How the rise of the food delivery market is affecting the restaurant sector.
Restaurants have become an anchor for the retail sector amidst the so-called retail apocalypse caused by the rise of the e-commerce industry. However, restaurants are now facing their own kryptonite—food delivery services. Here’s how the rise of the food delivery market is affecting the restaurant sector.
With the rise of Postmates, GrubHub, DoorDash, UberEats, and other food delivery services, restaurants have taken a hit. Due to the high commission fees that restaurants have to pay to delivery apps, many restaurants have closed their physical locations and fired waitstaff to lower operating costs. For instance, UberEats charges restaurants a 30% commission on all orders.
While this business model is clearly bad for the restaurant industry, the popularity of food delivery apps makes it very difficult for restaurants to resist the allure. Between 2016 and 2018, global downloads of the top five delivery apps increased by 115%. By working with delivery app services, restaurants can serve more customers, increase demand, and improve brand recognition. These benefits make it hard to pass up partnerships with delivery services, despite their high cost.
However, many restaurant owners are starting to push back against the system created by food-delivery apps. Recently, New York’s city council held a hearing to discuss the negative impact of restaurant delivery services on the local hospitality industry.
This is how the rise of the food delivery market is affecting the restaurant sector. Interested in staying up to date with the latest commercial real estate news? If so, then contact the experts at California Commercial Realty Advisors, Inc. Your commercial realty advisors are eager to assist you with all your real estate needs today.