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Abstract

It is a fact that nowadays, people and businesses must be in correspondence with ever-changing technology. Organizations are spending more time enhancing their revenue through social media advertising and other activities. It has become essential for businesses to stay updated on social media platforms. To become successful in business, they must understand each community’s perspectives and demands, so social media and community are more important for every business. People have become busier in their daily life, and they want to have everything at their fingertips and have delicious food when they feel hungry. These days, food delivery apps have emerged to a remarkable extent, and they have allied with most of the restaurants in town and suburbs to serve the customers better. Communities are delighted with mobile apps, as they can compare prices, standards, and quality among restaurants, check the ratings before they order foods, and pay online and track the rider online. We cannot forget how it has become imperative for the community during the COVID-19 pandemic. When most restaurants have engaged with Food Delivery Apps (FDA) to meet customer demands, larger scale to smaller restaurants had no other option than to link with one or more Food Delivery partners. Restaurants can cater to a more extensive customer base when they partner with these Food Delivery companies. Still, they are supposed to pay a commission somewhere around 20-30%, and this paper addresses how the FDA impacts restaurant sales.

Keywords

Online Food Delivery, Food Delivery Apps (FDA), Community, Network Society, Restaurant Revenue, Customer Expectations, Digital Communication, E-commerce

Introduction 

The food delivery method was introduced to the community in the ’90s, and it was not popular as expected. With the continuous digital and technological changes in society, mobile phone users have increased using software applications accordingly. Therefore, the demand for delivering food online through apps has increased intensely. The way that people are more addicted to digital media, the Internet, and mobile devices has led people to become socially isolated (Hampton & Wellman, 2018). People have already become more isolated from the current global pandemic, and they are more connected with digital and social media.

Even though most government authorities eased pandemic rules and regulations, people are still using FDA because they have identified it as the most convenient method of delivering food to their doorstep. There are two types of communities mainly involved in the FDA. Community members who order and receive food and other items by using these Apps, and they share the quality of foods, the latest updates, and special discounts within their groups. Restaurants and shop owners who are engaged with FDA for their business are the other community.

These Food Delivery companies have commenced their business before the pandemic, but the market growth has marked its peak during the period. It is common for everyone to have one or more FDA on their mobile phones. There are food delivery service providers in each country, such as Grubhub, Caviar, Uber Eats, DoorDash in the USA, Uber Eats, Pickme in Sri Lanka, Menulog, Deliveroo, and Uber Eat in Australia (Marks, 2020). In this paper, I wish to discuss the use of FDA for delivering foods, how it has helped restaurants sustain and grow in the current market and the positive and negative impacts on restaurant revenue.

The importance of Food delivery Apps (FDA)?

Digital communication is extensive, affordable, and can access a mass audience in a shorter time frame while reducing cost. It has changed the structure of the community as well (Hampton, 2015). This statement of Hampton is more related to the context as FDA have changed the community expectations rapidly. People use the FDA to purchase food items timely and safely. The service of FDA has been provided at the correct time; otherwise, the whole world would have faced a tough situation during the pandemic as most of the people had to be isolated. Consumers use FDA specifically for convenience, buyer involvement, distribution experience, quality, and to find the listing and reviews on restaurants (Ray et al., 2019). 

People are networking on social media platforms and businesses to attract customers and benchmark themselves. This collaboration will help each business to reach the customer more conveniently. FDA have identified this potential, and they have introduced this software application, from which customers, restaurants, and themselves can get the advantages.

What is the necessity for Restaurants to partner with the FDA?

During the last two years, utilization of social media has increased dramatically, as well as the enhancement of downloading several mobile apps due to consumers spending more time with each device during lockdowns. Hampton (2015) stated that “Large-scale, social change has always been tied to technological change” (p. 104). COVID-19 and consequent lockdowns produced many restaurants to limit their customers or close entirely, and millions of consumers ordered food using FDA for the first time. Restaurants had no other alternative option than partnering with FDA.

