Before the global pandemic, restaurants and takeout services were having to adjust to the ever-changing hospitality industry. But since March, with lockdown measures, restrictions, and work from home and isolation orders in place, restaurants are adapting their services more than ever.
The United States restaurant industry is projected at $899 billion in sales for 2020, according to the National Restaurant Association. An estimated 99% of companies in the industry are family-owned small businesses with fewer than 50 employees. A recent report predicted that by 2021, nearly 50 million people will use a food delivery app in the U.S., and by 2023 it will grow to 60 million people, making up 23% of smartphone users.
Contents
Why Should I use a Food Delivery Service?
With this many people in the US dependent on the restaurant industry, online food delivery services are beneficial for both customers and restaurants, despite some imperfections. These services allow customers to access a greater variety of restaurant options while directly from their smartphone while also providing these restaurants to an entirely new clientele who may have never found them otherwise.
To help your food business prepare for online ordering, we’ve put together a list of popular food delivery services and broken down their features, pros, cons, pricing, and recommendation so that you can make a more informed decision. The quicker this shift is made and online ordering is set up, the easier it will be for your restaurant to gain more orders and new customers.
DoorDash
DoorDash Inc. is an on-demand prepared food delivery service founded by Stanford University students Tony Xu, Stanley Tang, Andy Fang, and Evan Moore in 2013. There are currently over 300,000 restaurants on DoorDash in the US, Canada and Australia, and their app reaches 80% of consumers in America. The company is currently worth close to $16 billion and is the largest third-party delivery service in the US, surpassing Grubhub in 2019.
Features
With DoorDash, their couriers, aka “Dashers,” deliver orders to customers with real-time order updates and GPS order tracking. If you have your own delivery staff, they can help you generate customer orders and provide you the tools to accept and manage them at reduced fees. DoorDash also claims to have a “Dasher network” that enables food to be delivered in 37 minutes on average, so your food is always delivered fresh.
Pros
- 0% commissions for 30 days
- Deliveries as far as 25 miles from your location
- Reaches 80% of consumers in America
Cons
- Bad traffic control (customers can order a dish after it is sold out)
- High service fees after the initial 30-days
- Cold or stale deliveries may occur is there are too many orders and not enough couriers
Pricing
Please visit the DoorDash website and submit a form for specific pricing options
Recommendation
DoorDash is a third-party app that’s too big to ignore. However, there are downsides, such as Dashers stacking orders at nearby restaurants to save on gas that results in cold food when it’s delivered to your customer. Or high service fees like delivery, commission, and marketing fees. But if you’re unable to afford to hire your own fleet of delivery drivers, there is a big market benefit to work with them.
Grubhub
Based in Chicago, Illinois, and founded in 2004, Grubhub Inc. is an online and mobile prepared food ordering and delivery platform that connects diners with local restaurants. The restaurant delivery app also owns many other delivery apps such as Seamless, Eat24, and others. Like DoorDash, you can deliver the order using your in-house delivery staff or use Grubhub’s on-demand delivery drivers. As of 2019, the company had 19.9 million active users and 115,000 associated restaurants across 3,200 cities in the US.
Features
When you sign up with Grubhub, you decide your marketing participation level, delivery fees, and minimum order amount. If you have a compatible POS system (NCR Silver, Oracle systems, RPower, Toast, and Upserve), your menu will automatically update when changes are made. They also have a Grubhub for Work component that allows a business to place an order and assign items to particular people, which is an attractive feature for companies that want to order for the entire office or lunch meetings.
Pros
- Excellent discovery tool to attract people to your restaurant
- Marketing opportunities (emailing customers with targeted offers and coupons)
- Strong customer loyalty
Cons
- High priced services (sponsored, for example)
- Unsponsored listings go undiscovered
- Little room for branding or conveyance of unique restaurant values
Pricing
Please visit the Grubhub website and submit a form for specific pricing options
Recommendation
By their own calculations, GrubHub’s fees can easily total more than a third of the pre-tax total, typically, 20 to 30 percent per order. While this may seem like an alarming amount to commit towards a food delivery service, you should at least be considering Grubhub if you want to attract new diners, especially Gen Z diners. Plus, becoming a member of the Grubhub team is pretty easy and you can start increasing your monthly takeout revenue right away.
Postmates
Launched in 2011, Postmates is a US company headquartered in San Francisco that offers local delivery of restaurant-prepared meals and other goods. As of now, over 75,000 restaurants use Postmates and they operate in 2,940 US cities. Uniquely, they differ from other food delivery services because its application programming interface allows small businesses to compete for the delivery of consumer goods with larger companies such as Amazon. In the summer of 2020, Uber announced it would acquire Postmates for $2.65 billion; however, that deal is still pending.
Features
Postmates allows you to boost your digital presence by creating an account with crisp photos, organized menus, and other creative tools. Their services allow you to receive orders how you’d like, such as through the phone, tablet, POS system, etc. They also have features that can be catered to you, such as POS integration, live event ordering, and promotions. During the pandemic, Postmates also added a new curbside pickup feature for merchants that enables both customers and delivery drivers to pick up orders without entering restaurants.
Pros
- Increase in the visibility of your brand
- They claim to provide a 300% increase in online takeaway
- Valuable data provided (know what your customers like)
Cons
- High commission fee and other charges
- Complaints of items not being delivered to customers properly
- Uncertainty around acquisition from Uber
Pricing
Please visit the Postmates website and submit a form for specific pricing options
Recommendation
Like other food delivery services, Postmates can have high service fees, but they’re a great option for selling food, alcohol, and grocery items, particularly in metropolitan areas. They also provide great data for understanding your customers, such as what they enjoy, where they are located, and how much they’re willing to spend. However, with the recent purchase of Postmates from Uber, there is some uncertainty around what the future might hold for the company.
Uber Eats
Based in San Francisco, UberEats is an online food ordering and delivery platform launched by Uber in 2014. In February 2019, UberEats announced that it would reduce its fee from 35 percent of the order’s value to 30 percent, which is around the average for food delivery services. In March 2020, during the COVID-19 pandemic, UberEats saw a 30% rise in new customers; however, they also let go around 20% of its workforce. Still, the company’s revenue is at $2.51 billion.
Features
As with the other leading food delivering services, UberEats users can read menus, reviews and ratings, order, and pay for food from participating restaurants using an application on the iOS or Android platforms, or through a web browser. Recently, UberEats has claimed to have updated their restaurant manager tool with analytics and feedback you can use to boost your business. They also help restaurants launch virtual restaurants, the delivery-focused concept out of your current kitchen, with valuable data insights from the UberEats platform.
Pros
- Improved visibility for your restaurant
- Reach new audiences and markets
- Don’t have to invest in marketing
Cons
- Higher monthly commission and service fees than competition
- Can damage your brand with bad deliveries
- Long delivery times are common
Pricing
Please visit the UberEats website and submit a form for specific pricing options
Recommendation
UberEats is a huge player in the food delivery market, and with their parent company Uber calling the shots, they could be the big man on campus very soon. Especially with a purchase of Postmates, we could be seeing some new and innovative features and tools being released. However, that could also mean fewer competitors in the market and higher prices to pay. Either way, with an owner like Uber that’s known for disrupting markets, we’re likely to see further disruptions from UberEats in the food delivery market.
More articles which may be of interest: