Restaurants and third-party delivery companies have a complicated relationship.
The aggregators became a useful tool during the pandemic for restaurants that didn’t have online ordering or their own delivery drivers. But they also charged a lot for their services. And they kept valuable customer data, essentially putting a wall between restaurants and the people buying their food.
Savvy operators have begun using the apps to attract new customers and then funnel them into their own direct ordering channels, which are more profitable and also allow restaurants to learn more about their guests.
That, however, has not been an easy task. And it appears that on the whole, local restaurants are still ceding ground to the tech giants.
“All we can go upon is really instinct, and I would say that restaurants are still losing that battle and that consumers are in some ways addicted to their ordering habits at this point,” said Anna Tauzin, senior director of industry relations for ChowNow, an online ordering company whose goal is to offer restaurants an alternative to the big aggregators.
As Tauzin pointed out, there’s not a lot of data on restaurants’ success at converting customers. We do know, though, that the number of people who use apps like Uber Eats and DoorDash is growing.
DoorDash ended 2021 with more than 25 million monthly active users, a 25% year-over-year increase. Uber Eats similarly reported that monthly active users increased 14% last year.
Their growth underscores what restaurants are up against. The delivery companies are marketing experts, and they have tons of customer data to fuel those efforts. They’re also well-funded, which allows them to pay for discounts and other promotions that get people to sign up and keep coming back.
“The data … is what is helping DoorDash steal share,” said Zach Goldstein, CEO of restaurant loyalty provider Thanx. “They know who their customers are and they market to those customers.”
Thanx, like ChowNow, said it wants to help restaurants win those customers back by offering them marketing tools that rival the big providers’. But Goldstein agreed with Tauzin’s assessment that restaurants aren’t making much progress.
He looked at the number of new Thanx customers who lost patrons to third-party deliverers over the last 12 months. "It's pretty massive," Goldstein said. “This remains a very common trend.”
“When your fingers know the maneuvers to make to get food delivered to you quickly, it’s a really hard habit to break.” —Anna Tauzin, ChowNow
One reason for optimism is that consumers have said over and over that they would rather order directly from a restaurant than a third-party provider. DoorDash’s own research backs this up. And yet, what people say is not always what they do. For instance, they keep signing up for DoorDash. And those apps are tough to quit.
“Habit is a big part of how diners order these days,” Tauzin said. “When your fingers know the maneuvers to make to get food delivered to you quickly, it’s a really hard habit to break.”
ChowNow has tried to tackle that problem by showing consumers the positive impact they can make when they order through the platform, which doesn’t charge commissions and shares all customer data with restaurants. In December, it launched a new feature called Diner Impact Score that shows individual users how much money they’ve saved restaurants by ordering with ChowNow instead of a third-party delivery provider.
As of yesterday, the total amount restaurants had saved by using ChowNow was $470 million, Tauzin said. Chicago restaurant Carnitas Uruapan had saved $44,000. The Hand-Pulled Noodle in New York had saved $281,791.
Those figures don’t necessarily indicate that customers are migrating from delivery apps to restaurants. But they do show the kind of effect a wholesale behavioral shift could have.
And some restaurants on the platform have succeeded at getting customers to migrate over, Tauzin said. The best way to do it has proven to be pretty old-fashioned: “They’re talking about it,” she said. “They’re not afraid to bring it up with their consumers and their diners.”
That could mean a bag stuffer, a social media post or even a face-to-face conversation when a customer comes in to pick up their meal urging them to order directly next time. Tamper-evident labels are a particularly good place to print a message because customers have to spend time opening them, Tauzin said.
And while things may be bleak now, she is optimistic restaurants will eventually turn the tide.
“Restaurants are the most creative, wonderful people,” she said. “If anyone can figure this out, it’s going to be them.”