If you ever want to get my colleague, Jenn Marston fired up, just bring up the topic of third-party delivery commissions. Sure, Uber Eats, DoorDash and GrubHub may make delivery easier for a restaurant, but they do so at a high price, charging as much as a 30-percent-per-transaction commission on orders. For an industry like the restaurant biz, which is built on razor-thin margins, that’s just not tenable.
So we took note when Lyft said this week that it might get more into the meal delivery game, but do so at a much lower cost to the restaurants. As Restaurant Dive reports, Lyft could do this by eliminating the consumer facing app and acting solely as a delivery mechanism.
In this scenario, a customer would not go through the Lyft app to find a restaurant and order from it. Instead, the order would be placed directly through the restaurant’s website or app, and Lyft would just provide the drivers (of which it has more than 1 million).
Hybrid delivery strategies like this, where the restaurant owns the ordering and customer relationship and a third-party does the driving, aren’t new. DoorDash launched a couple of high-profile hybrid delivery partnerships with Little Caesar’s and Outback Steakhouse, for example.
A high-profile company like Lyft jumping into delivery could help push hybrid strategies more into the mainstream. And since Lyft wouldn’t be charging high commissions begin with, they could avoid revenue hits from delivery fee caps that have been put in place in various cities around the U.S. during this pandemic.
Obviously all of this is just talk from Lyft right now. If the company is moving at all in this direction, it’s still in the early stages. But just as with Uber, Lyft’s main ridesharing business has been decimated by the pandemic, so there is an urgency for the company to open up new lines of revenue. Uber piloted a commission-free delivery program earlier this year, but the orders still flowed through the Uber app.
The advantage for a restaurant using a hybrid strategy like the one Lyft is suggesting, is that the restaurant gets to keep more money and all of that customer data. But the downside is that it has to have the means to create its own online ordering presence. That’s made easier thanks to services like Chowly and Toast, but then restaurants still need to market its online presence and get people to not use a marketplace app like Uber and DoorDash.
There are still a lot of details to be figured out about any restaurant program Lyft might put into place, but if it saves restaurants money, well, that’ll be enough to get Jenn fired up.