On a recent episode of The Trust Factor Radio with Neil Howe, Paul Mikel, CEO of Snap Delivered, discussed How To Save Restaurants Money On Food Delivery Service.
According to Mikel, Restaurants have been hurting since the lockdowns. The delivery industry has been booming, however, restaurants are being squeezed out of profits by big delivery companies with their high commission fees.
Restaurant delivery service is a relatively new sector of the restaurant industry, but over the past few years, it has grown to a $100+ Billion dollar industry where some big names like Doordash, Grubhub, and UberEats control most of the market. Forbes predicts by 2025 restaurant delivery will double to over $200 billion and the recent restrictions from Covid19 have only increased that velocity.
Mikel said “I started realizing restaurants were getting charged 15% to 30% on every order. On a $100 order, they’re paying $15 to $30 before it ever leaves their place. I didn’t understand how restaurants could do that. I didn’t think it was a long-term viable business, because I didn’t think the restaurants were going to pay that 15 to 30%. They might do it at the beginning. They might do it for a while. But sooner or later, it was going to be something they didn’t want to do anymore.”
When host Neil Howe asked, What other fees do companies like Uber Eats, Grubhub, and Doordash charge? Mikel answered, “They put fees in any place they possibly can. I’ll give you an example. I have friends of mine, who are actually restaurant owners. They were testing out other delivery services because they were going to invest big time in our company to help us in our growth and expansion. They said, Paul, look at this, it says that their delivery fee is only $2.99. And yours is $5 per delivery or $10 a month. I said, Well if it’s $10 a month, and you do 10 orders that brings it down to $1 an order. And most people that order delivery order over and over and over. But, I said let me look at your receipt. They showed me the receipt. It was a $48 order. I said let’s round it to $50 just for you know argument’s sake. I said look at the taxes and fees line. Taxes and fees were $13.72. I said, What’s your tax rate in your area? They said 7%. And I said so your sales tax, 7% of $50 is $3.50. Right? There’s another $10 and whatever change that they’re charging you that you don’t even realize because it’s in taxes and fees. So you just look at it and go on. So essentially, they’re charging you that $2.99 plus the $10, you’re $13 on a delivery fee. Plus, you don’t even know if they raised the price of the food. There are all kinds of ways that they hide things in there. And not all of them do it, but most of them do.”
During the interview Mikel shared that they are looking for independent reps to share their business, explaining, “We want to have local people available that if there’s a problem with an order, or something needs to be done we want somebody locally that can go there and fix it, but we also want to build a nationwide network of people. Instead of hundreds of millions of dollars going into advertising, which is how the big, funded corporations get their customers, we wanted to have independent reps. So an independent rep can get started with us and they can start building their own book of business by sharing with local restaurants, drivers, and customers.”
The interview concluded with Mikel saying “We are looking for sharp, motivated individuals who may have contacts with restaurants, or are willing to contact restaurants. Some may own restaurants if they’re watching or listening to this or manage restaurants. We want to be the company that comes out and helps save the restaurants because a lot of them have been through a lot of bad things over the last couple of years. But, delivery is not going away. It’s becoming bigger and bigger every day and we are going to be a major player in it. We’re going to do it the right way.”
Paul Mikel is an entrepreneur that has started many successful multimillion-dollar businesses. He is now in the restaurant delivery space using the same business model to offer restaurants a better deal and to save them money on delivery fees. Snap Delivered business model also helps to grow local economies by keeping the money circulating locally instead of heading to big corporations.
To listen to the full interview on The Trust Factor Radio, visit https://businessinnovatorsradio.com/snap-delivered-ceo-paul-mikel-shares-new-restaurant-delivery-service-business-model
To learn more about Paul Mikel and Snap Delivered, please visit https://snapdelivered.com
Video Link: https://www.youtube.com/embed/dqkJ0ttXxsQ