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The (Singular) Delivery war

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In the last weeks We have received many inquiries about the business of delivery in the restaurants. Many hoteliers who had not shown prior interest in sending their gastronomy home (some of them directly belligerent against) have been driven to launch this line of business as only option these weeks and as an option for the future to stay. The doubts have been many and the value judgments and prejudices have been more. I write these lines to shed some light on these issues and I will try to synthesize it in the three blocks which I think are generating more interest:

1. The relationship with aggregator platforms (see Glovo, Deliveroo, UberEats Y JustEat in general)

  • Aggregators are BUSINESS, not an NGO and their business is to offer a leading sales channel NOT THE DEAL….Delivery is a necessary additional service in order to supply the market since many restaurants nor could they (THEY CANNOT) maintain its own structure of riders.
  • The immense most of the budget from the aggregators it goes in paying the riders. Also in engineering parto improve their algorithms and make the entire distribution value chain more efficient. It's a myth that delivery rates are high (then we go deeper).
  • Aggregators are at a loss overall, because they do not stop investing in opening new markets, take hold in immature markets (everybody) and improve their algorithms. His theory and that of his investors -very solid and based on very competent studies- is that the market will continue to grow at such a speed that the break even point will be exceeded soon. Other than that, in general, in the cities where they make money they don't earn much more than 1 and € 2 per order (depending on the average ticket of each order and many other factors)
    • Partner restaurants of aggregators who are sales leaders and accumulate the 80% orders they receive the aggregators habitually have commissions well below the 30%. The commission responds to supply and demand: If you are an outstanding leader in your market, aggregators will offer you better conditions because they need you. (BUT WHAT IT MEANS TO BE MARKET LEADER THEY DECIDE…NOT YOU). The higher the commission they offer you, less interest they have for you and what they offer you, Really, is that you can enter to test if you provide any value that is worth betting on in the future.
    • Aggregators are a COMMERCIAL PORTAL, what they offer are the potential CUSTOMERS so that they choose their restaurant option. That is their strength and the advantage that they offer to many restaurants: That most customers who want delivery will go to an aggregator to find what restaurant to choose and they will not spend time looking for it outside.

2. The cast and own sales portal

  • Of course: If you open the delivery channel, why not generate your own sales channel? It is logical and what it should ALWAYS be done. It is your business and you must have a direct line with the client. It is necessary to communicate that take away and delivery is done on your website, in the premises and RRSS.
  • The clients they have to be able make your orders through your website and RRSS. There are many options of apps and softwares that generate your own market on the web and RRSS easily and economically..
  • The best choice cast is that your own staff can make the deals in the immediate environment walking or cycling. It is easier (and cheap) put some extra person on the premises to cover the initial demand of the environment than to equip themselves with exclusive distributors to make delivery.
  • There are many external delivery services that you can easily add to your own web and RRSS sales channel.…They are NOT cheaper than aggregator percentages and only improve cost if customer orders are high and close. It is a self-deception to think that it is much cheaper than paying the aggregator….which also brings you the sale.
  • Having your own dealers is expensive: all the incorporation and hiring management must be done, keep the fixed costs of the contract minimum and add a bonus for usual order in the sector. It only makes sense if the order volume is high and known. further, so that our own distributors are efficient it is essential to have client and route management software, to manage and the data on the one hand and improve the efficiency of the deals (wear 2 one-time orders, for example). You need to develop some basic minimum skills.
  • The own sales platform (web or RRSS) you need COMMUNICATION and PROMOTION that consumes time and economic resources. This investment must always be assumed, but much more if aggregators are renounced and own is the only sales channel.
  • As in all businesses if you sell a lot your delivery costs will drop…and aggregator commissions, as well.

3. The new ways of delivery: The Virtual Brands explosion.

  • Another of the great transformations of the sector that has accelerated a lot is the creation and promotion of virtual brands, what, by definition, operan en dark kitchen in a conceptual sense (are brands only for delivery, How are the DarkKitchen). Developing brands that only exist for delivery has become almost a new classic that complements sales of core brands.
  • The increased demand for delivery makes it necessary for new brands to appear that cover niche markets that are not well covered., both because of the specialization of the food and because in some specific locations a type of food is not present.
  • Combining your own brand with virtual brands in the same space helps to make the delivery and spaces profitable.
  • They begin to be accessible franchised brands to operate as virtual and even brand packages to operate in the same kitchen and fill empty niches in local markets.

About the Author

Manel Morillo

I was practically born behind the bar of a bar and I was behind her for many years (and even traffic as I can). lifelong learning from and to the office. Now I am dedicated to help hoteliers improve their profits by improving the management of its #restaurantes and innovating concepts. I specialize in restaurant chains that need to professionalize and look to the future

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