If you’ve implemented an online ordering strategy, you might be struggling to make it profitable.

This isn’t unusual – particularly when you take into account some of the overheads you’ll be experiencing:

– commissions from a third-party delivery company;
– additional staffing or staff hours;
– vehicle costs (if you choose to undertake delivery yourselves);
– packaging costs; and
– increased utility costs.

There’s also the intangible cost of your own time as the restaurant owner; how valuable is every hour you spend on the delivery operation? Does that drive down the take-home profit of every sale? Possibly.

The good news is that online food ordering can be very profitable indeed. You just need to consider the following profit-boosting tips.

Consider per-channel pricing

If you’re accepting orders via multiple channels such as your website, telephone and a third-party delivery company, you might be unnecessarily eating into your profits.

Direct orders are always going to be more profitable, therefore if you’re being charged a hefty commission via a third-party, consider raising your prices to account for it.

There’s no harm in protecting your margins in this way. Once people are in the delivery app’s ecosystem, they’ll probably order via that channel, therefore you don’t need to worry too much about them shopping around to get the best deal from you.

…or ask for a lower commission rate

 

Some restaurants have been successful in negotiating lower commission rates with delivery companies, and the worst they can say is “no”.

So, reach out to your delivery company of choice and see if they can do anything to retain your custom. You never know what they might say.

Be careful with food packaging

The packaging in which your online orders are sent represents a great way to keep your brand in the minds of customers, but it can get expensive.

Go too fancy, and you’ll end up shaving far too much off your margins with the packaging alone.

So, work with suppliers to source environmentally friendly packaging that can be bought in bulk at a lower cost. And, if your delivery company offers it at a decent rate, albeit with their branding, it might be a better option, profitability-wise.

Try takeaway only

Some of the biggest expenses you’ll incur with online food delivery is the delivery process itself.

If those costs are simply becoming too hard to bear, try switching to a takeaway-only strategy instead.

Providing you have a loyal, steady customer base, they probably will travel to pick up food from you. That way, you put the onus of transport on them and can probably turn around a higher number of orders while you’re at it.

Make sure your POS is on point

It’s vital that you have the right POS in place if you want to run a profitable online food delivery service.

The wrong POS will leave you with lots of manual work to undertake and ultimately suffer from as the time spent on the delivery service eclipses any profits you’re making.

A POS system that’s designed to handle online food orders will do most of the leg work for you and enable you to run an efficient, lean operation. It might even help you cut out some of the expensive middlemen!

Keep hold of customer email addresses

It costs far less to retain customers than it does to find new ones, so it’s vital that you build a database of loyal online ordering fans.

The better you get at the delivery service, the more people will make it a regular occurrence in their diaries. But they may need some encouragement occasionally to place an order, which is why keeping a database of customer email addresses is so important.

As it builds, you can send out email campaigns advertising special delivery offers, or ‘order direct and save’ promotions that circumnavigate the delivery company commissions.

Wrapping up

Don’t give up with your online food delivery service. If it’s not profitable, there’s a reason, and the solution is probably above.

Getting ready to reopen? Don’t forget to grab our reopening checklist!

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H&L POS – working with you to help you grow your business
H&L POS has been delivering POS solutions with extensive back of house and staff management systems to the hospitality industry for more than 30 years. As hospitality people at heart, H&L understand the critical requirements for each food and beverage operation. We have staff in every state of Australia providing direction and advice as you grow and as technology changes.
Call us at 1800 778 340, email sales@hlpos.com or fill in the form below to discuss your venue’s needs.