Facing ever increasing costs of operating i
n labor, food, advertising, marketing, utilities and so much more, the average food establishment, whether corporate or private, company or family, brand name or no name are facing some of the hardest times in the history of hospitality. Some look for coupons and discounting to boost sales, they quickly learn “not a good move.” Others hire a social media “gurus” believing they have the right stuff, still some experiment with door to door salespersons while having to pay a high price for poor representation at a customer’s door.
Now the old “take away” style of food service is getting what appears to be getting a makeover, with companies like, Seamless, Instacart, GrubHub, Skip The Dishes, Amazon Prime, Let’s Eat, and Uber Eats all offering the local eatery with assistance in the delivery business, but what exactly are they delivering? When I was in grade school, 2 take away 2 left 0, and that just may be what these take away companies are doing in the local restaurant, let’s look at the numbers.
UberEats charges up to 30% of the total guest check, yet restricts the establishment from surcharging the customer, this then equates to a 30% discount on the “entire” check. For every $10.00 in food, $3.00 goes to the delivery company. This 30% does not include the delivery charge that the customer may have to pay, $5.00-$8.00 depending on the area. Think about your 7.99 QSR meals now costing 15.99 how happy is that customer? With Uber’s surge pricing this could get very, very costly. It appears that the only one making money is the delivery company, keep in mind that the actual driver is not pocketing these totals, they must lose 25% of the delivery charge, and may or may not be tipped. Companies like UberEats win, all else involved are at a loss.
We must ask, what hospitality company has actually made 30% profit, the answer is simple, None. Look at the reported facts: QSR’s average 22%, Casual Dine average 10% on the high end of the scale, and fine dine less than 7%. Simply put, the more UberEats deliver, the more the “eat” into your ability to stay in business. In addition, many companies offer a discount coupon for clients that the restaurant must honor when redeemed, adding to the loss on that delivery, Uber Eats coupons are anywhere from $5.00 to $30.00.
From traffic delays, to poor food handling standards, to hungry drivers eating some of the food, to orders cancelled without notification, to just poor service, it is the restaurant that is held liable for whatever the app and those using it require. Search any consumer complaint site and the list of poor service and the quality of food because of it is endless, but it always seems to be the restaurant that truly must pay the price for the poor quality work effort. The restaurant refunds the meal, but lose’s the delivery and surcharges, the restaurant must deal with the complaint while the app’s customer service is nearly impossible to reach, and most crucial the restaurant lose’s reputation, as the restaurant must “agree” to the delivery terms, while the app operators deny they are even in the delivery business, leaving the restaurant wholly liable for problems and complaints.
Some interesting statics have come to light in a recent survey reveal by Steritech in their online magazine Diners Dish, of a peoples dining survey 60% have ordered delivery cuisine, of that 30% experienced problems of that 80% blame the restaurant. “Out of the door doesn’t mean out of mind. Restaurants carry the burden to ensure quality – even if they can’t control delivery.” 38% complained that food took too long, was cold, keep in mind the delivery company is charging both the restaurant and the customer for this poor service, yet the restaurant is held accountable. 25% of customers in the survey had decided not to re-order again from the establishment. Therefore one must ask the operator how long can they sustain a loss of of one quarter of their business.
The establishment has no control as to who delivers the food, their background, criminal record, Uber calls their drivers “agents or partners” yet the driver agreement states they are independent and they must agree to this statement “I am not an employee, subcontractor or agent of Uber.” So then if not an employee of the restaurant, nor one of Uber, who holds these people to their responsibilities.
These company sales their service with the same false hope that the coupon companies do, “Use our app and we will drive regular customers to you”, but actually, they want to drive to the customer, so for every order placed by that “regular” customer you continue to take the 30% loss. How many losing customers do really want?
High fees, high consumer complaints, high damage to reputation, low profit (if any) one restaurant owner experience with one of these delivery companies is quoted in saying, “This is a truly evil company and it’s destroying our beautiful restaurant culture.” Clearly his experience was horrendous. UberEats requires and states in agreements “restaurateurs are “responsible for the delivery of meals” and they “maintain possession, control, and care of the meals at all times”. Yet they are in charge of the drivers, the restaurant loses control the moment the customers use’s the app, with the expectation of food preparation and storage, UberEats and their drivers take control, but assume no responsibility, why would they when they make about 1/3 minimum wage, yet incurs the hard cost of fuel, insurance and repairs for their car. UberEats can refund the order, deducting the amount from the restaurant and they may have no idea as to what has occurred and certainly not, why!
The restaurant must maintain the agreement, but the delivery company can change it without notice or feedback from the restaurant, be assured that those changes will always be in the delivery companies favor. With restaurant rating app’s now a standard, losing star rating because of poor delivery service can also have a large impact on the bottom line of the establishment, and what of the Uber app itself rating the restaurant, if the problem lies wholly with them does the restaurant deserve a poor rating? The app’s give a delivery time for the food to arrive, before they can even know what the restaurant is experiencing in service, is it dead, or are they in the weeds, the app can even cancel an order with either the customer or the restaurant knowing, so one awaits foods that may never come while the other prepares food that may never be sent out, or, drivers who simply don’t want to make pennies and won’t pick up the order for delivery leaving it to wait and wait and wait.
So what is the solution, you want to offer delivery, but hiring, insuring, and operating your drivers and cars is just too much. Consider partnering with a local delivery or taxi company and have people order directly through your website, often the cab fare is less than the huge fee charged by UberEats and others. Don’t be shy at contracting a “secret shopper” service to get an accurate evaluation of the entire experience, you cannot fix what you don’t know. Look at packaging that cannot be easily opened, that retains heat/cold for long periods. Consider follow up phone calls within a few short minutes after the delivery has been confirmed, you likely do table checks in your dining room, this is the same as a table check. The customer will appreciate the genuine concern and you may be able to prevent a problem before it becomes much bigger.
A large amount of the diners today check social media for their daily dining, therefore your protecting of your online presence should be a high priority, if 75% of new people walking in your door, already have formed a opinion of your establishment, those little stars may not mean much to you but they certainly carry weight with the consumer, you have the opportunity to solidify that opinion, make your’s a five star establishment. Your standards are what you must meet, not daily, but with every meal served, most customers may care what others think, yet they are more concerned with their own experience, food quality, efficient service and cleanliness, the QSC standard is your jury, the customer the judge, the experience your trial, be sure you are found innocent of the charge “providing an inferior experience.”