Delivery Co-Ops: The Answer to High Commission Fees?
Why Join Third Party Services?
During the height of the COVID-19 pandemic, food delivery took off. With dine-in restrictions in place, restaurants needed a surefire way to make money. Meanwhile customers still enjoy the ease and efficiency of ordering their favorite restaurants right to their door. As one of the few socially distant options available, takeout and delivery have grown enormously this past year.
For restaurants who maybe never offered delivery before, or at least didn’t focus that heavily on it, they needed a rapid way to pivot. Third party delivery apps offered this exact scenario: It was an attractive option at the beginning of COVID-19, when no one quite knew how to handle closures and didn’t have a ton of time to find out. Opening new delivery streams also costs a lot. Even now, restaurants struggle to get back to the (relative) financial stability they had pre-pandemic.
The problem with third parties is that they can get pretty expensive, too. Some restaurants report fees as high as 30%. Thus, business owners needed another solution. Some found it in joining together.
What Are Delivery Co-Ops?
When you think about co-ops, food delivery may not be the first thing that springs to mind. They’re member-owned and -controlled, so those with invested interests can control how the organization works. They all use and benefit from the co-op; with food delivery, that means many local restaurants band together to create a delivery service that they all share. Everyone gets to use the couriers, but everyone shares in the costs.
Delivery co-ops are already forming in many cities. These channels that hyperlocalize service. Then the restaurants get benefits like:
- lower service rates for customers,
- better pay for drivers, and
- higher percentage of profit for the restaurants themselves.
Even though they’re splitting the incoming revenue by tens or even hundreds of businesses (depending on where you’re situated), you still pull in more than you would with most third parties.
Meanwhile, companies can make sure that their employees are treated fairly and inclusively. They don’t have to entrust their workers’ care to outside parties, particularly given that the industry is rife with inequality. They set the rules, and that can mean taking better care of employees.
Delivery Co-Ops and the Future
They’re popping up all around the U.S. for a reason: They’re working. Delivery co-ops are a great way to open much-needed sales channels without breaking the bank on commission fees. But they’re not the only alternative.
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