The rise of food delivery apps has significantly changed the way we order food. While these services offer convenience to customers, they also have a dark side.

Many restaurateurs are asking, “Do delivery apps hurt restaurants?” and “Why do delivery apps hurt local restaurants?”

In this blog post, we will discuss how third party ordering services like UberEats, GrubHub, and DoorDash can negatively impact restaurants and why opting for an alternative, like UpMenu, can be a better choice for your business.

How Third Party Ordering Services Hurt Restaurants

1. High Commission Fees

One of the primary disadvantages of third-party ordering services is the high commission fees they charge.

For example uber eats commission rate range from 15% to 30% of the order value, significantly cutting into a restaurant’s profits.

With already thin profit margins in the foodservice industry, these fees can make it difficult for restaurant owners to keep their businesses afloat.

2. Loss of Brand Identity

When customers order through third-party platforms, they interact with the platform’s brand, not the restaurant’s.

This can lead to a loss of brand identity, as customers associate their food delivery experience with the third-party service rather than the restaurant itself.

This is why restaurants should consider third-party delivery services as supplementary rather than their primary online sales channel.

By utilizing services like UpMenu to create their own online ordering system and restaurant website, they can regain control over their brand identity.

3. Less Control Over Customer Experience

Third-party services control the entire ordering and delivery process, leaving restaurants with little say in how their food is presented or delivered.

This can lead to subpar customer experiences, as the third-party service may not prioritize the quality of the food or the presentation.

4. Data Ownership Issues

When customers place orders through third-party platforms, restaurants often don’t have access to valuable customer data.

This data is crucial for understanding customer preferences, improving menu offerings, and creating targeted marketing campaigns.

By using a platform like UpMenu, restaurants can collect and analyze customer data to make more informed business decisions and better serve their guests.

5. Reduced Customer Loyalty

With a plethora of restaurants available on third-party platforms, customers may be less likely to develop loyalty to any single establishment.

The convenience of these platforms can lead to customers ordering from different restaurants every time, making it difficult for individual businesses to build a loyal customer base.

Offering online ordering through a restaurant’s own website can encourage customers to return and order directly from their favorite establishments.

What’s more you can run your own restaurant loyalty program.

6. Reliance on External Platforms

By relying on third-party services, restaurants risk becoming too dependent on these platforms for their success. 

If a platform decides to change its commission structure, prioritize other restaurants, or shut down entirely, restaurants could find themselves in a precarious position.

10 tips how to reduce negative impact of third party delivery services

1. Establish a Strong Online Presence

Restaurants can incentivize customers to order directly from their websites by offering exclusive deals and promotions not available through third-party platforms.

This may include special discounts for first online order, free delivery, or loyalty programs that reward returning customers.

By providing these incentives, restaurants can encourage customers to bypass third-party services and order directly from their preferred establishments.

3. Focus on Customer Experience

To build a loyal customer base, it’s crucial for restaurateurs to focus on providing exceptional customer experiences.

This includes ensuring that food quality, packaging, and delivery meet or exceed customer expectations.

By prioritizing the customer experience and continually seeking feedback, restaurants can improve their offerings and encourage customers to return for future orders.

4. Optimize Delivery Operations

Restaurants can reduce their dependence on third-party ordering services by optimizing their own delivery operations.

This may involve hiring dedicated delivery staff, using technology to streamline the delivery process, or partnering with local courier services.

By providing reliable and efficient delivery, restaurants can encourage customers to order directly from their website, reducing the need for third-party platforms.

5. Leverage Local Marketing

Focusing on local marketing efforts can help restaurants reach their target audience and create a sense of community.

Participating in local events, partnering with nearby businesses, and utilizing local media outlets can all help to increase awareness of a restaurant’s brand and offerings.

By building strong connections within the community, restaurateurs can encourage customers to support their business by ordering directly from their website or visiting the establishment in person.

6. Communicate the Benefits of Direct Ordering

Educating customers on the benefits of ordering directly from a restaurant is essential for reducing the negative impact of third-party services.

Restaurateurs should communicate the advantages of direct ordering, such as better pricing, faster delivery times, and the ability to support local businesses.

By highlighting these benefits, restaurants can persuade customers to choose direct ordering over third-party platforms.

While it’s essential to focus on strategies for reducing reliance on third-party ordering services, it’s also important for restaurateurs to keep an eye on their performance on these platforms. Monitoring customer reviews and ratings can provide valuable insights into areas that may need improvement. By addressing these concerns, restaurants can ensure they maintain a positive reputation on third-party platforms, even as they work to reduce their dependence on them.

Key Takeaways