Third Party Delivery

Services like Netflix and Amazon have increased consumer demand for direct, in-home entertainment and goods – including food! It is becoming increasingly important for restaurants to offer delivery services. According to Technomic, 86% of consumers use off-premise channels at least once a month, with off-premise sales making up 44% of all restaurant sales. In addition, the average US consumer places 48 orders for delivery per year, with 18-24-year olds placing 66 orders per year1.

Third party delivery services assist restaurants in entering the world of delivery by providing an online ordering platform and taking on the responsibility for getting the food from your restaurant to your customer’s front door. The market for third party delivery services is huge and growing with 59% sales growth in 20182. However, it is important to balance your profitability, customer satisfaction, operational efficiency and the overall quality of your brand when considering third party delivery.

Pros

  • Meet consumer demand for delivery
  • Attract new customers through third party delivery apps or simply by offering delivery as an option
  • Consumers that use a third party app are going to order something from that platform’s offering, getting your restaurant in their consideration set
  • Potentially gain incremental business, such as late-night deliveries
  • No cost of entry since service covers driver salary, insurance, delivery equipment, etc.
  • No need to develop a new competency in delivery, allowing you to focus on making great food
  • Increased check averages for online orders by selling more appetizers, desserts and beverages since customers ordering online increase their spend 26% at QSRs3
  • Several third party delivery services to choose from, keeping the market competitive for service providers

Cons

  • Shrinking profit margin due to high commissions (ranging from 15-30%) charged by third party delivery services
  • Customer loyalty shifts from your restaurant to the delivery service, which is working with several restaurants (including competitors) at a time
  • Lack of control in how long delivery time will be, which is the biggest variable in customer satisfaction with optimal wait time being no more than 60 minutes4
  • Unable to guarantee the quality of how your food will arrive to the customer, creating a negative experience if the food arrives cold or soggy that the customer may attribute to your restaurant and not the delivery company
  • Potential to lose out on (or need to pay for) customer data that you typically get from your POS system
  • Varied levels of customer engagement depending on which third party services are widely used in your market – do your research before choosing a service
  • Additional training to ensure your staff is equipped to work effectively with the service
  • Your operation’s existing set up, make lines and packaging may need to be adjusted to accommodate the delivery service
  • Long-term contracts may oblige you to stay with a company that isn’t meeting your needs

Ultimately, the decision to utilize a third party delivery service must tie back to your business and marketing objectives. Whatever you decide to do in regard to delivery, Grande is here to support you with box stickers and custom designed take-out menus to enhance your brand recognition and set you apart from the competition.

Learn more about pizza delivery at PerfectingPizza.com. Download their Real Cost of Delivery Spreadsheet to see how all of the options compare and affect your bottom line.

Sources:

1Cowen & Co.

2Technomic, 2018

3Deloitte Digital, 2016

4McKinsey & Company, 2016

Date: May 11, 2020

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