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Maximizing Profits for Restaurants in the COVID-19 Era

By Wei Yang Ang

I love food. I can barely cook, so I love eating out. I love the communal feeling of eating with others. With the rise of COVID-19, the restaurant scene is experiencing changes that have never been experienced before (RIP ordering and sharing food). Now I know that I am 3 months late to the #takeout season party, but I’d like to share two suggestions regarding ordering out and purchasing food.

1) Avoid the usage of food delivery apps. Do not get me wrong, I am not accusing them of being illegal, and I am certainly not in a position to judge if a corporation’s actions and business model is ethical. Food delivery apps take a large commission, as a 35% commission rate is not uncommon. Restaurants, especially independently-run ones, have a profit margin of 10%. Unless you are paying 35% more food in the app, excluding delivery and app service fees, the restaurant itself is subsidizing your food order. If there are discounted offers in the app, this will again be funded by the restaurant. Having lived in Jakarta, Indonesia, this was honestly very surprising. There is a fierce food delivery digital wallet war going on, where different startups offer attractive discounts. The difference is, the startups are funding these discounts, not the restaurant themselves.

My goal when ordering food is that I want as much money as possible to go directly to the restaurant itself. When I order food, I avoid the food delivery apps and order directly from the restaurant. The weather is nice in Champaign, so I will just walk to the restaurant. It’s great exercise too! When I really need delivery, I order from restaurants who have their own delivery fleet (shoutout to Siam Terrace, Black Dog, and Oh, Honey Pie).

Some of you would also argue that by ordering through the app and picking it up by yourself, you would be saving precious time. Well, in my experience, all the restaurants I see in the food delivery apps accept phone orders. So call ahead and pay at pickup!

P.S. Just as I was finishing writing this blog post, the New York Times came out with two articles concerning food delivery apps. They did a much better job in explaining and researching this topic and they can be found here and here.

2) Pay with cash. Disclaimer; this is AGAINST CDC or ANY guidelines. I have to admit, even I stopped doing this myself unless I had exact change, and I would also round to the nearest dollar. Sidenote: I am interning and have interned for over a year in the largest Private Label Credit Card Issuer in the USA, Synchrony Financial, but it is highly unlikely you will be able to use one of Synchrony’s card in a restaurant. When you pay with a credit card, there are at least 3 different fees: interchange and assessment fees charged by the bank (e.g. Visa, American Express, JPMorgan Chase, etc) and processing fees charged by the payment processor (e.g. Square, National Processing). The bank would charge around 2%, while the payment processor would charge around 0.5%, except for Square, who charges an astronomical 2.75%. A detailed breakdown can be found here.

With the same goal of getting as much money as possible to the restaurant, I try my best to pay cash with the exact amount. In Champaign, some restaurants provide discounts when customers pay with cash, such as Cravings, Mid-Summer Lounge, Lai Lai Wok, and Mandarin Wok.

What I wish we could start doing: Bringing our own takeout containers. With the sudden increase in the need for takeout containers, there are rumors circulating among the Singapore food community that there is a large spike in the prices of takeout containers. The supply chain resiliency of the United States of America is undoubtedly much stronger than Singapore, and I was not able to find solid data on the price increase of takeout boxes in the USA. However, I would not be surprised if the prices of containers in the USA has also increased. Even if the prices did not spike, I still wish I could be more environmentally friendly by bringing my own lunch boxes. There is no reason why I would need 5 different boxes for 5 different takeouts. It is hard enough for me to tell the restaurant I do not need single-use utensils, I could imagine a big argument if I insist on using my own reusable boxes.

Whatever you do, stay safe, stay home, and only go out when you really need to. If you do need to go out, wear a mask, use plenty of hand sanitizer and hand soap. We are not out of the woods yet. The more disciplined we are, the faster we can defeat this virus. Yes, quarantine fatigue is real (this is coming from a guy who is stuck in the USA with no immediate family members and whose roommate left Champaign in late March). Hang in there and this will be over soon. I am looking forward to the day we can all share a meal without any worries.

Wei Yang Ang

Wei is currently in T&M Class XXV, a rising senior in Electrical Engineering, from Singapore,  and is currently interning with Synchrony Financial as an Emerging Technology Intern.

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