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Top 8 Challenges Faced By Food Delivery Businesses

by Vishnu R December 15, 2024

written by Vishnu R

When we consider any profitable business, the food and beverage sector has been preferred for a long time, and for good reason too. New age facilities such as online food delivery and gig economy apps like Uber Eats have provided the industry with massive and sustained growth.

The online food delivery restaurant business might seem enticing but in order to succeed in it you much be aware of certain challenges too.

In this blog, we will point out eight critical challenges such businesses face and how to resolve them:

1. Handling all orders Manually

You would find that once you start your online food delivery business would soon grow in size, wherein you would have to deal with multiple orders. It is sometimes seen that these orders are being manually handled. But it could cause gross inefficiencies and delivery delays, which might tarnish your image and severely hamper your online food business. To prevent this from happening, it is best that right from the beginning; you automate the process. It would help to eliminate human errors and make it efficient.

2. Using Multiple Ordering Platforms

If you are accepting orders from various ordering platforms, you might have to manage many devices. Managing and catering to them is pretty challenging. Servicing the different ordering platforms can be extremely difficult for you. The best way to resolve this problem is to have an integrated Point of Sale (POS) system. Through this, the system would pull in orders from various platforms and send them to your customized POS. A restaurant owner could manage door to door delivery process in many ways.

3. Rapidly Growing Operating & Variable Costs

The profit margins of most restaurant businesses are often relatively low. It is, therefore, vital that you keep track of all the operational and variable costs. Unless they are adequately monitored and tracked closely, it could easily lead to losses. Unless you are good at spreadsheets, it may not be possible to track the same. To ensure that they are correctly tracked, you can use POS software, accounting, and scheduling platforms.

4. Managing Menus across different online ordering platforms

Setting up and managing multiple menus can indeed be a significant challenge. For the success of your food business, the menu you have plays a key role. Thus, when dealing with menus across various ordering platforms, you must make sure that they are managed well. For example, if you have a quick menu change, it must be conveyed quickly to the ordering platforms. Here again, you need to automate the process that handles everything from multiple platforms and locations.

5. Not having Real-Time Sales Data for food being sold online

Having regular sales data online regarding the food being sold is essential data to keep track of. It is critical data that would empower you to decide rightly on business matters. To have this vital data in real-time, you need seamless integration systems. It can again be done by utilizing suitable POS systems.

6. Need for syncing the stock being displayed on the ordering platforms

Here is another requirement that needs to be integrated into the POS system to reflect the real-time position. Your customers would order out of the menu being displayed on the ordering platforms. It is vital that when the customers are placing the orders, the stock position is adjusted on the ordering platforms. Otherwise, there could be serious confusion, which must be prevented at all costs. The stock must also be replenished as well on the ordering menu.

7. Handling frequently changing Consumer behavior

In the current times where so many options are available to customers, consumer behavior changes frequently. So, you, as a dynamic restaurateur, need to assess the rapidly evolving consumer behavior concerning food. If you can successfully track the changes, you can act and decide rightly and design effective strategies to succeed. Along with your POS System, you also need reporting systems that would provide you with the essential data.

8. Understanding and implementing practical training needs

It is a fast-changing world now. The restaurant businesses’ needs are changing rapidly, and your staff must be in tune with the changes to meet the challenges posed by these rapid changes. To meet the changes, you need the right training strategies that would take care of this all-important need.

To conclude, we can say that the online food restaurant business can indeed be lucrative for you if you handle it rightly. We hope that the considerations and solutions mentioned here would certainly help you build a successful online food restaurant business quickly.

Here is the list of best online food delivery apps, so you don’t have to take much time to select among the apps.

Restaurants currently using an online system report a considerable increase in order frequency over time. By implementing an online ordering system, restaurants can successfully generate incremental revenue while reducing labor, increasing order accuracy and freeing up employees to handle in-person customers rather than being tied up on the phone handling an order.

How to Create an Online Food Delivery App For Your Restaurant?

