Food Delivery Services - The Good The Bad & The Ugly
By Dwayne Reno
The GTA has a very healthy foodservices industry. With over 8000 restaurants in Toronto generating 5.8 billion in sales, you can see why so many delivery companies have taking the city’s streets by storm. On any given day you can spot these guys delivering food on bicycles and in cars to hungry customer’s front doors. Now it seems like each month a new delivery service enters the Toronto market with promises to increase customer awareness and sales. But are they doing this, or are the delivery companies just in it for the profit? Let’s take a look at the Good, the Bad and the Ugly.
If nothing good is said about delivery services in Toronto, at least they can get your food to new customers. Many independent foodservice operators can gain a great deal of customer awareness through any of these delivery companies. This is great, if you are in a low traffic restaurant neighbourhood and must rely on fliers to reach new customers. Or that part of restaurant row that sees little if any foot traffic.
Recently It is seems that many of the larger delivery operators can’t keep out of trouble with Favour, a recent American import already landing in hot water. Some Toronto foodservice operators are accusing Favour of allegedly adding them to their food delivery app without permission. Read the full story here.
Tasteaway, who has been operating in Toronto since 2012 is now being accused by Toronto foodservice operators of late payments, or in some cases, no payment at all. Read the full story here. Lastly, Yelp has been in the news for allegedly stealing tips from delivery drivers in California. Read the full story here.
And The Ugly
With Many of these companies housing a lot of online traffic. This traffic is then used to entice restaurant operators into signing up for their delivery services, services that usually carry hefty sales commissions which are passed on to foodservice operators. These sales commissions not only increase the cost of menu items but don’t encourage new customer foot traffic to your location, which is what the partnership should do.
But why is this you say? It’s simple, why would a delivery company want their customers ordering directly from the restaurant that makes the prepared good it delivers for a commission? This is why many delivery services offer huge discounts to encourage deal seekers to order directly from them and not the restaurant. This behavior hurts the foodservice operator, who is giving a discount and in many cases getting nothing in return, no return customer or increased cheque averages.
Foodservice operators in today’s markets need to focus on marketing that brings customers through the front door. Also focus on parts of your business that will encourage word of mouth. You want customers telling friends about that great lunch they ordered from your restaurant, not that great lunch they order from a delivery service.
Until next time your customer want to know why they should spend money at your restaurant. So give them the goods! Need inspiration? Checkout some of our services.
Dwayne Reno CEO & Founder
Social Chat Blog
Once a month, Building Block Associates serves up some food for thought with our foodservice Social Chat Blog.