The DoorDash Storefront Trap Restaurants Should Be Aware Of

Yes, it’s everywhere, and we all use it once, twice or more a week to place food orders. Doordash, as a service, that delivers your food to your customers is flawless if we speak from the perspective of the customers who receive the final delivery, but from a restaurant owner’s perspective — not so much!

And now that the giant corporation has launched its own online ordering system — DoorDash Storefront, we are already having second thoughts. Let’s find out why!

A bit on the background: The current global public health crisis has clearly benefited delivery companies like DoorDash and Uber Eats. The public health restrictions in many countries prevent some consumers from visiting their favorite restaurant, and many others prefer to avoid going outside entirely. As a result of this change in behavior, food delivery companies have seen revenue gains that are highly significant.

For instance, let’s talk about DoorDash and Uber Eats. UberEats’ revenues in the fourth quarter of 2020 increased 224% to reach $1.4 billion, while DoorDash’s revenues increased 226% to touch $970 million.

However, the picture is far from being rosy. Apps like DoorDash expand restaurants’ customer base and geographical reach, but some East Bay eateries say service fees eat into their bottom line. In spite of the success that Grubhub and DoorDash have reached during the pandemic, their fees are destroying restaurant margins.

What Do Restaurant Owners Have To Say About DoorDash?

Many restaurant owners across the United States have complained that there is no quality control on the food once it leaves the kitchen. The harsh fact is that they don’t like that the delivery people — who they don’t know — are the face of their product when it gets into the customer’s hand. Some delivery services listed restaurants without permission on their apps, and oftentimes published inaccurate or outdated menu items and prices. The reasons listed above are very much valid and widely-known.

In the end, restaurant owners are averse to delivery services for one big reason. Cost is the major issue here. A rise in deliveries brought on by the pandemic is causing those costs to become unsustainable for some.

“The simple truth is every delivery sale is a money-losing proposition for restaurants,” John Schall, the owner of two eateries, wrote in the Seattle Times. “With delivery sales at 70–80% of restaurant sales, the delivery companies are now taking 18–20% of restaurant revenues. When average restaurant profit margins are 8–10%, this makes restaurants no longer viable.”

Many of them, including DoorDash, charge fees of as much as 30% per order. Fees in cities such as Denver, Los Angeles and New York were so high that local governments had to cap what they could charge. The fees charged by these delivery services can kill a restaurant’s margins to the point that it is at most times only marginally profitable.

The Truth Behind Doordash Storefront

Well, after having a love-hate relationship with restaurant folks with their delivery app, Doordash storefront is all set to enter, what I would call, the Personal Space of the restaurants with their eponymous Storefront Model.

Doordash storefront is basically an Online Ordering System that allows restaurants to set up their own, in-house ordering system that their customers can use to place direct orders. Given my experience in the industry, it won’t be wrong to assume that all orders that come through this platform would be 100% profitable for the restaurant, as they don’t have to pay commission on every order. Right? At least that’s the whole point of investing in such technology — to get rid of the commission model that eats into the bottom line.

But that may not be the case with the DoorDash Storefront.

On their website they have mentioned “Pay only 2.9% + 30 cents per order for credit card processing”, which means that you’ll be charged 2.9% on card payments and an additional 30 cents for each order placed on the restaurant website.

Going one step further into their FAQ section, it has been clearly mentioned that customers would have to pay a flat $3.99 in delivery fee on each order coupled with 10% service fee on order subtotal. That’s how the system makes money for Doordash. Restaurants that choose Doordash Storefront to launch their own ordering website can only use DoorDash’s service for making last-mile deliveries.

Having said that, the above mentioned delivery service fee is inevitable!

And you thought they were inviting you for a free buffet? Well, there are no free lunches, folks!

Result?

The final order amount would turn out to be more expensive for customers compared to ordering from DoorDash Aggregator App or Website.

So basically, your customers may be interested in ordering from your website, but with the additional fee, they might find it cheaper to order from the aggregator portal. They love to save, and direct ordering isn’t helping them much if they choose your native website over aggregators’. The issue can be corrected if the restaurant chooses to bear all the additional cost, which once again puts the restaurant on the losing end.

Why Exclusive Online Ordering Platforms are a better fit for restaurants?

Pricing: Most of the restaurant online ordering systems like Restolabs, Menu drive, Toast, Ordering Co, offer a comprehensive system for a flat monthly fee, regardless of the number of orders or order size. For instance, the monthly subscription plan for Restolabs, one of the top online ordering system providers in the US market, starts at $45 and goes upto $99 for an enterprise level requirement. On the other hand, Menu drive charges $149 per month for the same level of features and services.

Flexibility: Of course, none of the ordering platforms listed here set any limitations or compulsions on who should be your delivery partner. Even if your restaurant decides to use the current employees to make deliveries, no additional service fee or commission would be charged on any order transaction. You get complete flexibility and control to set up delivery fees or other charges depending upon your own operational expenditures

Seamless POS Integrations: DoorDash clearly mentions on the website that DoorDash Storefront is compatible for direct integration with select POS providers. Which is fair as they are new to the business and still finding their way into the system. But a reliable and a robust online ordering system should be able to provide seamless integration with the POS of your choice. Not just the POS, but all this-party apps like payment, loyalty programs and so on, so you can deliver a seamless experience to your customers. Doordash Storefront is not the most successful in this department.

Unlimited Orders: Of course, a conditions-free, commission-free online ordering system allows you to receive unlimited orders across all digital sales channels. You don’t have to pay any additional fee if your order count or value reaches a limit. To get a fair deal, make sure you always clarify on this point with your online ordering system provider to avoid any bad surprises later on. Want to know what other important questions you must ask when choosing a technology provider? Visit this quick blog link here.

Conclusion

Given the fact that third-person delivery apps like DoorDash negatively impact the revenue-generation of the restaurants, it makes more sense to have independent online operations that the restaurants can themselves manage in a stress-free manner.

DoorDash Storefront is an attractive trap that would only bring adverse repercussions in the long-term. The DoorDash Storefront model is so designed that it would benefit the app itself rather than delivering to the restaurants the benefits that it promises. It would also prove to be of least help in bringing to the customers the tailored experiences that most of them are looking for. This is precisely why it is more advisable to opt for exclusive online ordering systems that would prove to be very adaptive, flexible, user-friendly and also very reliable.