People have a large number of options to select among the food ordering and delivery apps. If you are in search of building an app similar to the apps in the above list, here is an open-source script to help you to create your app.

iScripts Team is focused on the current restaurant business demands and we are happier to announce the new Driver feature app for the Online Restaurant Delivery Software, iScripts NetMenus.

iScripts NetMenus offers an on-demand food delivery feature from local restaurants with the help of a driver. Customers choose menu items from a restaurant, then drivers pick up the food and deliver the food to customers.

By saving time and money, you can place all your focus on attaining restaurants and increasing traffic. Driver app features are also added in the single app. It allows customers to order easily from the nearby restaurants and deliver to the doorsteps. Take a look at the demo, and try to create your own website with this platform in minutes.

The iScripts NetMenus Enterprise is an Online Multi-Restaurant Ordering System that is defined as a simple and convenient way for customers to purchase food online, without having to go to the restaurant. This platform provides a web platform and an iOS Android mobile Application.

NetMenus Enterprise is an open-source PHP online food ordering software without code encryption. This means you can customize your marketplace at any time in order to fit your specific site needs. Know the top nine delivery driver applications that have changed how we perceive food delivery services globally.

As discussed in the article, creating an on-demand business is in trend and one of the best startup options. If you are looking into investing in a similar online food order and delivery platform, make sure to include such features along with the basic requirements to become the next big name in the industry!

Check out iScripts NetMenus

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How Online Multi-Restaurant Ordering Platforms Are Transforming the Restaurant Industry

by Mekha Chandran A M July 30, 2024

written by Mekha Chandran A M

The restaurant industry is experiencing a significant transformation due to the rise of on-demand delivery services. Multi-restaurant ordering platforms have revolutionized how customers interact with restaurants, offering unprecedented convenience and choice. These platforms impact how restaurants operate, market themselves, and reach their customers, creating new opportunities and challenges for businesses in the food service sector.

As technology continues to shape consumer behavior, multi-restaurant ordering platforms are becoming increasingly essential for restaurants to remain competitive. These platforms allow customers to browse menus, place orders, and arrange deliveries from various restaurants through a single interface. For restaurants, joining these platforms can increase visibility, expand customer bases, and streamline operations. However, it presents new considerations regarding commission fees, customer data management, and brand identity in a crowded digital marketplace.

The Rise of Online Multi-Restaurant Ordering Platforms

The food delivery market has experienced significant growth in recent years, driven by the increasing demand for convenient dining options. Multi-restaurant ordering platforms have revolutionized customer interaction with restaurants, offering a wide range of choices through a single interface.

Key players in the market

Several significant players compete for dominance in the United States market in online food delivery. As of March 2024, DoorDash and its subsidiary Caviar led the market with 67% of observed U.S. consumers’ meal delivery sales. Uber Eats secured the second position with 23% of observed sales, while its acquisition of Postmates brought its total market share to 25%. Grubhub and its subsidiaries, including Seamless, Eat24, and Tapingo, accounted for 8% of observed U.S. meal delivery consumer spending. These platforms make it easy for people to get food from their favorite restaurants without leaving home, and they continue to grow as more customers embrace the convenience of online ordering.

Growth trends and projections

The online food delivery industry has grown remarkably, particularly during the COVID-19 pandemic. For example, in April 2020, people ordered 162% more meals online compared to the same month in the previous year. Even compared to the month before, there was a 59% increase. Although the growth has slowed since then, the industry is still growing. In March 2024, sales for online meal delivery went up by 8% compared to the previous year.

Experts at Business Insider Intelligence predict that online food delivery apps will become a $38 billion industry starting in 2020 and continuing to grow. This means restaurants must change how they operate and market themselves, creating new opportunities and challenges in the food service industry. For example, more restaurants might need to focus on their online presence and delivery services to meet the demand.

Consumer adoption rates

Online multi-restaurant ordering platforms have become popular because they make it easy for people to order food. These platforms let customers browse menus, place orders, and arrange deliveries from different restaurants using just one app or website. For example, you can use a single app to order a pizza from one restaurant and a dessert from another. This convenience has dramatically increased the use of these services in the United States.

Many platforms have introduced subscription services to keep customers coming back. For instance, with DoorDash’s DashPass, customers pay a monthly fee for benefits like free delivery. In March 2023, 69% of people who signed up for DashPass subscribed after one month. After six months, 36% were still subscribed, and after a year, 28% kept their subscriptions. These subscription models and partnerships with well-known restaurants have helped these platforms grow even more.

How These Platforms Work

Multi-restaurant ordering platforms function as digital intermediaries between customers and various restaurants, making it easy to order food through one website or app. They gather information from many restaurants, handle all the orders, and coordinate everything to ensure a smooth process for customers and restaurants.

For example, imagine you want to order a burger from one place and sushi from another. Instead of calling each restaurant separately, you can use an app that shows you menus from both locations. You place your orders through the app, which then sends the orders to the restaurants and coordinates the deliveries. This way, you get your food without hassle, and the restaurants receive and manage your orders efficiently.

The technology behind the platforms

The core of these platforms is advanced software that connects all the different parts to work together smoothly.

One important feature is a user-friendly design that lets customers easily browse different restaurants, check out their menus, read reviews, and make informed choices. For example, you can use the app to see what’s available at various restaurants, read other people’s opinions, and decide what to order.

The platform also has a simple cart system, which allows you to add items from different restaurants. This system makes paying for everything accessible and secure.

Multi-restaurant ordering platforms often incorporate restaurant menu management systems that simultaneously allow real-time updates and modifications across numerous establishments. These systems enable restaurants to update their menus in real-time. The change is instantly visible to customers if a restaurant runs out of a dish or adds something new. For example, if a restaurant adds a new special dish, the app will show this item immediately, so you always see the latest menu options.

Order processing and fulfillment

When a customer places an order, the system processes it efficiently, sending instant notifications to the respective restaurant. For example, if you order a pizza, the restaurant gets an immediate alert about your order. The restaurant staff can then acknowledge the order directly through their point-of-sale (POS) system, which is integrated with the platform. This means they don’t have to manually enter your order, reducing mistakes and saving time. For restaurants, the platform provides tools to monitor incoming orders in real time, update order statuses, and manage delivery assignments. For instance, they can see when a new order comes in, update the order status (like “being prepared” or “out for delivery”), and manage who will deliver the food. This helps the restaurant run smoothly and get your food to you more efficiently.

Delivery logistics

Delivery logistics are a crucial component of these platforms. Many systems offer route optimization software to decrease unnecessary mileage and increase the throughput of delivery transactions. Real-time tracking features allow customers to monitor their orders from preparation to delivery, enhancing the service experience.

For restaurants that manage their delivery fleet, the platform often provides a separate app for drivers. This app allows drivers to accept and manage orders, with automated dispatch and intelligent delivery systems ensuring efficient routes and accurate delivery times.

By incorporating multi-restaurant delivery service software and multi-restaurant ordering platforms, these systems create a comprehensive ecosystem that benefits customers, restaurants, and delivery personnel. The result is a streamlined process that enhances efficiency, expands customer reach, and ultimately transforms the restaurant industry.

Benefits for Restaurants

Expanded customer reach

Multi-restaurant ordering platforms have revolutionized the way restaurants connect with their customers. These platforms act like online marketplaces, helping restaurants connect with more people and attract new customers.

For example, a small local restaurant that joins one of these platforms can now be seen by people all over the city, not just those in the immediate neighborhood. This increased visibility helps the restaurant grow its customer base beyond its usual local area, bringing in more orders and new patrons.

Increased order volume

One of the most significant advantages of online restaurant ordering systems is the potential for increased revenue. Restaurants with an online ordering system can raise their takeout profits by 30% compared to those without such systems. This increase in order volume is partly due to convenience, as customers who place online orders tend to visit the restaurant 67% more frequently than those who don’t.

Moreover, according to Deloitte, customer spending increases by 20% when ordering via technology. The research found that online ordering grew check averages for quick-service restaurants by 26% and fast-casual restaurants by 13% . This boost in order value contributes significantly to a restaurant’s bottom line.

Operational efficiencies

Online ordering systems make restaurant operations more efficient in several ways. Orders are processed quickly and accurately, which reduces mistakes that can happen with phone orders. For example, if you order a meal online, the system ensures that the restaurant gets your order exactly as you entered it. This accuracy allows the staff to focus on other essential tasks.

By using restaurant food delivery software and multi-restaurant ordering platforms, restaurants create a smooth operation that runs well together. These systems often include tools to manage menus, allowing restaurants to update their offerings in real-time. For example, if a restaurant runs out of a dish or wants to add a new one, the change appears immediately online for customers to see.

Using these systems helps restaurants manage their resources better and improve overall performance. They can handle more orders without significant changes to their setup, making it easier for businesses to grow. For instance, a small restaurant can start taking more online orders without needing to hire more staff or make significant changes to their kitchen.

Challenges and Considerations

Commission fees and profitability

While multi-restaurant ordering platforms offer numerous benefits, they also present significant challenges for restaurants, particularly profitability. One of the most pressing issues is the high commission fees charged by third-party delivery platforms. These fees typically range from 15% to 30% of each sale, significantly impacting a restaurant’s bottom line. Sometimes, third-party vendors charge up to 35% per order, which can severely cut into profits.

The financial impact of these fees has become a significant concern for restaurant owners. As food orders increase and restaurants continue to rely on third-party providers, they risk forfeiting a substantial portion of their revenue instead of growing their business. This has led many restaurants to explore alternatives, such as developing their online food ordering systems to retain more of their profits.

Impact on in-house operations

Integrating multi-restaurant ordering platforms can significantly impact a restaurant’s in-house operations. While these platforms can streamline order processing, they also introduce new challenges in managing the increased volume of orders and coordinating with delivery services.

Restaurants may need to adjust their staffing and kitchen operations to handle the influx of online orders efficiently. This can include dedicating staff to manage online orders, reorganizing kitchen layouts, and implementing new systems to prioritize and fulfill orders from various sources.

Brand control and customer relationships

One essential challenge restaurants face when using multi-restaurant ordering platforms is maintaining control over their brand and customer relationships. On third-party apps, restaurants often become just one option among many, making it difficult to stand out and build customer loyalty. This lack of direct customer interaction can hinder a restaurant’s ability to manage its brand effectively and create lasting relationships with patrons.

Moreover, third-party platforms typically retain customer data, limiting restaurants’ access to valuable information about their client. This data gap can make it challenging for restaurants to personalize their offerings, implement targeted marketing strategies, and build a loyal customer base.

Another concern is the potential impact on a restaurant’s reputation. According to a Techonomic study, 76% of customers blame the restaurant for third-party delivery errors, even when the restaurant has no control over the delivery process. This misattribution of blame can put a restaurant’s reputation at risk and highlights the importance of maintaining direct communication channels with customers.

Conclusion

To wrap up, the rise of multi-restaurant ordering platforms has brought about a significant shift in the restaurant industry. These platforms have expanded customer reach, boosted order volumes, and streamlined operations for many eateries. However, they’ve also introduced challenges related to commission fees, brand control, and customer relationships. The impact of these platforms on restaurants’ profitability and operations is significant and ongoing.

As the industry continues to evolve, restaurants need to weigh the pros and cons of partnering with these platforms carefully. They should explore alternative solutions, such as developing their online ordering systems, to maintain more control over their brand and customer data. For those looking to implement a customized solution, iScripts NetMenus offers a comprehensive multi-restaurant ordering platform that can be tailored to individual business needs. Ultimately, the key to success in this changing landscape lies in finding the right balance between leveraging technology and preserving the unique aspects of the dining experience that customers value.

Check out our portfolio and contact us to create a fantastic on-demand food delivery service app for your restaurant.

Check out iScripts NetMenus

iScripts NetMenus Live Demo

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Business Model Study

Comparison Between Grubhub and Doordash Business Model

by Noyal Sharook July 19, 2023

written by Noyal Sharook

Today, the world is far more instant and accessible than it was a decade ago. Food delivery could be cited as the biggest example of how far we’ve pioneered convenience. With just a few clicks, food is served on the table. As on-demand delivery services gained traction, food delivery apps have emerged from all around the world leading to more intense competition. Instant food delivery has forced new players in the market to enhance convenience as much as possible and adopt various business models to take advantage of the rising opportunity.

