Why Delivery Apps May Lose Their Luster in 2022

April 13, 2022

The pandemic caused a lot of businesses to pivot how they delivered goods and services, with restaurants having to make some of the most significant changes.

Many restaurants decided to use delivery apps so that customers could enjoy their food safely at home. Since customers wanted to help keep their favorite restaurants afloat, delivery services saw a massive user surge. 

While the pandemic hasn’t entirely ended yet, many restrictions have been lifted. As a result, customers are starting to feel comfortable visiting their favorite eateries in person now, while some customers and restaurants alike cannot afford some of the expenses associated with delivery apps. Thus, delivery apps may lose their luster in 2022. 

Delivery Apps Weren’t as Utilized Pre-Pandemic

Many restaurants didn’t use delivery apps before the pandemic because they weren’t cost-effective. Furthermore, delivery places a significant burden on restaurants.An in-house delivery system is an expense, as additional staff is needed to prepare and deliver food. 

These delivery service apps saw a definitive boost in use during the pandemic. Yet, there hasn’t been much flexibility in making the services more affordable for the business or the customer, and delivery drivers haven’t seen any raises either. Instead, the effect has been the opposite. 

Part of the profit that delivery service apps saw can be attributed to more regions offering the service and more people signing up to be drivers because they lost their jobs. 

However, believe it or not, some of the biggest delivery service apps didn’t see as much profit as expected, given the way they spent money on marketing to previously untapped markets. 

Delivery Drivers Don’t Get the Best Treatment 

The additional income for drivers wasn’t much, given that it’s challenging to make a decent amount of money as a driver unless tips are tremendous, and orders are consistent.

So, while the opportunity to drive for a delivery service app is marketed as a decent income, the results for most drivers weren’t aligned with what was promised. 

The amount of food ordered per order and how many orders come in on a particular day impacta driver’s income, as does how much a customer tips them.

Customers also have the option not to tip. Many drivers would have to log a lot of hours to make good money unless luck was on their side that day, making it a stressful experience overall for drivers. 

Above all this, these drivers are not considered employees of the company they deliver for. They do not earn anything towards gas, and they do not receive any other benefits or tax deductions. Thus, many expenses are incurred for being a driver, which can have a driver operating at a loss. 

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Delivery Apps Can Cause Additional Costs

With how busy restaurants can be in and of themselves, having this extra service isn’t always feasible, especially for smaller restaurants.

Restaurants that did not want to have their own delivery team could use other services to deliver food, such as Uber Eats, GrubHub, and DoorDash. However, there are costs associated with using these services as well. 

Even when restaurants have been able to open with limited capacity, they wouldn’t see as many in-person customers due to the fear of getting sick. Customers also enjoy staying home and continue to receive restaurant-quality food. Thus, restaurants aren’t seeing as many physical customers due to the assumed convenience of getting food delivered.  

Restaurants earn much less when receiving an order through a delivery app, as the amounts they must pay for the apps to host their restaurant are high. 

There Is Not Much Profit

Given that delivery service apps charge such high fees to restaurants, and since they don’t appear to be going down soon, offering food on delivery apps can often lead to the restaurant operating at a loss. This is especially true for businesses that aren’t set up to have a drive-thru or other avenues for customers to get food without sitting down. 

The pandemic also caused labor shortages for many businesses, including restaurants and retail establishments that could deliver. Given the strain on these service industries, it was challenging for businesses to keep up with delivery orders while also potentially catering to a reduced capacity of customers visiting in person. 

Restaurants Have Had to Raise Prices

One of the only ways that businesses have been able to try and rationalize paying these fees is by raising the price of their items ordered through delivery apps. Unfortunately, this could make people not want to buy, because their costs will go up as well.

Thus, there isn’t much leeway to come out of this arrangement on top for the business or customer. The cost of food and supplies is also rising, so restaurants would have to raise their prices regardless. 

Read more about the future of delivery apps at Eater’s blog.

The Customer Loses as Well

Customers have, of course, enjoyed having more options for food delivery in their area. When customers have had additional income and want to treat themselves to some food, they could conveniently place an order on an app and have it delivered to their doorstep. The convenience of this on the customer’s end is still palpable. 

However, customers have also become more educated on ethical business practices, causing them to be wary of using delivery service apps that may not be paying their delivery drivers fairly. The apps are alsocharginghefty fees to the restaurants for using their service. 

The ride of delivery service fees for restaurants is no longer a viable business option for many. Therefore, customers who want to support restaurants, and tiny business eateries, would rather spend their money at the restaurant or pick up the food themselves to ensure that the most money goes to the restaurant. 

Delivery Apps Are Expensive

When services are convenient, that convenience often comes at a cost. Delivery apps are no exception. Whether from restaurants or stores, you often purchase items at a premium. You then must pay delivery fees and taxes and are encouraged to pay a tip to the delivery person, as you should. 

These costs can add up quickly, and as the economy hasn’t quite recovered and job security is still scarce, fewer, and fewer people can afford the convenience. Many apps will offer consistent incentives such as savings from orders or free delivery to try and keep customers ordering and have also been adding other businesses to allow groceries, pet supplies, and even prescriptions to be delivered through their apps. 

Final Thoughts

When the pandemic started for many businesses, delivery apps were a saving grace, but the benefits were short-term. While delivery apps could have had a significant impact on supporting businesses, their greed has won out, making the benefits relatively minimal for anyone other than the apps themselves. 

There are a lot of reasons why delivery apps aren’t the best way to support local businesses, especially now that many restrictions have been lifted. There’s a good chance that their appeal will fade this year and even more so after this year.

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