2023-01-18

Self-pickup orders should not be subject to "delivery service tax"

As the trend of self-pickup orders continues to grow in the restaurant industry, it's important to understand the tax implications of this type of service. In some cases, delivery services can be a useful way to attract new customers. But is it reasonable to pay a third-party service fee for delivery and pickup for loyal clients who choose to pick up their orders themselves? Here are a few reasons why restaurants should have their own delivery service:

Unreasonable fees:

Paying delivery service taxes on self-pickup orders is unreasonable, as the customer is already doing the work themselves by picking up their own order.

Cost savings:

Self-pickup orders are a cost-saving option for both the customer and the restaurant. Customers save money on delivery fees, and restaurants save money on third-party fees. It makes no sense to subject self-pickup orders to the delivery service tax, especially since the customer is taking on the responsibility of picking up the order themselves.

Better control over the delivery process:

Having their own delivery service allows restaurants to have better control over the delivery process, ensuring that orders are delivered on time and in the best possible condition.

Building customer loyalty:

Offering a self-pickup option can help to build customer loyalty, as customers appreciate the convenience and cost savings of this type of service. Saving money on third-parties taxes, you are able to lower the prices for customers. They will certainly appreciate it!

Increased profits:

By offering self-pickup orders, restaurants can increase their profits by reducing delivery service taxes and third-party fees, allowing them to invest in their business and offer the best possible customer experience.

Generally, delivery services such as UberEats charge a commission fee on each order, which can range from 15% to 30% of the total order value. Additionally, delivery services may also charge a fee for each pickup or delivery made on behalf of the restaurant.
It's important for restaurants to carefully evaluate their options and understand the fees associated with each delivery service before making a decision. Restaurants may also want to consider factors such as the size and demographics of their target market, the quality of the delivery service, and the overall cost and value of using a delivery service.

Let’s analyse your target audience and see if your restaurant is to use third-party services.

	Reside in a nearby location	Live in your district	Live in another districts
Potential clients	They highly likely know you and are able to order directly from you without commission fees	May be reasonable as third party services provide you new clients.	Third-party services are reasonable because they give you new clients and you don’t have think about couriers
Your current clients	Definitely must order from you directly, you shouldn't pay commission to third-party services	Definitely must order from you directly, you shouldn't pay commission to third-party services	It depends. You need to compare the sum you give to the delivery services and how much would you spend on courier

Order type:

	Delivery	Takeaway
Potential clients	The first order is possible to make via aggregator (as it provides you new clients and it's reasonable to pay a fee for it). Our further aim is to make the clients order from your website directly to avoid commission.	The first order is possible to make via aggregator (as it provides you new clients and it's reasonable to pay a fee for it). Our further aim is to make the clients order from your website directly to avoid commission.
Current clients	It depends. You need to compare the sum you give to the delivery services and how much would you spend on courier	Definitely must order from you directly, you shouldn't pay commission to third-party services as in this case they do not provide any services

These tables only apply to citizens; tourists will find it easier to stick with the services they are familiar with. This is not relevant for those who have a one-time experience. The own ordering system is mainly beneficial for local residents.

Real case from our experience:

The restaurant operates both with aggregators and has its own order and delivery system. 30% of orders are delivered in-house, 30% are made and delivered through UberEats, and 40% through DoorDash. 70% of takeaway orders are placed through the restaurant's own website. The restaurant has one employee who handles the household affairs and delivers the orders during a portion of the workday. If he is busy, the restaurant orders an Uber Courier that delivers an order. So, the restaurant saves money on takeaway orders: the clients are aware of the website and make orders through it (read our article on how to make people ordering takeaway from you directly to get some tips). It also saves money on fees thanks to orders for delivery that are made through their own website. Working with third-party services provides them a traffic of new clients. Such an effective combination of ordering systems boost their traffic and revenue 🚀

In conclusion, it's essential for restaurants to understand the tax implications of self-pickup orders and the impact that delivery service taxes can have on their business. With the help of Umbi Space that provides built-in delivery and pickup options, restaurants can offer their customers the convenience and cost savings of self-pickup orders, without the burden of delivery service taxes. By having their own delivery service, restaurants can increase their profits and build customer loyalty.

Let's preserve and increase your income together? 🔥

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