As so, when speaking about online food delivery apps, there are two names that stand out – DoorDash and Grubhub. Although these companies serve the same purpose, there are various differences in the way they do business. In this article, we’ll analyze both of them and show you how they work. Read on.

DoorDash

If there’s one platform that has made its way to become an online food-delivery giant within a short span of time, it has to be DoorDash. Founded in 2013 by a group of Stanford students, namely Tony Xu, Stanley Tang, Andy Fang, and Evan Moore, it was initially called ‘PaloAltoDelivery.com’. Later on, they incorporated the name DoorDash which then went on to become the largest food delivery company in the United States with a 56% market share. Additionally, in 2018, DoorDash expanded its operations to include grocery delivery services through a strategic partnership with Walmart. So how does DoorDash work and what do they owe this tremendous success to? Let’s find out.

DoorDash is essentially an on-demand delivery service solution for all your needs. It operates by connecting customers with a vast selection of local restaurants and allows them to order food for delivery or pickup. Their user-friendly app and website enable customers to browse menus, place orders, and track the delivery in real-time, ensuring a seamless and convenient experience. But what truly set them apart from the other apps that existed in the marketing was their in-house fleet of delivery drivers, called ‘Dashers’. This approach gave them greater control over the delivery process and allowed them to offer fast and reliable services to customers.

Business Operations

The food delivery giant functions on a three-tier system – customers, restaurants & dashers. Customers can use the DoorDash online food delivery app or website to browse through a wide selection of local restaurants and stores, and explore menus, read reviews, and choose the items they want to order. Then they are required to enter delivery details to ensure seamless delivery. Once they finalize their orders, they can confirm by making the payment and will receive an estimated delivery time upon confirmation.

After the order is placed, DoorDash assigns a ‘dasher’ (driver) for the delivery, who picks up the order from the particular restaurant who in turn also receives an alert upon the order confirmation. The dasher then delivers the order to the customer’s address while customers can track their order in real-time through the app.

Revenue Model

Most on-demand delivery services often share at least one common kind of revenue mechanism, which usually happens to be charging commissions. In the case of DoorDash, there are various channels through which they earn revenue. Let’s take a look:

Commission Fees: DoorDash charges a commission fee to the restaurants and merchants that partner with the platform. This fee is a percentage of the total order value received from customers through DoorDash.

Delivery Fees: Customers using DoorDash often pay a delivery fee for the convenience of having their orders delivered to their location. The delivery fee varies based on factors such as distance and demand. Typically, they levy a delivery charge ranging from $5 to $8 per order, depending on the location and distance covered.

DashPass Subscription: DoorDash offers a subscription service called DashPass. Customers who subscribe to DashPass pay a monthly fee and receive benefits such as reduced or waived delivery fees on eligible orders.

Promotional and Marketing Services: They offer promotional services to restaurants and businesses to boost their visibility on the online food delivery app. Restaurants may pay for featured placements, sponsored listings, or marketing campaigns, providing an additional revenue stream for DoorDash.

Grubhub

Grubhub could be best described as the culinary companion that won hearts across the nation with its delectable offerings and seamless service. Born in 2004 from the minds of Matt Maloney and Mike Evans in the vibrant city of Chicago, Grubhub started as a vision to bring local restaurant favorites right to your doorstep. Over the years, it has grown to become a household name, serving as a go-to online food delivery app for everyone craving a wide range of cuisines. In 2021, the company was acquired by Just Eat Takeaway.com for a whopping $7.8 billion.

The platform’s primary goal is to connect hungry diners with a vast selection of local partner restaurants. With an easy-to-use app and website, Grubhub allows users to explore menus, place orders, and have their favorite dishes delivered straight to their doorsteps or prepared for pickup. In contrast to DoorDash, Grubhub has historically relied more on partnering with restaurants that have their own delivery drivers.

