The current coronavirus pandemic has affected restaurant industry pretty hard. There is no easy way to say this - It’s really bad!
Most of the restaurants are close now for dine-in guests in all cities and towns across America. They can serve take-out and deliveries which generates only a fraction of their usual income everyday.
Some of the restaurant owners are sadly finding out that it does not make sense to operate with traditional take outs and deliveries - and they are closing their restaurants.
One may ask - why? Online ordering and deliveries can still bring sizable revenue. Shouldn’t that be enough to continue?
At surface, yes - but when you look in the details - the numbers don’t add up.
Most of these takeout and delivery orders for restaurants come from third party platforms like GrubHub, DoorDash and UberEats along with others.
These platforms usually charges commission between 25%- 30% of the sales. Some of them now waived fees for limited time but that’s not going to continue very long.
They are still stuck with their rent and other fixed expenses. Also, overall sales is probably down 40% or more, but these fixed expenses are not.
On top of that giving 25-30% commission on limited revenue leave them with no profits at all.
We always believed that the current restaurant delivery model is broken. The margin issue of online platform ordering was a growing problem for restaurant, but it was hidden under larger revenue from dine-in guests.
Now all of a sudden when 100% of the business is relying on these online ordering and delivery platforms - this broken business model is very obvious to everyone.
What is the solution then? How can COVID-19 transform the restaurant delivery model for the better?
GO ONLINE - GO LOCAL !
Take control of your online sales and find local delivery companies for managing deliveries - It’s possible and more sustainable model.
Have a commission free online ordering system, which costs less than $2-$3/day and work with a local restaurant delivery company for deliveries.
QuestTag is proving tools for local entrepreneurs to start their own restaurant delivery businesses by providing an easy integration with all types of restaurant ordering systems including GloriaFood, ChowNow, Slice, GrubHub and others.
Restaurants don’t have to provide any commission for their online orders, they can offer a bit generous delivery fees along with 100% of delivery tips. That can work.
This is especially lucrative option for mid to high $$ tier restaurants. Restaurants can save $1000s on commission fees every month with this model.
We hope the coronavirus pandemic be a defining moment for restaurants to find an alternatives to current high-fees delivery model.