Even though the lockdowns have come to an end and restaurants are fully open for all their customers, as usual, people prefer to order online for their convenience. Therefore, it is still essential for restaurants to get the service of the FDA. Otherwise, they will not be competitive in the market. For example, even though Mass food supply chains like Mc Donalds and KFC have their own delivery team, they are also available in Food Delivery Apps. Indeed, the FDA is not just providing their services free of charge, they are charging a commission from each partner restaurant since they have to bear the expenses relating to the same such as payments to the riders and wages to call centre staff.

When restaurants run their businesses, if they have a higher volume of the online market, they always go beyond the physical interaction and self-logistics while selecting FDA like UberEats (Example Starbucks) (Niu et al., 2021). When restaurants have an extensive online market, the logistic service fee and their sales also increase accordingly. If the online order quantity is low, the “food & logistic” price will also increase (Niu et al., 2021). While enhancing the profit, the food delivery platforms, and restaurants have collaborated to improve environment-friendly packaging, and UberEats started to assist the restaurants to access “more affordable eco-packaging” (Niu et al., 2021). The FDA has introduced discount schemes and a unique coupon system to compete in the market. (Especially for large online orders). If there are massive subsidies to the customers, the restaurants have started to directly handle their delivery platform to satisfy them (Niu et al., 2021). The ultimate nature of community is ever-changing and always blends with the connectivity of people, and topical technological changes are reforming the creation of the society (Hampton & Wellman, 2018). 

Everything has its own cost

Many restaurants use the same delivery services, and they provide with latest offers and continuously update their food items on FDA to get a competitive advantage. While the FDA offers free advertising on their platform and influences the business’s marketing, most small restaurants have not identified their existence. The FDA does not provide its service free of charge they must pay a commission (Platz, 2019). The commission scheme is explained as “The platform’s commission and logistics service fee make both the restaurants and customers experience a cost increase in online food delivery. Grubhub sets a 25% commission rate for the restaurants and charges an average $2 logistics service fee on each online order in the US market. Restaurants consider this logistics service fee as a “drain” to exploit their profit margin” (Platz, 2019, as cited in Niu et al., 2021, p. 2). Some restaurants have deviated from FDA to their delivery scheme while considering improving their profitability. They took charge of self-delivery (Platz, 2019, as cited in Niu et al.).

During a survey in the United States (US), the restaurant owners questioned delivery agents about the quality of the food delivered. Some restaurants have been advertised by FDA without their consent. Also, FDA has not updated prices and menu items in their lists (Marks, 2020).

The main reason that the restaurant owners are not satisfied with FDA is the high cost, especially during the pandemic period. Some small restaurants couldn’t tolerate the higher costs. In the US, when the delivery sales of restaurants are getting at 70-80%, if they pay around 18-20% for FDA companies from their revenue, the profit margins are 8-10% which is not feasible (Marks, 2020). When analyzing the context, with the exceeding demand of the community for quality and easily accessible food, restaurants have to rely on FDA. Getting customer attraction on a digital platform and being noticeable on social media is a positive thing, but they must pay a considerable amount as charges, and the question is, does it worth having FDA for restaurants? The latest technologies have shaped our network and behaviours (Hampton & Wellman, 2018). Since the community demand is still there for delivering food to their doorstep, restaurants cannot simply ignore the service provided by FDA. People with busy schedules still depend on FDA. With the latest promotional activities and listing of most restaurants under one platform, the FDA has gained a considerable market share in the community.  Those who run a small restaurant might not have enough time and resources to continuously update their web pages and meet the extensive demand for food deliveries. Most businesses need to be active on social media platforms, especially restaurants. People are more concerned about ratings and reviews before buying anything. This situation reflects how social media has impacted on the community and the importance of networking. Not only for online orders but also before visiting restaurants, people are checking the ratings and reviews. Restaurants are trying to meet customer satisfaction through their websites and social media activities to minimize the cost associated with FDA. They must decide whether it is worth getting the service of the FDA considering the profitability. If it is not profitable, they can re-consider having the FDA or not. The delivery apps have become more popular during the pandemic and widely have grown all over the world. Therefore, it is ideal for most restaurant owners to partner with the FDA which provides visibility to their potential customers. This method can be referred to as a more extensive network of various restaurants linked together to satisfy customer expectations. Presently it is not only food items; there are larger-scale items that customers can select.

