How Delivery Apps Changed the Restaurant Business

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The way of eating is going through a dramatic change. About 20 years before, restaurant-quality food delivery was restricted to pizza and Chinese. But now, the food delivery industry has worth more than $150 billion, the figure which has tripled since 2017.

Food delivery app development for the restaurant are user friendly, have a cohesive driver network, can keep up with changing consumer expectations and preferences. All these features have made these apps very popular among customers. The global pandemic has only aided this industry.

Delivery apps became the crutch for the survival of restaurants. Now, it has become a permanent fixture in the world of dining. The relationship is becoming more and more codependent as time passes.

While the world of food delivery continues to grow, its economic structure is still developing. There are various things to consider – operating efficiency, brand, real estate, option variety, and changing user preferences. Stakeholders also have to consider the compensation of drivers. The business is driven by scale and has a low-profit margin, but still, this industry has had an influx of investment.

Benefits Of Food Delivery Apps

Some of the advantages that the food delivery apps provide the users are given below

Easy To Use

The mobile apps available for food ordering are user friendly and convenient. The users need little effort and time, a reason that works in their favour. Thus, customers choose to order their favourite food online and enjoy them comfortably in their pyjamas! The apps can be navigated easily and have effective search options which boost up their convenience.

Flexible Payments

There are numerous payment methods available in these apps. So customers have a lot of options to choose from for their mode of payment. The popular payment gateways provide cashless transactions and flexibility to the users. So, they get ample incentives to use these apps.

Real-time Tracking

The software in the delivery apps has a real-time GPS tracking system. This enables the customers to track their food orders and helps the delivery executives to pinpoint the correct address of the users.

Loyalty Points

Most White label food delivery app development give their users’ loyalty points to induce them to use the apps more. The customers can use these pointsfor placing future orders.

Effective Customer Support

The apps have 24/7 customer service. So, the users can make their queries known at their preferred time. Plus, they can also assist in any complaints of customers. With just a few clicks, the users can reach the executives who can help them with any needs.

The landscape is experiencing a shift with the onset of the Covid-19 pandemic, which has given rise to new challenges, opportunities, and decision points. Several complex players have come to the field – delivery platforms, restaurants, drivers, consumers, and other tech enablers.

Before the pandemic, the US restaurant industry had a consistent 3%-4% growth every year. Delivery sales saw an increase twice that amount. While population growth contributed to this, the maximum increase came from the youth who preferred prepared meals to cook.

Restaurants And Covid-19 Pandemic

Earlier, restaurants calculated their profits against three main costs – food (ranging between 28%-32% of the total costs), labour (comprising 28%-32% of the total cost) and real-estate costs (22%-29%). Now, restaurants must run between 78%-93% to reach a profit margin between 7%-22%.

Earlier, restaurants viewed delivery orders as one more table, which a driver is servicing instead of a waiter. Drivers got minimum wage and solely depended on the tips from the customers. They had to deliver numerous orders within a set period. Delivery was seen as a tool to increase the revenue of the restaurants.

The beginning of the covid-19 pandemic posed a threat to the existence of restaurants. The food delivery software was a saving grace. The restaurants using these apps could grow their revenue in 2020. Although, their overall profits decreased, often leading to negative margins. The dining restrictions imposed due to Covid-19 also facilitated this trend.

The traditional profit margin of restaurants cannot cover the commission of delivery platforms, which ranges from 15%-30%. This is very hard to sustain as delivery orders cover most of the restaurant business. The problem does not become that significant when in house diners order items with high margins like wine and other alcoholic drinks. It helps the restaurants cover the labour and occupancy costs. Though house dining has decreased exponentially.

Now, delivery contributes more to the share of fixed operating costs of restaurants. If the delivery business increases, the kitchen space will also need to expand, thereby increasing the fixed costs too. It may seem like increasing sales through delivery is the smart option. But focusing too much on online white label on-demand ordering & delivery app development can be a blow to the in house dining of restaurants. Eventually, this will lead to a reduction in the base that covers the fixed costs.

The ever-changing food delivery ecosystem requires and rewards creativity. One prominent example is combining television and dining where the users can get "taste your favourite cooking shows at home” alongside their favourite chefs.

Though many restaurants have suffered and even shut down due to the pandemic, the increase in tech-enabled delivery has provided a silver lining for a lot of restaurants. Moreover, the option of enjoying restaurant-quality food at home has been a revelation for many users.

Moving forward, the On-demand food delivery App development industry is expected to expand and become the next “normal”. So, restaurants need to take up strategies and form partnerships with delivery platforms. Plus, delivery platforms have to be better at leveraging user data so that they can enhance the customer experience. They also need to take up models that will reduce costs innovatively.

With all the ways that eating habits are evolving, it will significantly impact how new businesses will be established. The restaurants have to have a concrete understanding of the market to access all the opportunities that these shifts will open up.