Digital delivery has transformed the restaurant industry. With this change, comes many new challenges for operators to navigate as they adjust to the rapidly changing landscape and demand for quality and value in the digital dining experience. Several of the key challenges that restaurants are Facing are outlined below:
1. High Fees
- Commission Rates: Delivery platforms often charge commissions ranging from 15% to 30% on orders. This can significantly cut into profit margins, especially for low-margin items like pizza or coffee.
- Hidden Costs: Restaurants may also incur costs related to marketing fees, promotional discounts, and even equipment rental for integration with delivery apps. There are also hidden costs related to speed and accuracy that the business will incur if they are not able to execute digital at a high level such as error fees and refunds.
2. Quality Control
- Food Integrity: Once food leaves the restaurant, it’s subject to temperature changes and handling that can compromise freshness. For example, items like fries can become soggy, and sauces can leak. Many delivery drivers work the system and manage multiple orders at a time increasing drive times and diminishing the food quality.
- Packaging Challenges: Restaurants may struggle to find packaging that keeps food hot and intact during transit. Improper packaging can lead to messes that frustrate customers, and further increase the cost of doing business.
3. Branding Issues
- Visibility: Many customers may not know the restaurant’s name if they primarily order through an app. Instead, they might remember the app itself, limiting customer loyalty, and creating visibility competition.
- Limited Interaction: Restaurants have lost the ability to engage directly with customers, making it harder to build relationships and connections that encourage repeat business.
4. Order Accuracy
- Communication Breakdowns: Orders may be miscommunicated or misinterpreted between the restaurant and the delivery driver, leading to issues like missing items or wrong orders, upset customers, and extra charges for the restaurant.
- Complex Customization Requests: Handling special requests or dietary restrictions can be particularly challenging, resulting in unhappy customers if these are not communicated effectively.
5. Operational Complexity
- Multiple Platforms: Juggling multiple delivery services can create confusion in the kitchen, leading to slower service and increased likelihood of errors. This can also lead to less than stellar in-house experiences for guests.
- Integration Issues: Many restaurants struggle with integrating their POS systems with various delivery apps, resulting in manual entry errors and operational inefficiencies.
6. Data Ownership
- Customer Insights: Restaurants often do not have access to customer data, limiting their ability to understand customer preferences and tailor marketing strategies accordingly.
- Lack of Direct Communication: Without access to customer contact information, restaurants can’t follow up with customers, offer loyalty programs, or promote specials directly.
7. Increased Competition
- Market Saturation: With numerous restaurants and Ghost Kitchens available on delivery platforms, standing out can be tough. Unique offerings often become diluted in a sea of options.
- Promotional Wars: Restaurants may feel pressure to discount their prices or offer deals, further eroding profits in a bid to attract customers.
8. Dependence on Technology
- System Outages: Technical glitches or outages with the delivery platform can lead to order delays or cancellations, harming customer satisfaction.
- Learning Curve: Staff may require additional training to effectively manage and balance multiple platforms, which can take time and resources.
9. Customer Experience
- Delivery Times: Delays caused by traffic, weather, or logistical issues can negatively impact customer perceptions, leading to poor reviews.
- Driver Behavior: The professionalism and behavior of delivery drivers can vary widely, affecting the overall experience for the customer, who usually blames the restaurant for issues beyond its control.
10. Sustainability Concerns
- Packaging Waste: The rise in delivery orders increases the volume of disposable packaging, which can contribute to environmental concerns and may not align with the values of environmentally-conscious consumers.
- Carbon Footprint: Delivery logistics can result in higher carbon emissions compared to traditional dine-in services, leading to criticism from eco-minded customers and advocacy groups.
Conclusion
While digital third-party delivery can expand a restaurant’s reach and provide additional revenue streams, it can cause many operational and financial challenges. These challenges require careful management. Restaurants will need to consider strategies such as improving packaging, optimizing menu offerings for delivery, and exploring direct-to-consumer delivery models to mitigate these issues. Building strong relationships with customers and focusing on brand identity will also help create a loyal customer base despite the challenges posed by third-party delivery services. How is your business navigating digital delivery?
