Excitingly, the demand for the off-premises, in-home consumption of restaurant food has continued to stay strong as states across the nation begin to relax their dining restrictions. For some segments of the industry delivery was a large portion of their business before the pandemic, but, for the larger majority of the industry, the need for survival dictated a necessary and expedited pivot into the delivery business during 2020.
With foods of all styles -from fast food to fine dining- having now been available to consumers through delivery everyone in the industry expects the demand for these services to continue post-pandemic. If a customer cannot get a meal delivered from their preferred location then there’s the chance they will take their business elsewhere. This opens up the opportunity for the permanent loss of business as these, previously loyal, customer fulfill their needs elsewhere and find new favorites that fulfill all their needs.
If you’re thinking of offering delivery the time is NOW! Before your customers go searching for someone else to drop the succulent meal they’re craving onto their doorstep for them.
In today’s heavily connected world there are two delivery service options available to restaurant operators: 3rd Party Delivery Services and Proprietary Delivery Services. Both have their pros and cons and deciding which method best suits a venue can be a challenge, but the final decision rests entirely upon the personal circumstances of each restaurant. We’ve delved into both 3rd party and proprietary delivery services to work out the pros and cons of both, and have laid these out to help restaurant operators better choose which option they may want to use to facilitate delivery from their location.
3rd Party Delivery - What is 3rd Party Delivery?
Firstly, What is 3rd party delivery? A 3rd party delivery service is a company whom restaurants can hire to take care of their delivery service for them. 3rd party delivery services possess the cars and the drivers need to execute deliveries and they often work will multiple restaurants in the same area.
Many 3rd party delivery services rose to stardom during the pandemic, but not without criticism. Hiring a middleman to do your business for you, especially when you’re in a customer-service-centric industry, can be a roll of the dice. But that dice roll, just like on the craps table, has huge potential.
Positives
- Easy Setup - With everything already in place these 3rd party providers can have you up and rolling on their app or website within a week.
- Increased Visibility and Discoverability - Being present on a 3rd party marketplace increases a restaurant’s exposer to potential customers that may not have known of the restaurant’s existence until they scrolled upon it.
- Loyal Customers - 3rd party delivery services, just like restaurants, have loyal customers, and they often have reward schemes enticing them to stay loyal.
- No Advertising Costs - Being on a 3rd party marketplaces means that a restaurant is automatically being advertised to hungry customers scrolling through the app.
- Tested and Successful - The 3rd party companies that are out there are out there for a reason.
- You Can Focus Elsewhere - With all elements of delivery taken care of by a 3rd party, you can spend more time focusing on what already makes you great, your product!
Negatives
- High Commission Fees - It has been noted many times that 3rd party delivery services can charge extortionately high delivery fees, which can have had a hugely detrimental impact on restaurants and their employees.
- No Control - The delivery drivers and last mile delivery are out of a restaurant's control. They’re placing their faith entirely in the 3rd party.
- Highly Competitive - Whilst being on display on a 3rd party marketplace is a positive it also has a negative side. Each restaurant is displayed alongside tens, many hundreds, of other brands, and users are just scrolling through looking at logos.
- You Take The Blame - The restaurant will receive the blame for any bad experiences, regardless of whether they are the fault of the location or the driver.
- No Communication with Customers - The restaurant has no direct line of communication with their customers. Leaving any bad experiences unanswered, and any complaints or critiques un-hearable.
- No Access to Customer Data - The 3rd party provider keeps all the information about the customers ordering from a restaurant.
Many 3rd party delivery services rapidly became household names during the pandemic, however, it is important to note that before the pandemic 74% of consumers said they would prefer to order food directly from a restaurant rather than an intermediary 3rd party. So, whilst the rise of delivery conglomerates may now fill the airwaves and seem like the only option, there’s a high chance that there are a large percentage of customers out there who still want to connect directly with restaurants.
Positives
- No Commission - Managing a proprietary food delivery service means that the owner can reliably predict how much it’s going to cost each month.
- Freedom and Flexibility - 3rd party delivery services come with a criteria which must be met by restaurants participating in their program. Managing their own delivery service means restaurants can manage the service to best suit their location and its level of business.
- Control of Delivery Experience - The restaurant hires and trains the delivery staff to their own standards, ensuring that customers receive the same service as if they were sat in the location itself.
- Direct Contact with the Customer - When a customer orders directly through a restaurant there is a link between them through which information can be exchanged; say, if there’re any errors, or feedback is wanted.
- Collect Customer Information - Owning the system allows the restaurant to keep track of who is ordering through their platform, giving them insights which allow them to better direct their marketing.
- Easy Menu Changes - Adjusting item availability, pricing and a variety of other factors is easy, and often instant, when a restaurant owns and operates its own delivery platform.
- Requires Capital - To set up a delivery system requires the capital to do so, which many restaurants don’t have on hand.
- Requires Knowledge - Vehicles, insurance, ordering programs, payments systems, and delivery tracking are all piece of the puzzle which require in-depth researching before the implementation of a working system.
- Full Accountability - Restaurants can’t pass the buck off to someone else if there’s an error or a mishap along the way.
- Lower Visibility - Proprietary apps are restricted to existing customers and to whomever and however a location chooses to advertise.
- Overwhelmed During Peak Times - A system structured around everyday use may fall flat on its face during surges in business, resulting in a poor customer experience.
In Conclusion: Choosing a Delivery Service?
Some say that 3rd party delivery companies best suit chain restaurants and franchises, whilst proprietary delivery service are best suited to privately owned, often single unit, locations.
No one can tell a restaurant, be that an individual or a group, whether they should partner with a 3rd party service or source and provide their own delivery service, there’re too many factors affecting the final decision which only those closely connected to the business will have an intimate knowledge of.
The extra burden of managing a proprietary service may be enough to put off many an operator. On the flip side of the coin, the high commissions charged by these 3rd party delivery services is enough to turn away a large majority of proprietors.
In the end the choice is down to individual owners and operators, but a decision never has to be final and, whilst it may take a good amount of capital or sacrifice for either of these options, it is never too late to change over to the other side. What is for sure is that post-pandemic consumers are going to continue to demand that delivery options remain available to them.
