Not All Delivery Tales are Rosy, But Instructive Nonetheless

…By the end of 2017 revenue from delivery was hitting $2 million and “we were a $9 million company, but we were always strapped for cash.” She enlisted consultant Rodney Johnson, now on the Hell’s Kitchen board, for an analysis, and he determined delivery was costing the restaurant 40 percent of sales, an unsustainable amount.

“The first principle everyone needs to appreciate is: Incremental sales does not necessarily equate into incremental profit, especially if you’re an independent restaurant. Very few independent restaurants really know their numbers,” he said. They ended up stopping delivery, at least for the time being, and began climbing back from the brink.

…If there are demand-based delivery fees there should be demand-based pricing, meaning restaurant operators should be able to charge more for products when everyone wants to buy them, just like ride-share apps charge more when everyone wants to move around.

His second best idea: “Reduce the percentage cut. It’s not realistic. Incentivize us to send you bigger orders,” he said, so when the size of the order goes up the percentage fee goes down.

And one more: “There has to be a better way to train independent contractors and hold them accountable,” he said.

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