In today’s restaurant industry, delivery services are a crucial part of revenue generation. However, the way these services charge restaurants and customers can have a significant impact on profitability and customer choices. In this post, we will be comparing restaurant delivery options and contrasting the cost of third-party delivery apps that offer low or free delivery to customers and compare it to Dine Local’s model, which allows restaurants to pass the true cost of delivery to customers.
The Cost to Restaurants
Third-party apps often charge restaurants high commission fees—ranging from 20% to 30% per order. These costs significantly cut into restaurant margins, forcing many operators to increase menu prices just to maintain profitability. In addition, restaurants have little control over customer chargebacks, often resulting in significant refund volumes. Additionally, restaurants often do not have control over their customer data when using third-party platforms, limiting their ability to build long-term relationships with their guests.
Dine Local, on the other hand, eliminates commission fees, allowing restaurants to retain full revenue from their orders and full control over customer satisfaction and remedy for issues. With our integrated delivery solution, restaurants can pass the full cost of delivery on to customers rather than absorbing hidden costs. This model ensures restaurants maintain healthy margins without inflating menu prices.
The Cost to Customers
While third-party apps may advertise low or free delivery for customers, these costs are often subsidized by charging restaurants high commissions or incorporating hidden service fees. Customers may not realize they are paying inflated menu prices or additional service fees at checkout, ultimately making their orders more expensive than they appear at first glance.
With Dine Local, the cost structure is transparent. Customers pay the real cost of delivery upfront, without hidden service fees. Restaurants also have the flexibility to adjust their pricing strategies, ensuring customers get the best possible value for their meals.
The Impact of Higher Delivery Fees on Customer Choices
A common concern is whether customers will continue ordering if they have to pay the full cost of delivery. Studies show that customers are price-sensitive when it comes to delivery fees, and higher delivery charges can reduce order frequency. However, restaurants can counteract this effect by offering targeted incentives that encourage larger orders, offsetting delivery costs.
Using Discounts to Drive Higher Cart Values
One strategic advantage of the Dine Local platform is the ability for restaurants to control their own pricing and discounts. Instead of absorbing delivery costs, restaurants can offer delivery discounts based on order size, encouraging customers to spend more. For example:
- Spend $25, Get $2 Off Delivery
- Spend $50, Get $5 Off Delivery
- Spend $75, Get Free Delivery
This model incentivizes higher cart values while still ensuring that delivery costs are covered. Unlike third-party platforms that force restaurants into rigid pricing structures, Dine Local gives full control back to restaurant owners.
Conclusion
The way restaurants handle delivery pricing can have a profound impact on their bottom line. When comparing restaurant delivery options, third-party apps may seem convenient, but their high commission fees and hidden costs ultimately hurt both restaurants and customers. By using Dine Local, restaurants can take control of their pricing, pass true delivery costs to customers, and strategically use discounts to drive higher sales.
Are you ready to take control of your restaurant’s delivery strategy? Join Dine Local today and keep more of your revenue while giving customers a fair and transparent ordering experience. Contact us today to discuss how the Dine Local platform can help unlock your takeout and delivery business.