Member Article

Restaurant Delivery Donut Profitability Data shared by Specialists

According to research by restaurant delivery specialist VROMO, the most profitable distance for hospitality venues and restaurants operating self delivery is within 2.14 miles.

VROMO, which provides restaurants with a ground-breaking software-as-a-service (SaaS) platform to manage restaurant food delivery, has identified the exact sweet spot for profitable restaurant delivery, that it’s calling the ideal ‘delivery doughnut’.

The company analysed data from users of its platform and found that deliveries within 2.14 miles of a restaurant are the most profitable for restaurants that manage their own deliveries.

For anything beyond the 2.14-mile mark, it usually becomes more cost-effective to use delivery service providers (DSPs), as it gets harder for restaurants to run profitable delivery services using their own fleets of drivers and riders.

VROMO’s CEO Alan Hickey says that use of data is important in helping restaurants to pinpoint where the dividing line is between operating their own profitable in-house delivery teams and drawing on the resources of DSPs.

Offering delivery to more-distant areas will obviously bring many new customers and increase revenue, but using an in-house delivery fleet to cover them will often bring inefficiency. Some contributing factors include the requirement for additional drivers, more driver idle time as they return to the restaurant, fewer opportunities to merge deliveries and, finally, having to extend the delivery time that the customers can expect, which can deter customers from ordering.

He comments:
“VROMO already integrates with some of the biggest DSP platforms in both the UK and US, so we have been able to analyse and compare data for those restaurants that self-deliver only, those that use a mix of self-delivery and DSPs, and those that use DSPs exclusively.

“We’ve crunched a lot of data from usage of the VROMO platform, and 2.14 miles is the optimum delivery doughnut diameter. Anything inside it is the sweet spot for restaurants to run their own delivery services efficiently and, most importantly, profitability. Anything outside that is where DSPs come into their own – in terms of both cost-effectiveness and meeting the demand for delivery.

“As restrictions are lifted and we get back to something like normal life, those restaurants that manage delivery very well and make it a seamless part of the overall dining experience will thrive.

“The smartest restaurants are those already using a mix of self-delivery and DSP strategies because it offers the best of both worlds – they can self-deliver to customers nearby and call on DSPs to deliver orders further afield.

“There’s never been a better time for restaurants to use all the tools out there to develop an excellent delivery model. They can take advantage of platforms such as VROMO to manage their in-house delivery teams within the doughnut, as well as use DSPs to complete deliveries further away.”

This was posted in Bdaily's Members' News section by Kirsty Hunt .