Friday, June 9, 2023

Food Delivery Apps

You might argue that food delivery apps are more and more relevant in today’s global economy.  Countries are ordering the closing of restaurants, bars and non-essential shops, but allowing restaurants to continue with take away service.  Those restaurants now need to adapt and find new clients.  How better, when all you can offer is take away, than a food delivery app?

Food Delivery Apps
shopblocks, CC BY 2.0, via Wikimedia Commons

Food Delivery Apps

Food delivery companies such as Uber Eats, Deliveroo and Just Eat have cornered the market.  In reality it is a very simple business model.  They create a website and app, market their services to restaurants, do their marketing to the general public and wait for the orders to roll in! For a customer it is ideal. 

Sit at home, alone or with friends, decide what you fancy to eat, sometimes from different restaurants, place your order and eventually someone will arrive with food. All at the same price as they would pay in the restaurant but with a small delivery charge.  For example, Uber Eats charges 1,99€ in Paris. Nobody has to drive, if one wants pizza and the other wants Thai; simple.

But what about us, the humble restaurateur?  How much are we paying?  Back in the spring of 2020 when most European countries were in a state of lockdown as a result of Covid, the delivery app companies were starting to rub their hands together.  The only service on offer from your favourite restaurant was take away and they needed to get their message out there. 

Food Delivery Apps

Restaurants in London have since complained that although they managed to get their food to their clients they were not given any relief from the big delivery app companies. How much does it cost the restaurateur?  Well that depends.  Whilst researching this article I have been in contact with the big 3 but without signing up for their service I cannot get an accurate figure. But I can tell you that they are charging restaurants as high as 35% of the value of the meal. 

A few simple calculations.  The restaurant sells their meal for $50 – the food cost is 30% – $15, and the delivery company takes 35% – $17,50.  That leaves $17,50 for the restaurateur! Out of which they have to pay the staff, the rent,the electric, the gas, VAT and income tax.  Restaurant margins are so tight to begin with that surely it is impossible to offer a quality product for delivery at a price that the customer will pay.  Do not forget this is a competitive market and the customer is very price sensitive. Deliveroo is currently valued at $2 billion! But as yet has not made a profit.  Now I understand why those London restaurants have complained.

What does the restaurateur get in return?  Well obviously enormous publicity.  Just Eat in France boasts 1 million hits to their website every month and 4 million clients have ordered – pretty impressive. 

It appears that most of the delivery app companies also supply the restaurateur with a tablet to receive their orders and mange their account, promotional kit and access to take-away packaging at a “great price” covered in the company logo.  Simply upload your menu to their site and you are in business.  Start cooking, get delivered and get reviewed. A  few five star reviews and you will start appearing in listings with your rating.

At the risk of sounding like a dinosaur, but really I am playing devil’s advocate, I am going to give you one more thought.  My restaurant has its own website, Facebook page, Google my business page and Tripadvisor page. 

It is listed with the local tourism office and appears in guidebooks Le Routard, Le Petit Futé and The Hungry Gourmet. Each time I make a change to the opening hours or the menu I have to change the website, Facebook, Google and Tripadvisor.  I have to respond to reviews through Tripadvisor, Facebook and Google.  If I now sign up to Uber or Deliveroo that is twice more for menu alterations and review responses. When will I get time to cook?

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Dave Winteridge
Dave Winteridge
I am a restaurateur in the South of France but originally from Great Britain. I have spent around 30 years in the hospitality industry and over the past 12 years I have opened restaurants in Spain and France. I am a keen skier, living in the Pyrenees, and ideally for the future I would like to spend less time at the stove and more time at the keyboard.


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