A recent study conducted by leading Restaurant Operating System, Otter, has revealed figures on the financial impact of takeaway order cancellations for UK restaurants.
The study found that the last hour of operation is critical for cancellations, with restaurants experiencing a 1.74 times higher cancellation rate than those operating beyond this hour. On average, 20 percent of orders and 31 percent of cancellations occur within the last hour before closing time. In response to this challenge, Otter advocates for a review of restaurant operating hours and calls on businesses to establish buffer times to mitigate the clash between last-minute orders and closing schedules.
Based on a comprehensive analysis of 30 million orders processed in the UK from January 2023 to December 2023, Otter has identified key patterns and trends that reveal strategies to reduce cancelled orders and protect revenue. The research shows that cancelled orders predominantly happen during peak ordering periods. The evening rush from 6:00 pm to 9:00 pm witnesses the highest amount, accounting for 27 percent of cancellations among 36 percent of orders. Off-hours between 10:00 pm to 10:00 am account for 28 percent, but only 13 percent of orders.
The impact of cancelled orders is felt across the country, with UK restaurants facing a loss of between 0.66 percent and 1.33 percent of their weekly takeaway sales due to cancelled orders. For a restaurant generating a weekly revenue of £10,000, this translates to a loss of between £ 66 and £133 per week, or between £3,564 and £7,182 per year.
Cancellations arise when customers place online orders via delivery apps such as Uber Eats, Deliveroo, or Just Eat, which are subsequently cancelled by either the customer or the restaurant. Common reasons for customer cancellations include delayed deliveries, while internal issues, closed kitchens, or out-of-stock items are the primary reasons for restaurant cancellations.
The impact of order cancellations has extended beyond immediate financial losses. As delivery apps increasingly prioritise high-performing restaurants, most platforms will automatically pause stores that experience two cancellations or non-acceptances in a row, resulting in increased downtime and decreased order volume.
For restaurants looking to thrive in a highly competitive market, addressing the root causes of cancellations is imperative. By leveraging the insights from Otter's study and implementing proactive strategies to minimise cancellations, UK restaurants can ensure profitability and deliver exceptional customer experiences amid changing consumer preferences and market dynamics.
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