Conclusion

During the pandemic, most of the restaurants, from larger scales to small, depended on Food Delivery service providers, and with the highest commission rates, the restaurants were not able to get the expected revenue. Some of those have started their own web pages and delivery schemes, but the continuous update on websites and meeting customer expectations have become more challenging. Food delivery apps have grown their market share during the past decades, and some consumers are willing to continue even after the pandemic.

“As with many earlier technologies, digital communication technologies have reduced the costs of interacting across time and space. Yet recent technologies have also introduced widespread affordances for persistent contact and pervasive awareness that have the potential to change the structure of community fundamentally” (Hampton, 2015, P.  118).

Instead of competing, the restaurants and their associated delivery partners have to find a proper method of working together without losing each market share and revenue. Presently FDA is reaching their customers on behalf of restaurants while doing all the necessary advertising campaigns, especially on social media platforms. The partnership between the FDA and restaurants can be more robust and reliable if they find a solution for larger-scale commission charging from restaurants.

Restaurants can identify customers’ buying patterns, locations, and choices with the FDA. They can get customer reviews once the food item is delivered. When purchasing food items, customers also can see the ratings and reviews for each food item online. Simply it is a digitally networked community. They can make payments online and track the order as well. Therefore, restaurants cannot leave FDA behind and proceed. They need to find a mutual agreement and satisfy the customer’s expectations. As there is much competition among the FDA, restaurants can communicate with each team and go for the better option.

Every business is very competitive, and they are now advertising through social media platforms, and the same applies to restaurants. While considering all the facts discussed above, restaurants can either partner with FDA or not, but both options have their impact as the FDA has become more linked with the customers than ever. Partnering with the FDA is highly recommended for restaurants, but they have to consider their profit margins.

References

Cinelli, M., Quattrociocchi, W., Galeazzi, A., Valensise, C. M., Brugnoli, E., Schmidt, A. L., Zola, P., Zollo, F., & Scala, A. (2020). The COVID-19 social media infodemic. Scientific Reports, 10(1). https://doi.org/10.1038/s41598-020-73510-5

Hampton, K. (2015). Persistent and Pervasive Community. American Behavioral Scientist, 60(1), 101-124. https://doi.org/10.1177/0002764215601714

Hampton, K. N., & Wellman, B. (2018). Lost and saved . . . again: The moral panic about the loss of community takes hold of social media. Contemporary Sociology: A Journal of Reviews, 47(6), 643–651. https://doi.org/10.1177/0094306118805415

Marks, G. (2020, December 2). Restaurant owners may not like delivery services – but can they do without them? | Gene Marks. The Guardian. Retrieved April 1, 2022, from https://www.theguardian.com/business/2020/dec/02/restaurant-owners-delivery-services-grubhub-doordash-fees-pandemic

 Niu, B., Li, Q., Mu, Z., Chen, L., & Ji, P. (2021). Platform Logistics or self-logistics? restaurants’ cooperation with online food-delivery platform considering profitability and Sustainability. International Journal of Production Economics, 234, 108064. https://doi.org/10.1016/j.ijpe.2021.108064

Ray, A., Dhir, A., Bala, P., & Kaur, P. (2019). Why do people use food delivery apps (FDA)? A uses and gratification theory perspective. Journal Of Retailing And Consumer Services, 51, 221-230. https://doi.org/10.1016/j.jretconser.2019.05.025

 Wetsler, T. (2021, November 2). Food delivery app boom continues following lockdown driven growth [web log]. Retrieved April 1, 2022, from https://www.adjust.com/blog/food-delivery-apps-thrive-following-covid-growth/.