Why restaurants need their own online ordering system

A recent article by NewYorker Magazine titled “How Delivery Apps May Put Your Favorite Restaurant Out of Business” shows the risks restaurants are facing now from third party Delivery App companies such as Uber Eats, DoorDash, Grubhub and others.

At the beginning of the food delivery wave starting in 2006 with Grubhub and others, online/digital orders were only a small fraction of restaurant’s revenue and it added incremental sales.

However, over the years online orders are becoming the major source of revenue while in-stores sales are declining. Therefore, online sales are not actually incremental sales over time but are replacement sales as customer preference is shifting towards buying online.

In 2018, 15% of total retail sales were made online in the US and it is growing 14% year over year according to the recent Mary Meeker’s Internet Trend Report. This means by 2030, about 50% of the total retail sales are going to be from online purchases, which is about 3X of what it is today.

The problem for restaurants with third party Delivery Apps is they take a large cut of the sale, about 25%-35%, reducing profit margins for restaurants for online sales. Most of the restaurants are small businesses and don’t have much leverage to negotiate these fees. 

Let’s do some math. If 30% is generally understood food cost, with 30-35% cut to delivery Apps, restaurants are left with 35-40% of the sale to cover store rent, employee salaries, utilities and admin expenses and a razor thin profit at the end if at all.

So, in 5-10 years when more than 50% of the sales are online, how can restaurants survive relying on these third party delivery apps?

Although it is not possible to fight the tectonic shift towards online orders, but it is possible to take control of restaurant's own destiny in the digital age by starting their own online ordering system.

Over the last 4 years, many online ordering softwares have been coming to the market to help restaurants take online orders and stay profitable in the digital age. 

Many restaurants only take online orders for “pick up only”. However, with few delivery drivers, restaurants can offer deliveries too. After all the big part of online orders are due to connivence of staying home and get items delivered.

It is possible for any restaurants to do it, again think how pizzerias have done it profitably over the years with their own drivers. In fact, finding delivery drivers are perhaps easier than ever now. Just ask your favorite DoorDash, Uber Eats, or Grubhub driver for help.

There are free delivery software like QuestTag Delivery, which helps restaurants to provide an easy to use delivery management tool.

Recently, QuestTag has partnered with one of the top and most affordable  online ordering systems, Gloria Food, to offer a free unlimited use “end to end” ordering and delivery system for restaurants.

There are other options too. Here is a list of top online ordering platforms published in another article last year, and there are many more.

In this age of very affordable small business softwares, we hope more and more restaurants will implement their own online ordering and delivery system. It will not only improve the bottom line but also will increase customer satisfaction and retention. 

Today, most of the restaurants who sale online through these third party delivery apps do not know who their online customers are - let alone sending email promotions or discount coupons to boost online sales

In a recent article by NPR, studies found 1 in 4 delivery drivers admit eating customer’s food when they work for these third party delivery companies. That’s really bad!

By having in-house delivery and online ordering, restaurants can ensure delivery quality and the best customer experience possible increasing customer loyalty. 

Restaurants need to understand online orders are not incremental business, but it is part of their actual business in the e-commerce era. By out-sourcing the online part of their business, they will be owning less and less of their own business. 

Why the world needs a free dispatch and delivery tracking solution?

The first use of internet for many people were though free email accounts. Free email service like hotmail, yahoo mail, and later gmail brought people online to communicate with each other, start businesses correspondence and later do business transactions though e-commerce.

The growth of e-commerce is still at the early stage. Only 10-12% of world wide retail is though e-commerce. It is expected to grow to 40% in next 10-15 years. One thing that grows with the adoption of e-commerce is parcel delivery because most of the online purchases require a delivery, often a short distance local delivery.

This gives rise to the opportunity for growth for small delivery companies all over the world. Sometimes many businesses can choose to delivery themselves, same as the neighborhood pizza shop has been doing for decades. To manage the chaos of deliveries with small or large team, business needs simple and easy to use tools to make their life easy.

For many young entrepreneurs, especially in the developing countries, a FREE delivery tracking tool could help them begin delivery company in their city and support online commerce within their community. The possibilities are endless.

QuestTag wants to let thousand flowers bloom in last mile logistics to create the strong and agile foundation for tomorrow’s e-commerce globally.

The future of local delivery is here - and it's not robot YET!

E commerce is still 10-12% of the global retail sales. For many developing countries, it is just starting. How our last mile delivery will change when E-commerce reaches 50% of retail transactions. It requires a highly automated infrastructure in larger cities coordinating between robots and human though sensors and internet connectivity. Check out this article from MIT talking about the last mile infrastructure for the future