How Restaurants Can Save an Additional 30% on Commission
As I’m sure you’re aware, your sentiments towards third-party apps are naturally conflicted, as is your attitude toward them.
Despite the fact that you welcome their traffic, you loathe their commission costs, which range from 20 percent to 30 percent of your sales revenue.
Make sure to read until the end since we’ll be discussing how to save that 30% from third-party applications.
Save with Jason from 62restaurant
Hello, and welcome to everyone. It’s Jason from 62restaurant.com, your friend who is devoted to ‘assisting you in developing a profitable restaurant‘ – but how exactly does that work? By continuously monitoring the food industry and making recommendations to assist you in growing your business.
An often-heard cause of unhappiness is that these third-party programs take a 20 to 30 percent commission off of the top line revenues whereas the restaurant sector can only subsist on 5 to 10% profit margins, resulting in the restaurant firm incurring a net loss.
If, on the other hand, we were to discuss the benefits of these third-party applications, we would say the following:
They spend billions of dollars each year to direct traffic to restaurants, which, at this stage of the epidemic, represent a lifeline for a variety of different enterprises. They not only handle the logistics of dealing with drivers, but they also handle the technology and the logistics of operating a takeaway company. They also handle the logistics of operating a takeaway company.
For the time being, if you’re a business owner that receives a lot of foot traffic, with the bulk of that foot traffic being repeat customers, you could be ready to move on from this platform and take the next evolutionary step into meal delivery!
With it, you’ll receive unlimited free delivery and can save up to 5% on all orders over $15. (thepointsguy.com)
Our staff at 62 highly advises you to take advantage of this opportunity since you will save a large amount of money.
At the moment, the most challenging issues that a small restaurant has while striving to become a delivery service are those related to technology and logistics.
The expense of building both mobile apps to connect with drivers and mobile apps to distribute to your customers (so that they can open the app and pick a meal for delivery) is in the tens of thousands of dollars.
It is costly, but money wisely spent on research and development and legal expenses, and it takes months to manufacture.
That is why, at 62 eateries, we went above and beyond to find the ideal solution for your specific situation, which we did.
Distribution and application platforms manage the logistical and technical components of the delivery process.
In our study, platforms were, on average, 22% more expensive than ordering directly from the restaurant for table service or take out. (thepointsguy.com)
App platforms may assist you in creating your digital menu and even your own restaurant app, as well as in delivering meals to your customers; they manage all of the technical components of the process.
Consider the Third Wave Cafe in Port Melbourne in the following scenario. They may create a monthly income of $50,000 with the Third Wave. They receive twenty thousand dollars directly from restaurants and the remaining thirty thousand dollars through third-party applications such as Uber-eats, DoorDash, Deliverfy, and so on.
These businesses subtract their fee, which is often +-25 percent, from the $30,000 they get. This generates a net profit of around $7500.00, which is transferred to these third-party apps in exchange for using their technology, logistics, and driver networks.
Consider the following scenario: Greg hires a full-time driver and has his own delivery team (Greg owns Third Wave). At $3000.00 each month, he earns the following:
Consider the following customer order as an illustration of the technology necessary to fully support this third-party app system.
How Customers Order Digitally
Your online customer makes a purchase using one of the channels listed below:
- The URL of your website
- You have created a program.
And this app/website notifies your eatery that an order has been placed. If your restaurant is sufficiently big, you may decide to place this notice in the kitchen as well. Once this is completed, you must call your drivers to arrange for them to come and collect the order from you.
This implies that your driver will needs an app that holds all of your customers’ information, including their address and phone numbers, as well as the ability to plan out routing inside the app and understand that when your driver comes to pick up, it will need to alert the consumer.
Developing any of these technologies will cost tens of thousands of dollars.
Due to the high commissions (20% to 30%) paid to new restaurant owners, only the most astute, structured, and knowledgeable operators will be able to survive and develop their companies in the long run.
If you tip again at the door, you could be accidentally tipping 40% or more. (readunwritten.com)
If and when these third-party apps consolidate to the point that only one or two remain, they will achieve real market monopolization.
Then they can charge whatever fees they want, increasing the commission to 35% or 40%, and if you’re not prepared, you’re going to have a very, very difficult time taking the pill when the time comes.
That is why we wrote this essay to aid you in better planning for the future, so that you might follow in the footsteps of Greg, who founded his own delivery system.
Building a distribution system
Even still, constructing your own distribution system is by no means a straightforward task.
It is not sufficient to have software that manages all technologies and logistics; you must also have a dedicated driving staff.
You have two options: employ your own driver and promote your in-house culture, or search online for driver fleets in your city, which will provide you with a multitude of driving fleets in your region.
By outsourcing it to them, you may save even more money on the total cost of the transaction.
That concludes the strategies I utilized to aid you in establishing your own distribution system, to which I personally reached out.