For the past year, restaurants are relying heavily on food delivery to keep their business afloat during the pandemic. Despite the pandemic, it was reported in reportlinker that the food delivery business is still expected to reach $126.91 billion in 2021. The growth is primarily driven by social distancing protocols, remote working schemes, and restrictions in commercial activities that drove restaurants to heavily invest in food delivery. Customers are now embracing that the new normal for restaurant transactions is through food delivery.
How do delivery aggregators work?
One trend that helped restaurants grow their delivery process is the rise of food delivery aggregators via apps. With just a tap in customer’s mobile phones, customers can easily place their orders from their favorite restaurants using the food delivery aggregators app.
In the US, the major players in this industry are Grubhub, Doordash, and UberEats. Customers use these apps for free but some restaurants will require a minimum order amount, may also charge varying delivery fees, and allow customers to tip them and the delivery personnel. These apps also promote contactless deliveries to ensure the safety of the customers during these transactions.
While in India, the top players are Swiggy and Zomato. All these food aggregator apps offer exclusive deals, vouchers, and discounts. These apps also allow a cash-on-delivery payment method, making them accessible to all customers including those who do not use cashless payments.
On the other side of the business, restaurants that partnered with food delivery aggregators are usually charged a commission rate from 15-25% of the total order amount. This covers the use of the app to receive orders and the placement of the restaurant in the list of participating restaurants in the ordering app. In some instances, the delivery fee is also charged to the restaurant as part of their agreement.
What is a cloud kitchen?
To save on rental and operating costs, restaurants also accepted and jumped into cloud kitchen setups. Cloud kitchen is a type of restaurant model that caters to delivery transactions only. There is no dining area, storefront, or signage that could be associated with the restaurant brands. These are usually located in areas that are not easily accessible by foot traffic because they rely on delivery transactions but are still located within the retail trade radius of commercial and residential areas. Because of this and the regulations implemented during the pandemic, restaurants prefer to operate in cloud kitchen setups than in traditional brick and mortar branches. The rental cost is lower and the shared spaces inside the facility allow restaurant operators to have a lower initial investment cost to run the business.
How do restaurants operate in cloud kitchens using delivery aggregators?
The combination of food delivery aggregators and cloud kitchen facilities allowed restaurants to thrive and even grow during the pandemic. Restaurants now rely on food delivery aggregators to receive orders from customers. This means that restaurants do not need to create and maintain their local ordering app or website anymore. Restaurant owners can now save on the high cost of developing and launching their own ordering applications. Customers will order through the food delivery aggregator app and restaurant staff will just accept the order using a device or a web portal that is also provided by the aggregator company. As a restaurant owner, you can partner with several food delivery aggregators that will allow you to capture more markets to receive more orders from different channels without requiring additional marketing effort.
Once a customer orders using a food delivery aggregator app, the order will be transferred to a cloud-based database that will transmit it to you. Orders will be accepted in the devices in your operating space in the cloud kitchen. After accepting the orders, your staff will need to punch these transactions into the POS to properly account for your sales and inventory. Kitchen order tickets will then be printed that will be used as a reference for your kitchen staff to cook and assemble food products ordered by the customer. While preparing the order, the system of the delivery aggregator will send two types of notifications. One notification for the customer that his order is now being prepared and another notification for the delivery personnel that he needs to proceed to the cloud kitchen facility to pick up an order that needs to be delivered.
When the order is ready, you may dispatch it to the delivery personnel waiting in the cloud kitchen’s lounge together with the kitchen order ticket to cross-check that complete orders are being dispatched. The customer will receive another notification that his order has already been picked up and is now on its way to be delivered. You will now just wait for the customer to confirm that the order was delivered to them.
With this kind of setup, you just need to focus on preparing and assembling high-quality products, applying food safety protocols, and maintaining the cleanliness and sanitation of your production area. All other activities are now outsourced to the food delivery aggregators.
What is the issue?
Receiving orders from several aggregators using several devices during peak hours can be taxing and frustrating for your staff because all transactions need to be punched in the POS as soon as these are received to ensure that your sales and inventory data will be accurate.
If you are receiving more than 10 orders per minute, your staff will get overwhelmed and will start to relay orders manually to the kitchen team. If this happens, there is a high possibility that your team will miss an item or an order because of the manual intervention done by your staff. You can also lose sales when orders are accepted manually because there is only a 20-30 seconds acceptance period that restaurants need to comply with. In addition, when orders are punched at a later time, the sales data that you can use for forecasting raw materials and production schedule will also become distorted and unusable.
California Burrito, a restaurant chain with 37 outlets in India that serves Indian-Mexican fusion cuisine, was focused on growing their delivery business but had to allocate additional 2 staff members to do manual punching of delivery transactions during end-of-day operations.
How to solve this issue?
To address this, you may consider using an order consolidator or aggregator of all third party orders(TPB). Order consolidator is a type of software that consolidates all orders received from your partner aggregators. Because consolidators are usually integrated into POS systems, the orders received will also be automatically punched into the POS. There is no need for your staff to punch the transactions one by one or to manually relay them to assemblers. Your staff can now focus on ensuring that complete products are prepared and dispatched to the delivery personnel. To complement this setup, you can also consider installing kitchen display screens in your production area. These screens will be used by your assemblers during product preparation and assembly instead of the printed order list that can easily get lost during peak hours.
California Burrito implemented an order consolidator to reconcile all their delivery transactions. The delivery business was contributing 35% of their total revenue and was even able to reduce 2 staff who were previously manually punching orders.
Cake Zone operates in 27 branches in 5 cities and accepts at least 2500 orders per day. They operate in cloud kitchen models and 100% of their transactions come from aggregators. To keep up with the growing demand, they implemented an order consolidator that also allows them to make changes on their menu in as fast as 4 seconds, which was previously 4 days.
What are the benefits of reconciling accounts in cloud kitchens?
When an order consolidator and kitchen display screens are used in your cloud kitchen operators, you can generate savings on manpower because you will not need a dedicated staff to receive and punch orders anymore. All orders will be automatically accepted and punched into the POS by the order consolidator and will also be automatically displayed in the kitchen display screens for product assembly. With this setup, you can also lessen the possibility of missing out on products and serving incomplete orders to your customers.
Using third-party aggregators in cloud kitchen operations allows restaurant managers to focus on producing high-quality food products. The processing of orders from different channels and the delivery of the food products are now outsourced to easily manage operations. To complement this setup, restaurant managers can also use consolidators to reconcile all orders to have a smoother flow of operations, especially during peak hours. Because of all these improvements and technology, running a restaurant business is now easier and more efficient.
Learn more: A-Z guide how to choose a restaurant management software