founder of Table Duck