Truth in advertising is vital in the restaurant delivery business. Here’s why.
In August 2022, DoorDash ran a 15-second TV spot supporting local businesses. Check it out here >
It’s admittedly a pretty clever ad. But it’s also misleading. Here’s why.
DoorDash is not a local business. In February 2022, DoorDash was valued at around $33 billion. If you subtract liabilities, the company’s net worth is about $4.67 billion. Plus, DoorDash operates across the United States, Canada, Australia, and Japan.
Second, DoorDash’s support of actual local businesses is mathematically questionable. In most geographies, DoorDash takes a 30% cut of every order.* This may seem like a reasonable commission rate, but the restaurant industry operates on tight margins. The average profit margin for a full-service restaurant is around 11%. Those numbers make it very difficult for restaurants to remain profitable and competitive.
The DoorDash ad closes with this text on screen, “Supporting local businesses and Dashers one buzz at a time.” However, even DoorDash’s reputation as an employer is questionable. Dashers have reported poor support from the company and dramatic discrepancies in pay. A Dasher may reject dozens of orders before they find one that pays well enough to make it worth their while.
In sum, DoorDash’s attempt to brand itself as a supporter of local businesses is a little dubious. And this is a costly miss, given current attitudes toward large corporations. 2022 marks the first year in which most Americans perceive big businesses negatively. Admittedly, it’s a slight majority—just 53%—but after a decade of a near-perfect split, it’s a meaningful shift.
Consumer sentiments toward small businesses are changing too. The COVID-19 pandemic triggered a massive spike in people’s devotion to and loyalty to local favorites. As a result, 82% of people are willing to spend a little extra to support local businesses.
Of course, DoorDash isn’t about to get canceled over that ad. But the ad’s lack of transparency may not land well with a particular group of consumers: Millennials. 84% of people born between 1982 and 2004 do not trust traditional advertising—and Gen Z isn’t much different. These younger generations have no tolerance for slick marketing tactics and can sniff out insincerity in a heartbeat. For a big company like DoorDash, trying to align itself with local businesses is a risky move.
So what does this mean regarding marketing your RDS?
This article may read like an attack on DoorDash. But really it’s a case study on the importance of authenticity. It’s hard for DoorDash to make a real case for its value to local businesses. Your RDS has a clear advantage: You actually are a local business. In a consumer environment that loves local businesses, this gives you a competitive edge that is simply unavailable to a major corporation.
So how do you capitalize on your status as a local favorite? Here are three key pieces of messaging to consider:
- Your RDS is a local business. For every $100 spent at a local business, $68 goes right back into the local economy. According to Forbes, “That’s more than twice the amount chains reinvest.” So, don’t be shy about sharing that statistic and discussing about the benefits of supporting local businesses over national chains.
- Your RDS supports other local businesses. This is an especially powerful angle if your restaurant clients are local favorites rather than big chains. You can be honest about why you prefer to partner with other small business owners. You can also be transparent about your pricing model and how you strive to protect restaurants’ profits. People will likely be drawn to you if you demonstrate your compassion for keeping local restaurants in business.
- Your RDS hires local workers. The COVID-19 pandemic nurtured a deep passion for workers’ rights and better treatment. Of course, the Big 3 also hire local folks to deliver food. Your advantage lies in how you treat and compensate your drivers. If you offer special perks or better pay than the big guys, be open about that. People will pay attention.
Don’t pretend to be someone you’re not.
Here’s the big lesson: You can’t cheat your way into earning people’s trust by pretending to be something you’re not. Today’s consumers can sniff out insincerity from a mile away, especially the younger generations. So play to your strengths.
To learn more about leveraging your position as a small business, take a look at our brief strategy guide >