The Effects of COVID on the Online Food Ordering Business

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The Effects of COVID on the Online Food Ordering Business

While many businesses are suffering during the pandemic, the food delivery industry has more than doubled. Sales are way up, yet that may not translate into increased profits.

Restaurateurs are hopping on the online food ordering bandwagon because it’s just about the only wagon that’s currently rolling. Are you ready to sign up? Moving into the new year we’re still adjusting, and figuring out what works best for us and our business.

Check out some of these details that may help you make a move.

Online Food Ordering

Since March, we’ve all been doing things we never thought we would. As if we didn’t use the internet enough before, more than ever we are doing business remotely.

We are staying home, and overpaying for food delivery. This is totally worth the convenience at times, and we like supporting local restaurants, plus the delivery drivers that are trying to make a living.

Once the quarantine restrictions are lifted, what will happen to the food delivery services? Will they continue to grow? Restaurants that want to get things moving again might want to check this article on online food ordering out.

How to Order Food Online 101

Ordering food online is easy, almost too easy. From your phone or handheld device, go to wherever you download apps from and browse through the various delivery services to choose which app you like best.

Not all services are offered in every neighborhood so that may narrow the selection down for you.

  • Door Dash
  • Bite Squad
  • Uber Eats
  • Grub Hub
  • Postmates
  • EZ Cater

Look over the restaurants that are participating, check out their menus, and select your meal(s.) You can pay through the app with a credit card, or pay with cash or credit when the food is delivered.

Most of the time, your food will come in under an hour.

Profit Margins

Are these companies really making a decent profit? From the outside, you would think they must be making money because of their sales increasing during the pandemic, and that they charge the restaurant and the customers high rates.

For those that watch the stock market, you might think that they don’t.

The big companies gave a break to the restaurants who used their services over the first few months of the pandemic.

Food delivery service companies charge as much as 30% of the bill to the restaurant, and that amount gets added to your total.

Customers get charged a delivery fee which is anywhere between $1.99-$3.99. And also a service fee of $1.25-$2.25. All in all, you could end up paying almost 50% more for your meal than if you were to order it outside of the delivery apps or go out to eat.

Uber Eats charges the highest overall rates, which at times can be over a 90% markup. Are you willing to pay more than double?

Free Delivery

The major food delivery companies offer free delivery on your first order. While this is great for the customer, how is that benefitting the businesses?

After the free delivery, how much are we willing to pay for the convenience of ordering from wherever we are craving food from our phone, and have it delivered to our front door?

After the initial free delivery offer has been used, GrubHub offers a monthly membership program called GrubHub + where customers can get free delivery from selected restaurants.

Making Adjustments

Covid hitting has meant that we all have had to make major adjustments while trying to keep our customer service smiles.

While businesses are happy to be able to have some sort of options during this time, they are still adjusting to the unexpected charges that they are having to pay for the food delivery services.

More take out also means purchasing more disposable one-use items like take-out boxes, cups with lids, and single-serve sauces and silverware. Restaurants have taken a financial hit in 2020, even those that are serving through delivery services.

Restaurants have had to lay off staff members in order to stay afloat. Keeping a skeleton crew just to handle the take out orders is a major challenge. And, if one staff member tests positive with Covid-19, it could mean the entire establishment being shut down for weeks.

Local Delivery Service

Supporting local businesses is important to a lot of us, especially since the pandemic hit.

While services like Uber Eats are convenient and popular, some areas have risen and created their own restaurant delivery such as Cape Fear Delivery in North Carolina. They deliver to about a dozen or so towns and also offer grocery store and pharmacy deliveries!

Skipping the Service

How can you skip the extra fees and give more of your money directly to the local restaurants? Call them directly as they may have their own delivery service. Or, you could do it the old fashioned way and pick up your own takeout meal.

Many people are not even aware of how much the restaurants are charged just to use the ordering platforms. Some areas have designed their own mobile food services to help local restaurants to survive, and avoid paying the major corporation’s fees.

Grocery Delivery

Other than delivery from restaurants we are also ordering from convenience stores and grocery stores and having it delivered. This option is great because unlike meal kit delivery, you can choose prepared meals from the grocery store deli or bakery.

Though it is not instant like restaurant delivery, it can be at your door in a few hours and saves you from going to the grocery store during a pandemic. Many stores have their own delivery service, while others go through companies like Uber Eats.

The Other Competition

So there are restaurant delivery apps, and grocery store delivery services, what about the meal kit delivery services? Companies like Blue Apron and Hello Fresh sell complete meal kits that are packed in ice and delivered through FedEx and UPS.

While it is another way to get food without leaving home, it takes several days and you need to prepare the meals yourself. Sales have grown since Covid-19 started, but it’s nowhere near as popular as ready to eat meals.

Prices for meal kits range from $7.50-$12 depending on which company you choose, and which level of meals you prefer. Many of these services offer a sign-on bonus that covers one month of meals for free, and some even offer free delivery.

Who’s Hungry?

Customers are hungry, and restaurants are hungry for business. Put those two together and you end up with online food ordering.

While it may not be the most ideal business solution, with a bit of adjusting we can all make it work. Stay positive, find solutions to problems, and we can all eat at the end of the day.

If you have enjoyed this article, check out more of our business savvy topics!

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