How QSRs Maximize Profit Margins through Native Delivery
How can quick-service restaurants stabilize their profit margins to meet their long-term business goals?
Most would think the increased popularity of third-party delivery platforms such as Uber Eats, Just Eat Takeaway, Deliveroo, etc. play a crucial role in this huge market growth. However, the soaring revenues of big delivery platforms mask a harsh reality: third-party delivery giants are trapped in an unsustainable business model that consistently drains profit from collaborating restaurants (Indigo9Digital, 2023).
An omnichannel software specifically designed for QSRs solves the challenge of getting the majority of online orders via third-party delivery platforms, which constantly holds restaurant chains back from achieving their desired profit margins.
The main objective of restaurant chains looking to increase profitability should be to become data-driven e-commerce brands that prepare and deliver food that their customers love, through a healthy split from third-party delivery platforms to their own sales channels. This way, QSRs can better fulfill their top priorities: high-profit margins and increased customer loyalty.
Overdependence on Third-Party Delivery Services
Third-party delivery services offer QSRs, indeed, plenty of benefits, starting from increased visibility, convenience for customers, ability to deliver, and marketing opportunities.
However, the overdependence on third-party delivery services poses a threat to the long-term sustainability of quick-service restaurants. The combination of high fees, no incentive for repeat orders via third-party platforms, the absence of customer data insights, and the inability to make informed business decisions all contribute to a low-profit margin.
To secure their future, QSRs must prioritize strategies that emphasize direct customer engagement, data ownership, and flexibility via implementing their own first-party delivery services in order to increase their profit margin.
Transitioning from Borrowed Orders
To achieve an increased and stabilized profit margin, quick-service restaurants must prioritize the development of their own sales platforms. The strategic shift from relying on borrowed orders from third-party delivery services that comes with an average cost of 30% per order to cultivating a dedicated customer base for their own brand and, therefore, reducing costs associated with third-party delivery platforms is a game-changer. By investing in strong e-commerce, quick-service restaurant chains benefit from an increase of 11% in their direct online sales (S4D, data statistics, 2023).
Empowering Customer Loyalty
By owning the sales channel quick-service restaurants can easily bond with their customers and increase their customer lifetime value. User-friendly mobile apps and websites in their own brand that offer seamless online ordering experiences are crucial for providing the experience customers are looking for. Additionally, implementing a strategic loyalty program significantly drives repeat orders, amplifies customer satisfaction, and boosts overall revenue. On average, restaurant chains that implemented the loyalty program benefit from 4x more orders per year and a doubled yearly revenue from loyalty customers (S4D, data statistics, 2023).
Gaining Operational Advantage
The ideal first-party sales channel seamlessly integrates with all in-store operations. This ensures that customer data and orders are centralized and any time accessible. By ordering from a brand’s own e-commerce platform, customers enjoy a personalized experience, have a transparent order journey with real-time order status tracking, and by being incentivized with a loyalty program customers return to order more often.
Since the ordering process is seamlessly connected to the in-store process it allows customers to track their order status from the moment it is received to its preparation, readiness, and delivery. Monitoring the entire process contributes to delivering within the promised timeframe and outlines the quick-service restaurant known for its reliable services.
In conclusion, a healthy split from third-party delivery platforms to own e-commerce platforms is a great investment in terms of achieving stabilized profitability for quick-service restaurant chains.
About the Author
Daan Bakker is VP of Growth at S4D. With a wide experience in startups and scale-ups, he has thrived in the dynamic environments of Tel Aviv and Amsterdam, scaling B2C and B2B apps. His recent focus lies in scaling SaaS companies, while also bringing his expertise to the restaurant industry by providing an omnichannel solution to increase profits by improving sales and streamlining operations for restaurant chains with S4D.