Observing the evolution of the on-demand delivery industry over the past 7 years, including the pre, during, and post-COVID periods, has been intriguing, particularly in the food delivery sector, which is both fascinating and challenging.
Picup is preparing to launch an enterprise solution in this space, and a debate has arisen between large franchises and family-run restaurants about whether to choose a QSR marketplace for convenience or to invest in an owned solution.
To put it plainly, there has been a noticeable shift in mindset from relying on convenient online marketplaces to developing dedicated apps to increase profitability, customise the customer experience, and possess the data. This change is influenced by several factors.
Commission fees that eat into profits
There’s no doubt that marketplaces like Uber Eats and Mr D have been game-changers in the way we order food and have been a lifeline for restaurants during covid to be able to turn on a dark kitchen solution almost immediately.
But when looking at the bottom line these commission fees, which can be up to 30%, cut into the profit margins significantly and result in a low return on investment. Whether you’re a large franchise or medium sized restaurant, these fees don’t seem sustainable long-term.
Controlling the customer experience
Another factor for restaurant/food service businesses to consider is the customer experience. The overall customer journey for a brand has become increasingly important in order for a business to differentiate themselves from the rising competition. But how can you stand out if you’re stuck in the crowd?
Unfortunately, with an online marketplace platform, restaurants have little control over the quality of customer support, drivers and branding. The truth is that every interaction with your restaurant matters, from the online order process, troubleshooting availability and the knock on the door. Having control and ensuring a top-class customer experience will result in repeat business, positive reviews and ongoing customer loyalty.
Battle of the Offers
Marketplace platforms are highly competitive environments and the fight for market share can rely strongly on offers and promotions to highlight your restaurant amongst direct competition. This can create unneeded pressure to compete in an already saturated sector. By moving away from marketplaces, it opens up additional advertising opportunities to establish a unique market position.
Owning the data to learn and optimise
When it comes to data, marketplace platforms typically don’t share the customer information with the individual restaurants. This makes it difficult for restaurants to build direct relationships with their patrons when it comes to special offers and customer loyalty drivers.
Personalisation is another massive driver, with AI going mainstream overnight the power really is in the data. The future is personalised ordering options and notifications according to individual preferences. In a nutshell, having an owned solution ensures you have complete control over your customer data in order to analyse trends and optimise strategically to build on revenue growth.
The debate continues
While marketplace platforms can provide restaurants with access to a large customer base and have a relatively low initial barrier to entry when it comes to upfront costs, the long-term effects on the business sustainability comes into question.
The larger franchises however need to invest in building infrastructure to own the entire customer journey. As a DaaS (delivery-as-a-service) company Picup has the ability to seamlessly integrate our software and driver network with your app or marketplace to facilitate the logistics aspect of the customer journey.
Previously, national franchises/restaurant groups would need various DaaS companies to manage their fulfilment, but with a network of over 5,000+ drivers nationally we are able to scale with your business.
For small-medium restaurant groups a hybrid solution might be the answer as there’s no doubting the benefits of investing in understanding the unique needs of your customers and how to provide them with the best experience possible.