Food delivery services are still popular in Baton Rouge, but they’re not turning a profit
Food delivery services are still popular in Baton Rouge, but they don’t make a profit
Baton Rouge take-away meals. File photo by Collin Richie
Grocery delivery service how DoorDash and Uber Eats did big business during the pandemic, reports the Wall Street Journal, but even at the height of their popularity, the companies made no money. Now they are trying to apply new ideas to make their services profitable.
Delivery services, which primarily use apps to enable customers to place orders, make their profit by charging restaurants a percentage of each purchase and charging customers a service fee. These revenues are used to pay their delivery drivers, one of their biggest expenses,
The percentage of an order varies from service to service, says Emelie Alton, owner of Bistro Byronz. Bistro Byronz uses Waitr and Grubhub, while Pizza Byronz uses Waitr and Uber Eats. The food delivery services typically take up around 20-30% of the total amount of each order, Alton says.
After taking into account advertising costs and customer reimbursements, among other operating expenses, DoorDash remains an average of 2.5% of a customer’s total bill, according to an analysis by Deutsche Bank. That means DoorDash received 90 cents averaging $ 36 during the peak of the pandemic.
Food delivery “is and will be a lousy business,” Grubhub chief executive Matt Maloney told WSJ. As restaurants recover from the pandemic, Maloney believes more orders will move away from app delivery, but online orders will continue to be popular, be it for pickup or transportation by the restaurants’ own staff.
City Slice tried to start its own delivery service, says manager Loni Trabeaux, but it may have been too late. City Slice’s service only ran for a few months, and customers weren’t as willing to order directly from the restaurant as they were through grocery delivery apps, says Trabeaux. City Slice’s delivery app orders have increased 70% since before the pandemic.
DoorDash and Uber executives last year tested processes they can use in the future to increase their bottom line, resulting in fewer refunds.
However, many local customers have not seen such efficiency changes in action.
The accuracy of food delivery from these outside services depends on the weather and time of day, says Lance Leblanc, owner of Italian cafe La Divina. He didn’t notice any significant changes to the services over the past year.
This story originally appeared in a June 1 issue of the Daily Report. To stay up to date on Baton Rouge business and politics, subscribe to the free Daily Report e-newsletter here.
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