This food-ordering app promises not to devour restaurant revenue and reward eaters instead.
Seated, an app that originated as a rewards-based reservations platform, had to rethink its business model when the coronavirus shut down restaurants across the country. And with more people eating at home, it expanded to delivery this week.
But unlike third-party delivery services like Grubhub, Uber Eats and DoorDash, which can take anywhere between 10 and 30 percent in commission fees per order, Seated Delivery doesn’t take a cut of restaurant profits. Instead, it incentivizes customers by offering a percentage (up to 30 percent back per order) of what they spend per order as a reward they can redeem for credits with their favorite brands like Sephora, Airbnb or Nordstrom.
Restaurants can then use their own staff to deliver or choose a local courier service like Relay.
During COVID when many restaurant dining rooms remain closed or have capacity limits, owners need to bring in as much as they can to make up for lost profits earlier this year.
Seated’s co-founder Bo Peabody, a restaurant owner, saw first-hand how third-party delivery service fees impacted restaurants, especially small, family-owned businesses. So he decided to build a business model in which Seated cashes in on big brands and allows restaurants to retain their profits while growing their customer base.
“It’s predicted that delivery, which previously made up less than 10 percent of most restaurants’ revenue, will now make up 30 to 40 percent of revenue as restaurants remain closed, or begin to open with capacity restrictions,” Peabody said. “Restaurants are an essential part of our culture, and the fees delivery marketplaces charge are not sustainable for businesses that are already struggling to survive.”
The restaurant industry is estimated to lose a staggering $240 billion by the end of 2020 as a result of the pandemic, according to the National Restaurant Association. And to help businesses stay afloat, local governments mandated third-party delivery services cap their fees to between 10 and 15 percent in cities like Seattle, San Fransico, Boston and New York.
But small businesses had been pushing back against third-party delivery services even before the coronavirus pandemic hit arguing high commission fees take a big chunk of the business, particularly for those where the average check is around $10.
Like Seated, a number of restaurant reservation platforms have begun implementing delivery capabilities. OpenTable, a restaurant reservation app that lets users browse times available at their favorite restaurants to dine in, launched a partnership with third-party delivery services like Caviar, Grubhub and Uber Eats earlier last year, allowing eaters to opt for delivery and pick-up options at thousands of restaurants listed on the website.
Sales for meal delivery services more than doubled by the end of May 2020 compared to May 2019, according to data from Second Measure. And 29 percent of Americans order from platforms like Grubhub, DoorDash and Uber Eats, up from last year's 23 percent.
The food delivery wars continue to wage. Uber confirmed earlier this week it purchased delivery service Postmates in a $2.65 billion all-stock deal.