Restaurant Marketing vs Delivery Apps

Today’s restaurant owners face a pivotal question: Should we rely on third-party delivery apps to increase sales, or focus on our own marketing efforts? While apps like DoorDash and UberEats grant you immediate access to a large pool of hungry customers, they can command a 25% commission per order. On the other hand, investing in direct marketing—even if you only have a $1,500 monthly budget—can help you keep more revenue in-house and build a loyal following over time.

1. Overview: Delivery Apps vs. In-House Marketing

Delivery Apps (DoorDash, UberEats, etc.)

1. Advantages
   • Immediate Access to Customers: Increases your visibility among people actively looking to order food.
   • No Heavy Lifting on Your Part: The platform handles the technology, payment processing, and sometimes delivery logistics.
   • Built-In Marketing: Delivery apps often feature restaurants in their newsletters or “nearby” listings.
2. Drawbacks
   • High Commissions (25%): This fee can consume a large slice of your profit on each order.
   • Limited Customer Data: Generally, the delivery service holds the customer relationship and contact information.
   • Brand Competition: You’re one of many eateries listed, making brand loyalty harder to foster.

In-House Marketing

1. Advantages
   • You Own the Relationship: When customers come directly to you (online or in-store), you can gather emails, phone numbers, and social media follows.
   • Better Margins: Even if you spend $1,500/month on marketing, you avoid handing over 25% of each sale.
   • Long-Term Brand Building: Your marketing efforts create lasting brand equity and customer loyalty.
2. Drawbacks
   • Requires Continuous Effort: Content creation, social media engagement, and campaign tracking are ongoing tasks.
   • Initial Costs: Whether you hire a marketer or spend on tools, you’ll need some upfront investment.
   • Slower Results: Building a following can take time, so you may not see an immediate surge in sales.

2. Financial Impact on a Restaurant P&L

Below is a simplified monthly P&L comparison, assuming $100,000 total revenue. Note how the 25% commission for delivery apps and varying marketing costs affect net profit. We compare two scenarios:

• Scenario A: Heavy reliance on delivery apps (50% of sales through apps), minimal marketing ($500/month).
• Scenario B: Moderate reliance on delivery apps (30% of sales through apps), higher in-house marketing ($1,500/month).

Scenario Details

• Scenario A
  • App Revenue: $50,000 (50% of total)
  • Direct Revenue: $50,000 (50% of total)
  • App Commission: 25% of $50,000 = $12,500
  • Marketing Spend: $500
• Scenario B
  • App Revenue: $30,000 (30% of total)
  • Direct Revenue: $70,000 (70% of total)
  • App Commission: 25% of $30,000 = $7,500
  • Marketing Spend: $1,500

Sample Monthly P&L Comparison

Key Takeaways

1. High App Commissions vs. Marketing Spend:
   • Scenario A pays $12,500 in commissions and only $500 in marketing.
   • Scenario B pays $7,500 in commissions but $1,500 in marketing.
2. Net Profit Difference:
   • Scenario A finishes with $14,500 (14.5% margin).
   • Scenario B nets $18,500 (18.5% margin).
3. Long-Term Strategy:
   • Scenario B invests more in brand-building while still coming out ahead financially. Over time, direct marketing efforts can further reduce reliance on high-commission channels.

3. Striking a Balance: Apps and In-House Marketing

1. Diversify Your Sales Channels
   • Relying exclusively on third-party apps is risky; if their fees increase, your margins shrink further. Having multiple revenue streams fortifies your bottom line.
2. Build a Loyal Customer Base
   • In-house marketing campaigns (email newsletters, social media promotions, loyalty programs) let you directly engage with your customers—leading to repeat business without ongoing commissions.
3. Negotiate or Experiment with Multiple Apps
   • Some apps may offer reduced commission tiers for self-delivery or special promotions. Shop around to find the best fit and minimize fees.

4. Tips for Maximizing a $1,500 Monthly Marketing Budget

1. Focus on High-Impact Channels
   • Prioritize Google Business Profile, local SEO, and social media ads targeted to your neighborhood. These typically yield solid returns for local businesses.
2. Email & SMS Marketing
   • Collect customer emails and phone numbers via online orders or in-store sign-ups. Send out weekly or monthly offers and updates—an extremely cost-effective way to drive repeat visits.
3. Encourage User-Generated Content
   • Run social media contests or ask customers to tag you in their posts. Reposting user-generated content not only saves on content creation but also increases authenticity.
4. Collaborate with Local Businesses
   • Co-promote events, provide joint discounts, or host pop-up nights with nearby retailers or community groups. This broadens your customer reach with minimal extra spend.
5. Track Your Return on Investment (ROI)
   • Monitor each marketing channel’s performance. If certain campaigns (e.g., Facebook ads) yield high sales, consider allocating more budget there.

5. Which Option Is More Beneficial?

As the P&L table shows, balancing your reliance on delivery apps with a modest investment in in-house marketing can lead to higher profit margins. Delivery apps can still be a useful channel, particularly for tapping into new or convenience-oriented customers. However, limiting app reliance and capturing more direct sales—even if you only spend $1,500 monthly on marketing—can reduce steep commissions and improve your overall financial health.

• If You’re New: Apps can give you immediate exposure, but allocate part of your budget to in-house marketing so you’re not fully dependent on third-party platforms.
• If You’re Established: Gradually shift more of your business toward direct channels to retain a larger share of revenue and cultivate loyal repeat customers.

Conclusion

The choice between relying heavily on delivery apps or investing in your own marketing isn’t black and white. Each approach has its pros and cons, and most restaurants find a hybrid strategy most effective. With apps charging 25% commissions, even a modest $1,500 monthly marketing budget can help you build stronger profit margins by reducing fees and growing a loyal customer base.

When planning your strategy, remember to:

• Measure your results (App-based orders vs. direct sales)
• Refine your marketing (Focus on top-performing channels)
• Cultivate customer relationships (User data is golden)

Over time, you’ll be able to optimize your approach for sustainable growth and increased profitability—without being at the mercy of third-party delivery platforms.

Need Assistance Finding the Right Mix?

Our combined expertise in restaurant consulting and marketing can help you craft a data-driven strategy that balances the convenience of delivery apps with the advantages of in-house marketing. Reach out for guidance on honing your P&L, setting up effective campaigns, and building a lasting brand presence in your community.