the evolution of online restaurant delivery service

I read an article today that reported on restaurant owners that were losing money to online delivery services like Seamless and GrubHub.  These services, while great for the customers that use them, are laden with heavy fees for the restaurant owners.  These fees have actually caused a loss for many restaurant owners and a lot of them are looking to get out of their deal with the online delivery services.

The problem is that these delivery services are a huge convenience for diners…especially in cities like New York.  Many restaurant owners feel as though they are stuck.  Either lose money using the online services because of the huge fees (14% or more of each order goes back to the service, plus fees for online marketing)…or lose money because diners won’t order from your restaurant if you don’t use the online delivery services.

Customers like the convenience of going to one site for delivery from all of their favorite local restaurants so those restaurants that think they can convince customers to start ordering from their individual restaurant sites are sadly mistaken.  A customer wants to be able to go to a site, look at the restaurants available to them in a certain area, and then order without having to go to a second site.  That’s what Seamless and GrubHub offer.  Customers are also now used to not having to pay for delivery so restaurants looking to go it alone are in a tough spot.

What is the solution?

One might be for restaurants to work together in creating their own online delivery service.  If restaurant owners could get together and agree on setting up their own online delivery service where any restaurant owner could join for a monthly fee to help with operating costs they could skip the profit making services like Seamless and GrubHub (soon to be close to a monopoly if their merger is approved).  The key would be getting as many restaurants involved as possible to keep the monthly fees to a minimum.

I personally think services like Seamless and GrubHub are not longed for this world because their model on benefits one side and actually hurts their actual customer.  Sidestepping this middle man by working together towards the common good is the simplest and most cost effective solution.

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