When COVID-19 erupted earlier this year, scores of restaurants relied on online delivery marketplaces to deliver meals to their customers. The role these marketplaces have played during the pandemic, delivering restaurant orders right to people’s front doors, has become invaluable to many consumers. But is it invaluable to restaurants?
While restaurants may increasingly rely on online delivery marketplaces, they can hinder a restaurant’s overall profitability – commission fees are sometimes as high as 30 percent of the basket. Pre-COVID-19, paying expensive delivery fees was not an issue as food delivery was not a large part of a restaurant’s revenue stream.
Fast-forward to today, in the middle of a global pandemic, delivery orders now make up 60, 70 or 80 percent of business revenue for restaurants. Suddenly, paying a 30 percent commission to an online delivery marketplace cuts into profitability in a significant way. It is a hard reality to swallow considering COVID-19 already obliterated profits for many restaurants, restaurants that continue to face in-person dining bans or strict capacity limits. As contradictory as it sounds, delivery services pose a real threat to the restaurant industry. And not just in terms of profitability.