Search for:
How to make the most of third party delivery services for your restaurant

How To Make The Most Of Third-Party Delivery Services For Your Restaurant?

Restaurants are under pressure to meet consumer demands; 57% of the millennials say that they prefer having food delivered, so they can watch movies and TV shows while enjoying their favorite food. In the current scenario, providing quick and efficient delivery by investing in delivery services seems like a smart choice. However, hopping on to the third-party food delivery bandwagon can be wearisome. Not only does it require planning and streamlining operations on various levels, but restaurants also need to make ongoing efforts to make the most of third party delivery services.

In this article, we will guide you through each step of the process- right from selecting a third party delivery service to using it to your restaurant’s advantage.

Selecting A Third-Party Delivery Service 

With the boom in the food delivery market, restaurants are faced with the daunting task of selecting a third party delivery partner from the dozens of services available at competitive prices.

Here are a few things you should consider while selecting a third-party delivery service:

1. App Popularity

App Popularity: Make the most of third party delivery services

Compare all the alternative services available in your area- to see which one has the most subscribers or has the most daily active users before you tie-up with any particular service. Check review sites and compare ratings to get an idea of app performance and the kind of experience the delivery service is offering to its customers.

2. Delivery Charges

Delivery Fee Charged By Food delivery Apps: Make the most of third party delivery services

Take into consideration the delivery charges (if any) that the third party delivery service is levying on its customers. Although this may not directly affect your revenues, your customers would definitely prefer a service that charges a lower commission. 

3. Delivery Time

Compare the average delivery time of the alternative services; the time taken to deliver food directly affects the state in which food reaches the customers and in turn customer satisfaction. 

4. Customer Experience

App popularity; Third-Party Delivery Services

One of the most common complaints of restaurant owners working with third-party delivery services is having to deal with untrained delivery riders. In the majority of the complaints about delayed delivery or the state in which the food is delivered, the third party delivery services shift the blame to the restaurant in question.

It is therefore advisable to spend some time analyzing the way in which the shortlisted service handles customer complaints and discuss issues related to delivery rider screening and training with the third party delivery providers.

Selecting the right third party delivery platform for your restaurant takes care of only one part of the delivery problem. There are several aspects of the delivery process that require your attention, which lead us to the next part of this article.

Prepping For Third-Party Delivery 

It is important to streamline all components of the food delivery cycle before you outsource your delivery service.

1. Avoid Long-Term Commitments 

Considering the fact that providing third party delivery can be a drain on your revenues, at least initially, you would want to experiment and keep your options open. Refrain from entering into a long term commitment before you are convinced that the third party delivery service is fit for your business.

2. Negotiate

Commission Charged by third Party delivery services

Most of the third-party delivery services charge a commission anywhere between 15% -35%  per order placed through their app. The final price is negotiable; bigger chains that have a larger customer base succeed in securing a much better deal than small independent restaurants.  However, the price you pay is determined by your ability to negotiate favorable terms. So, give it your best shot.

3. Price Escalation

Sometimes restaurants have to recourse to increasing the prices of food items on the delivery menu offered through third-party delivery services. This is mainly to cover the commission charged by these services. Before you set out to do this, it would be prudent to evaluate the market. See what your competitors are doing, and check the price sensitivity of your customers. If you mark up prices to cover commission costs, you may end up losing customers to competitors who are offering lower prices.

4. Evaluate Your Menu 

If this is the first time you are considering delivery, you would want to check if all items on your menu deliver well. Evaluate each menu item on the following three criteria to come up with the ideal delivery menu.

  • Whether they do or do not travel well
  • Whether the margin on the food item is enough to cover the delivery commission
  • Packaging considerations

Remove the food items that do not lend themselves to pick-up or delivery from the menu, work out the finances for the rest to come up with the final delivery menu.

5. Packaging & Assembly 

The packaging is one of the most important aspects of delivery. Go for the best packaging that you can afford; boxes, containers that would carry your food well, and retain food temperature and quality. Badly packaged food can be off-putting and discourages customers from ordering again from you no matter how good it tastes.

Tips:

  • Sustainable eco-friendly food packaging is the future.
  • Provide add-ons such as napkins, cutlery, and condiments.
  • Adding your brand logo on the takeaway boxes is a great way of reinforcing your brand identity.

6. Delivery Technology 

One of the important factors to consider when getting started with delivery is order management from two sources. Consider investing in a kitchen display system that supports capacity management. This would not only provide order management but also help you to provide real-time estimates on expected delivery time to the third-party delivery partner and in turn your customers based on activity in a restaurant’s kitchen.

Tacking driver performance and delivery time helps restaurants manage contracts with third-party service providers. This level of accountability is also valuable to consumers that come to expect delivery from their favorite services within reasonable time frames.

7. Restaurant Layout 

Providing third party delivery services can affect your in-store operations. Besides food preparation, you should also consider the following

  • Who will assemble and pack delivery orders?
  • Changes in kitchen layout considering that additional space may be required for assembling and packing delivery orders.
  • Ensure that the delivery riders are not disrupting the in-store experience, you may want to consider a separate entry/exit/ waiting area for delivery riders.

