Restaurant chains that choose to manage their own deliveries can increase their profitability by as much as 30% per food order – an important move for hospitality businesses that will be responding to overwhelming consumer demand for restaurant delivery to continue, even as on-premises dining opens up this month.
VROMO, a fast-growing software provider dedicated to restaurant food delivery, is seeing a sharp divide in profitability levels between restaurants that manage their own deliveries and those that rely on marketplace apps such as Uber Eats.
CEO Alan Hickey recognizes and applauds the success of the likes of Just Eat for transforming the food-ordering and delivery sector – never more so than during the last 12 months of the pandemic, where food establishments have had to pivot to delivery only in order to keep trading. But he says that restaurants are paying a high price, and this may not be sustainable in the medium or long term.
“There’s no doubt that marketplace apps have given consumers greater choice in the way they can order takeaway food – and consumers have responded enthusiastically because they like the convenience of ordering their favourite food on their smartphones and getting it delivered right to their doors,” said Mr Hickey. “While this suits some business models, such as established fast-food chains, smaller restaurant chains are paying a heavy price because the cost of being listed on marketplace apps is eating into their ability to be profitable. Typically, this can be 30% of the cost of an order.”
Mr Hickey said that VROMO is a ‘best of both worlds’ solution. First and foremost, the software allows restaurants to manage their own deliveries, but the company is also working with a handful of marketplace apps to provide overflow delivery capacity when the restaurant delivery team is stretched during busy periods. He says that VROMO is beneficial in affording restaurants the opportunity to manage all of their deliveries while saving them almost half of the marketplace fee.
“There are two demonstrable benefits to VROMO for restaurants. The first, as mentioned, is to retain more profitability on each food order. Restaurants should welcome the marketplace app orders at 15% commission, but paying an additional 15% for their delivery service is a very expensive alternative to using your own restaurant delivery team.
“The second and more lucrative benefit is that restaurants retain ownership over their customer bases. In the case of marketplace apps, they own the customers because they are the ones that have made huge investments to acquire and retain users of their apps. Because the likes of Uber Eats own the customer base, they can then influence the user experience to maximize their profitability through incentives and premium listings – which, of course, the food establishment ultimately pays a high price for,” said Mr Hickey.
“VROMO puts the control in the hands of restaurants themselves, as our software-as-a-service (SaaS) solution can be integrated into a restaurant’s point-of-sale system for convenience.
“This enables the restaurant to track the live progress of its entire delivery fleet and make real-time decisions, as the system continuously sends location updates to the VROMO admin portal. And drivers can download the VROMO app to receive job offers, instructions and updates on the progress of jobs.
“VROMO also enables restaurants to use the data to identify patterns such as the peak delivery times and frequencies of deliveries in geographic areas – which allows restaurants to plan the shift patterns of their drivers.”
Mr Hickey said that VROMO isn’t just a tool to manage deliveries – it’s also a powerful marketing portal.
“Restaurants can use the data to build strong brand loyalty with their customers through better, more-responsive communication,” he said. “They can offer promotions that increase the average order value, run retention promotions or incentivize more orders from specific areas.”
Mr Hickey added: “The technology is available for restaurants to stop abdicating responsibility to marketplace apps – where they have little control and see their profit margins eroded.
“Restaurants can now take back control and build their own delivery offerings as a solid part of their growth as they move forward in a post-Covid world.”