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What is the average revenue growth rate restaurants experience when they offer food delivery services to their customers?
Hello, and thank you for your question about the average revenue growth rate restaurants experience when they offer food delivery services to their customers. The short answer is after searching extensively through UberEats, Yelp, Seamless, case studies and anecdotal evidence, I have determined that no data exists that allows us to triangulate an average rate growth. However, I learned that a positive revenue impact can only be achieved if there is a n increase in sales volume to make up for the decrease in profit margins. Below you will find a deep dive into our findings.
METHODOLOGY
To answer your question, I began with your preferred search strategy of checking delivery platforms (ex. Yelp, Seamless) for company reports. I found a source from UberEats that was relevant. However, these reports have an obvious marketing bias and focus on the most successful cases available. Therefore, I investigated what restaurant owners are saying about how these apps affect their bottom line.
Next, I ran a series of open-ended searches in Google with terms such as "online food delivery growth rate," "restaurant growth with online food delivery," "UberEats/Yelp/Seamless case study," "case study online food delivery," and more. There does not appear to be any industry-wide research completed to answer your question. However, I identified three other restaurants and their hard data for revenue growth after implementing a food delivery service, these three cases are not enough to make an argument for an "average" revenue growth rate.
FINDINGS
Service fees vary from platform to platform with some services taking up to 30% in commissions. One problem facing restaurant owners is that platforms like Seamless want in-house and online pricing to be the same. Therefore, to make a profit, a family owned restaurant needs to "makes up in volume what it loses in margins."
UBEREATS
In the FAQ section of their website, UberEats claims that restaurants earn an average of over $6,400 per month. However, that is only the average for the top 25% of all active restaurants, so it is the average of the best results possible, not a realistic average of what any restaurant should expect.
GRUBHUB
GrubHub did an economic impact study that found restaurants using GrubHub were able to grow takeout revenue by 30%, which was equal to six times the revenue growth of restaurants not using the service. The study found that revenue growth was even more pronounced for small restaurants, who had more typical revenue increases of 50%. Another interesting aspect of the study was that GrubHub showed the service was able to cut order processing time by 50%, which made the restaurant more efficient.
MENDOCINO FARMS
Mendocino Farms was mentioned in an article in the LA Times as seeing a 2% to 3% growth in overall revenue after partnering with online food delivery service DoorDash. Two or three percent seems minor compared to the estimate of GrubHub of 30% to 50%, but it's important to note that this is the different between measuring the economic growth of overall sales in the restaurant versus growth just in takeout sales. The article further reported that DoorDash now handles 6% of all the business that the restaurant is able to service.
BAREBURGER
Bareburger, a burger join headquartered in Santa Monica, signed up for service with five apps for online food ordering and delivering. Within three months, they saw a 8% to 9% growth in revenue. Most recently, the company saw a 13% overall growth in sales.
NICK THE GREEK
Restaurateur Nick The Greek told the LA Times that he has seen a 15% growth in sales in the two years since implementing DoorDash online food delivery service.
OTHER ANECDOTAL EVIDENCE and RELEVANT STATISTICS
In my search for concrete case studies and hard numbers, I come across many anecdotal stories and unverifiable numbers. One story that seems reasonably credible was found in an article discussing trends in the overall restaurant industry. However, the story doesn't name the restaurant or the person giving the statistics, so I would not consider this a source worth of Wonder Research.
However, according to the story, the owner of this American BBQ restaurant completed 85 orders the previous day through UberEats. Day to day, the story goes, the restaurant expected one or two orders through another service, Foodoro. One reason that I wanted to include this unverifiable story is that it demonstrates the point that these service handle the "logisitics of delivery," making it possible for companies who would never have considered online delivery before to immediately implement a full-scale solution.
CONCLUSION
To wrap it up, there is strong evidence that restaurants do see an overall profit after implementation, sometimes up to 30% of monthly takeout revenue or $6,400 a month. However, this depends on if the restaurant is able to make up for lost profit by increasing sales volumes.
Thank you for using Wonder! Please let us know if we can help you with any additional research.