The hospitality industry is on the rise again, but how are restaurants staying ahead in a game dicier than chopped tomatoes?
Food and beverage has always been an industry with multiple overheads and razor thin margins, so success can be far and in between for most. It is the operator who sees the gap in the market, the trends, the opportunities, who are able to create success.
Food delivery demand is making a comeback within Southeast Asia and while it’s returning to pre-COVID trendlines, delivery is still anticipated to grow 40%+ in GMV from 2022 to 2025! With rising demand comes the opportunity of increased profits — here’s how:
1. Offer a menu that has minimal food cost to you
The largest sting when setting up a virtual brand is the commission fees attached to delivery platforms, sometimes being as high as 35%. So what is the best way to tackle this? Sure you can negotiate with them to alter the commission, perhaps saving 5-10% on fees, but the quickest way to curtail this is to offer a menu that has a lower food cost than your normal menus. Food cost can often be anywhere between 30% to 40% in a normal dining restaurant, however because of the inclusion of commission fees, naturally, a restaurant operator has to either lower food cost or incorporate commission fees into the final pricing (making the customer pay for these add ons). As we are in the hospitality game, you can’t pass too much onto the customer, otherwise they won’t become a return customer!
2. Offer something unique and keep on trend
Fortune favours the bold! 2021 was a year marked by endless entertainment options thanks to the likes of #FoodTok.
According to TikTok, 47% of TikTok users have bought something seen on the platform and 67% of TikTok users were inspired to shop when they weren’t planning to — more than any competitor platform. Dailybox, a halal Indonesian brand, is expanding to Singapore, because of its growing reliance on food delivery services with 2.5 million Singaporeans opting for online food delivery in 2021. Their success lies in offering authentic dishes aside from the usual Nasi Goreng or Satay Ayam, in line with FoodTok’s trend of showcasing food from other cultures. Gigi Hadid's spicy vodka pasta, Emily Mariko's salmon rice bowl – Compared with other social media, users spend much more of their time on TikTok: an average of 20 hours a month, and more than 10 minutes a session.
3. Create a virtual restaurant
You may think, “But why? I already have a premises where I serve a number of customers a day, and delivery is only one component of that business. Why not make a stand-alone delivery brand?!”
These are often called virtual restaurants, and by nature, is a food service business that serves customers exclusively by delivery by ordering online. During the COVID-19 pandemic, even industry giant Jollibee was forced to close 255 of their stores, but what if they had a purpose only virtual restaurant to stop this? With lower entry and setup cost, and a wider online audience to reach, restaurant operators can set up a ‘new’ location without putting in traditional investments that are attached to brick and mortar storefronts.
4. Utilize order management software
Order management software is often thought of last when it comes to making money in food delivery, mainly because you have to pay for the service, however with the sheer number of delivery platforms available, it is time consuming to manage all incoming orders from all different delivery devices. A Google search of “Top 5 Food Delivery Apps” can help you narrow down your customer base, but it doesn’t have to be that hard — order aggregation software that can integrate all of these delivery platforms into one device, for easy management. The time saved means money saved!
Ways to make more money on delivery
- Offer a menu with minimal food cost
- Have a unique or trend-driven item
- Create a virtual restaurant
- Utilise order management software