Business Operations

When it comes to operations, Grubhub works similarly to that of DoorDash. Customers can use the Grubhub website or mobile app to browse through a variety of restaurants in their area. Initially, they are required to enter their delivery address so that they may view the available restaurants in their vicinity. Once they’ve finalized their orders by making the payment, Grubhub provides an order confirmation and an estimated delivery time. At the same time, Grubhub sends the order details to the respective restaurant, notifying them of the incoming order. The restaurant then begins preparing the food.

They offer both delivery and pickup options. The difference here is that if the restaurant has its own delivery drivers, the order is handed over to them. If not, Grubhub employs its own delivery drivers to fulfill the order. Meanwhile, customers are able to track their orders in real time through the app. They receive updates on the order’s status, including when it’s being prepared, picked up, and on its way to the delivery address. Finally, the order is completed by the delivery driver.

Revenue Model

When it comes to business, Grubhub generates revenue through various channels in its food delivery business including:

Commission Fees: Grubhub charges restaurants a commission fee for every order made through its platform. This fee includes the processing charge as well, which is usually somewhere around 3.05%.

Delivery Fees: Customers using Grubhub typically pay a delivery fee for the convenience of having their orders brought to their doorstep. The delivery fee varies depending on factors like distance and demand.

Promotional and Marketing Services: They offer restaurants promotional opportunities to enhance their visibility on the platform. Restaurants can opt for featured placements, sponsored listings, or marketing campaigns to attract more customers.

Grubhub+ Subscription: Grubhub operates a subscription service called “Grubhub+,” where customers pay a monthly fee to enjoy benefits like free delivery on eligible orders and exclusive discounts. This $9.99 subscription revenue significantly contributes Grubhub’s overall earnings.

Wrap Up

Although both DoorDash and Grubhub follow the same business process, DoorDash has the largest fleet of delivery drivers (or dashers) spread across 7,000+ cities partnering with

450,000+ restaurants making them the bigger player in the delivery game. Additionally, these companies are also competing in a saturated competitive landscape with other online food delivery apps like Uber Eats and Postmates taking a 23% and 2% market share respectively.
However, the primary revenue streams for both companies stem from commissions and delivery fees.

With food delivery businesses thriving with the growing rate of technology, there has never been a better time to capitalize on this trend and enter the market with your own on-demand delivery service app. As the competition intensifies, staying ahead requires innovative solutions that can set your app apart and deliver exceptional customer experiences. If you’re an entrepreneur wanting to make use of this opportunity, check out iScripts NetMenus Enterprise. It is an easy-to-go software solution that helps you develop an online multi-restaurant ordering platform capable of partnering with numerous restaurants across different cities and serving your customers with a simple and convenient way to order delivery or pickup.

Whether you’re looking to go with the DoorDash model or the Grubhub model, you have the option to customize it according to your requirements. It comes with a web application as well as a mobile app, making your job a whole lot easier. Now, if you’d like to give it a try, check out our Free Demo.

Check out iScripts NetMenus

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New Product Release

New Product Release: iScripts NetMenus

by Sheri Levitt April 29, 2013

written by Sheri Levitt

When a website is created with iScripts NetMenus, the users of that site will be able to search for restaurants based upon location. Catering menus may be provided through the site to highlight establishments that offer catering services.

The software is distributed with full source code (like all other iScripts products) that enables users to customize and adapt the software as needed. Key features of iScripts NetMenus include easy menu importation, Google Maps integration, user ability to create custom pizzas, and a customer order history. A more thorough listing of features is available here.

“It is important for smaller players in the industry to compete with larger players in terms of efficiency and management. We have created this script with input from a number of different types of businesses in the industry. This enabled as to create software flexible enough to meet the needs of your business the way you want to run it.” said Aji Abraham, founder and CEO of iScripts.com.

Pair the iScripts NetMenus script with an open-source mobile app like the Restaurant Menu, and you have a ready-made duo you can brand to make all your own!
For more information, contact us at 1-(800)-569-5538 or sales@iscripts.com

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