Third-party delivery platforms have become a staple for many restaurants, offering convenience for customers but often at a significant cost to restaurants with poor conditions for delivery workers. New York City has recently taken center stage in the gig economy debate, with policy changes impacting delivery workers and restaurants.
NYC’s Experiments
A significant concern many cities have with third-party platforms has been the low wages for delivery workers. A recent NYC law aimed to address this by raising the minimum pay for app-based delivery workers. Interestingly, a report by the NYC Taxi & Limousine Commission suggests this pay hike hasn’t hurt customer demand. This could be a game-changer, paving the way for similar regulations in other cities. While the long-term impact remains to be seen, it highlights the potential for a more balanced ecosystem where worker well-being doesn’t come at the expense of customer experience. However, it also poses a risk for restaurants that depend on this business, which could see a longer-term impact, especially in cities outside of New York, if it is widely adopted.
One downside to this change has been fewer workers, presumably due to tighter scheduling guidelines by third-party delivery platforms given the minimum wage requirements.
Another proposed NYC bill would allow delivery platforms to increase restaurant fees from the current 23% cap to 43%. The additional fees would be for optional marketing services. This would further pressure restaurant margins, already squeezed by rising food costs and operational expenses.
Taking Back Control: Direct Ordering
So, how can restaurants navigate this complex environment? One way is to mitigate your use of third-party apps where possible. Here are some strategies to encourage customers to order directly:
- Build a User-Friendly Online Ordering System: Invest in a user-friendly online ordering system that’s easy to navigate and accessible via your website or a branded app.
- Promote Direct Ordering Incentives: Offer exclusive discounts or loyalty programs for customers who order directly. Highlight the benefits of supporting your business directly, such as faster delivery times or menu items unavailable through third-party apps.
- Leverage Social Media: Use your social media platforms to promote your direct-ordering options. Run contests and promotions that encourage direct ordering.
- Partner with Loyalty Programs: Partner with local loyalty programs to incentivize direct ordering through targeted promotions.
- Highlight Transparency: Address customer concerns about hidden fees or menu markups on third-party platforms. Communicate the benefits of direct ordering, such as supporting your local business and ensuring a higher-quality dining experience.
The third-party delivery landscape is in flux. Cities and states will continue to adjust regulations around the gig economy, which will impact local restaurants. Following these changes in your area and nationally closely will help you stay ahead of changes; lowering your dependence on these apps will mitigate any impact. By prioritizing direct ordering and fostering loyalty with your customer base, your restaurant can navigate these changes and secure a sustainable future.
