New stats show 2.14 miles as optimum 'delivery donut diameter' for profitability

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Jul 07, 2021, 04:00 ET

NEW YORK, July 7, 2021 /PRNewswire/ -- For restaurants that operate on a self-delivery basis, a 2.14-mile 'donut' provides the optimum profit – according to new research from restaurant delivery software provider VROMO. For anything outside of this donut diameter, restaurants should consider calling in support from delivery service partners (DSPs), the company advises.

VROMO – a fast-growing company that provides US restaurants with a ground-breaking software-as-a-service (SaaS) platform to manage restaurant food delivery – has identified the exact ideal 'delivery donut diameter', which is the sweet spot for profitable restaurant self-delivery.

The company analyzed data from US users of its platform and found that deliveries within 2.14 miles of a restaurant are the most profitable for restaurants that manage their own deliveries.

For anything beyond the 2.14-mile mark, it usually becomes more cost-effective to use DSPs, as it gets harder for restaurants to run profitable delivery services using their own fleets of drivers and riders. Offering delivery to more-distant areas will obviously bring many new customers and increase revenue, but using an in-house delivery fleet to cover them will often bring inefficiency. Some contributing factors include the requirement for additional drivers, more driver idle time as they return to the restaurant, fewer opportunities to merge deliveries and, finally, having to extend the delivery time that the customers can expect, which can deter customers from ordering.

VROMO's CEO Alan Hickey says that the findings are important in helping restaurants to pinpoint where the dividing line is between operating their own profitable in-house delivery teams and drawing on the resources of DSPs.

"VROMO already integrates with some of the US's biggest DSP platforms, so we have been able to analyze and compare data for those restaurants that self-deliver only, those that use a mix of self-delivery and DSPs, and those that use DSPs exclusively," said Mr. Hickey.

"We've crunched a lot of data from usage of the VROMO platform, and 2.14 miles is the optimum delivery donut diameter. Anything inside it is the sweet spot for restaurants to run their own delivery services efficiently and, most importantly, profitability. Anything outside that is where DSPs come into their own – in terms of both cost-effectiveness and meeting the demand for delivery."

The findings of Paytronix's Annual Order & Delivery Report 2021 highlighted that restaurants said that 25% of their online orders placed in 2020 were for delivery. According to Mr. Hickey, this highlights not only that delivery is here to stay but also that it's set to become even more important for restaurants – so running a profitable delivery service is a must.

"The pandemic forced many restaurants to pivot to delivery, primarily as a way to keep trading – but as restrictions are lifted and we get back to something like normal life, those restaurants that manage delivery very well and make it a seamless part of the overall dining experience will thrive.

"The smartest restaurants are those already using a mix of self-delivery and DSP strategies because it offers the best of both worlds – they can self-deliver to customers nearby and call on DSPs to deliver orders further afield.

"There's never been a better time for restaurants to use all the tools out there to develop an excellent delivery model. They can take advantage of platforms such as VROMO to manage their in-house delivery teams within the donut, as well as use DSPs to complete deliveries further away."

About VROMO

VROMO.io was originally founded as WeBringg in 2016, offering the world's only dedicated software for restaurant food delivery. The delivery management software can easily integrate directly with a restaurant chain's system software, giving food brands complete control of food preparation, cooking and delivery. It expanded into the UK and Australia but was unable to find a software solution that was customized for hot food delivery, so it bought Spatula Ltd. to strengthen its offering. In response to huge demand for its software, it rebranded as VROMO in 2019 and pivoted exclusively to a SaaS model. In 2020, it launched in the US and has already partnered with some of the biggest brands in restaurant food delivery.

Follow VROMO on LinkedIn: https://www.linkedin.com/company/wearevromo

SOURCE VROMO