How Food Delivery Services Like Uber Eats and Doordash are Killing Your Profit, (and What You Can Do Fix It!)
Sales at your restaurant have hit a slump and foot traffic is at an all-time low. Advertising has not changed. Both the customer experience and the quality of food at your restaurant supersedes expectations… so what gives?
What if technology is the reason why you are not seeing the results you want in your restaurant? …But what if technology may also be the way to fix it?
Many industries are utilizing technology in the form of mobile apps to revamp their businesses. The food service industry is no exception.
Technology allows restaurants to:
★Boost branding by marketing to a broader audience
★Increase customer retention with app-based loyalty programs
★Formulate and analyze data to target ways to improve customer experience
The major concerns for most restaurant owners are (1) maintaining/increasing profitability and (2) establishing a loyalty loop within their customer base to promote repeat visits.
Here are some Do’s and Don’ts to help you on your search to find the perfect mobile app for your restaurant:
DO: Collaborate With An App That Makes Your Restaurant a HotSpot
If the app you are using does not get people talking about your restaurant, then you may consider re-evaluating the partnership. We all remember the 2016 Pokémon Go craze. Gamers tore through cities trying to hunt down hidden and hard-to-find Pokemon characters. Restaurants capitalized off of the trend by making their establishments Pokéstops, where gamers could find free tools and gadgets. Restaurants also purchased “lures”- modules that cause Pokémons to spawn rapidly- and placed them in their establishment.
Inevitably, gamers’ phone battery drained from hours of usage. Owners then enticed the players to food and drinks, often off of Pokémon-themed menus, while their phones charged. Business skyrocketed. Some New York stores even report a 75% surge in sales over the weekends!
DON’T: Don’t Partner with An App that Cuts Into Your Restaurant’s Profit
You may be surprised to learn that delivery services that appear to increase your business, may in fact be plummeting your sales.
Delivery services like UberEats, DoorDash, and GrubHub charge restaurant owners 12-35% commission, which is a steep rate, especially to early phase businesses. Shockingly, owners often compare this partnership to becoming addicted to drugs: delivery service appears to be an instrument owners become dependent on to increase performance; yet ultimately it ends up draining them of all their resources.
DON’T: Don’t sacrifice your product for publicity.
It is important to find a balance between using discounts on your products to increase customer traffic, and decreasing the price of a good/service so low that it depreciates its value. Groupon, for example, provides consumers with extremely low markdowns on products and services, with the goal of increasing foot traffic for the business. However, business owners have found that the products are priced too low to receive profit from, and owners are also not equipped to handle the flood of consumers coming in to redeem a hot deal. It is also worth noting that many customers that purchase a Groupon deal, do not end up returning to the store a second time.
DO: Choose an app that improves customer retention and allows you to obtain feedback from your consumers.
Apps that encourage users to return to your restaurant, while generating data to help improve their second experience, are vital for the success of your business. The MILK App does just this. The app works by rewarding users for refraining from using their phones during special moments such as family time, outings, or dates. Users activate the app, set the timer for the duration of time they wish to remain present, then lock their phone. Points begin to accumulate while the phone is locked. Users that activate the app in local restaurants receive special MILK points that can only be redeemed in your restaurant. This drives foot traffic to your restaurant and encourages repeat visits in order for users to redeem their prize for being present.
Hopefully, the next time you are invited to partner your restaurant with a mobile app, you will remember this post!