8. Preparing your Staff

Ensure that you have adequate staff to handle the additional orders that you would be receiving via these services. It is also essential to train your staff to take delivery orders through the POS system or troubleshoot any food delivery issues.

How To Make The Most of Third-Party Delivery Services?

1. Integrate Your Existing POS

Tying up with a third party service for delivery can be a drain on resources. You can reduce the risk of franchisee underreporting by not opting for any of the tablet-only delivery services. Another way to reduce costs is to forego the tablet or email order notifications by integrating the third-party platform directly with the POS. This also saves labor time as you do not require a dedicated employee to transcribe orders manually.

2. Deliver The Best Customer Experience

On a third party delivery app, your brand is competing with all the restaurants in the vicinity that offer similar food. A customer will choose to order from you only if you are at the top of your game. This means not only your food but each aspect of the delivery experience requires your attention.

3. Focus on Customer Reviews

The important thing to remember is that most customers on a third-party app are not looking for your restaurant. They will browse through all available options and go through reviews before deciding on a place to eat. Customer reviews get more attention than food pictures. Positive reviews, in particular, will help your potential customers trust your business.

The one obvious way to ensure that your customers leave a positive review is by going above and beyond to deliver a great experience. The key is in the details- from food packaging to add-ons and the delivery time.

When delivering through a third-party service, you have no direct way of soliciting a review, but you can always have a message asking them to leave reviews printed on the takeaway boxes or bags.

4. In-App Marketing Strategy

You should have a go-to-market strategy in place when you launch delivery through third-party apps. Highlight Convenient Delivery Options On Your website and social media channels. Include the delivery options on the menu, flyers, and in-store posters. Train your staff to communicate the delivery option to your customers at check out.

Include offers or discounts in the delivery and to-go packaging/ or put out branded promotional stickers on takeout containers. You can also put out Ads on social networks to announce your arrival on delivery apps.

Most of the third party delivery apps offer easy advertising options for partner restaurants. Advertising can helps you increase your reach and visibility on the app and ensure that you appear on the top when people search for restaurants like yours on the app.

5. Create Metics To Track Performance

Setting clear goals and tracking your major KPIs regularly gives you the opportunity to identify your weaknesses and understand the preferences of your customers. This helps you to optimize your strategy and get the most out of these apps. Pay particular attention to strategies to make sure that the return on investment is worthwhile. 

Wrap-up

Working with third-party services comes with its challenges as well as advantages. While on one hand third party delivery services make restaurants available to a much wider audience and help them to increase revenues, on the flip side restaurants risk  jeopardizing their dine-in sales and losing control over customer experience. However, with proper planning and a concentrated effort restaurants can leverage third-party delivery services to their advantage.

Which Food Delivery Service is Best for your Restaurant?

Food delivery and take-out services are two of the fastest-growing segments of the restaurant industry. The increasing popularity of these services can be attributed to the incredible amount of convenience they bring to the customers.  Customers can not only order and pay for food from their choice of restaurants using a single app interface, but many of their favorite eating joints which did not previously offer delivery, are now available on these apps. With the growing demand for these services, more and more restaurants are expected to jump on the bandwagon. Here is a quick overview of some of the best food delivery services.

Uber Eats

Uber Eats is a food delivery platform powered by Uber. They promote the partner Restaurant’s menu through the Uber Eats app, website, and various other channels.

How Does it Work?

After you have partnered with Uber Eats, customers can place an order from your restaurant on the Uber Eats App interface. Once you accept the order, the customer can track the order’s progress through the app. Uber Eats sends a delivery partner to pick up the order and deliver it to the customer.  

Commission

Uber Eats charges somewhere around a 30% cut on each order placed through their app, which includes delivery.  So, if your restaurant already has its own delivery service, Uber Eats may not be a very lucrative choice for you. Further, customers can not place pickup orders on Uber Eats.

Marketing and Advertising for Restaurants

You can pay an additional(optional) marketing fee if you want your restaurant to show up higher in user searches or appear as a promoted listing on the UberEats app.

Restaurant sign-up

Uber Eats restaurant sign-up

DoorDash

DoorDash is a food discovery and delivery app that gives restaurants access to an extended customer base.

How it works

Customers can register on the platform or download the app and select meals from restaurants of their choice. Once a restaurant accepts an order made through the app, Doordash will send a dasher to pick up the order and deliver it to the customer. Restaurants can also use Doordash’s delivery services to deliver orders they receive via their own online ordering system. All they need to do is set up a pickup location, a delivery location, and customer information.

Commission

DoorDash takes revenue potential, menus, and customer base into account while deciding on the commission it will charge a restaurant. Depending on the agreement with a restaurant, DoorDash will set a commission for orders placed on the app which can be anywhere between 10-25%. The commission charges include delivery. If you have your own delivery guys, then maybe  DoorDash would not be your preferred choice. There is no option for customers to place pick-up orders on the app.

Marketing and Advertising for Restaurants

As part of their business model, restaurants can feature their menus and promote their food on the app by paying an additional marketing fee.

Restaurant Sign-Up:

DoorDash Restaurant Sign-up

Grub Hub

GrubHub Inc. is a web commerce platform for ordering and delivering take-out food, based in Chicago.

How Does It Work?

Customers can search through a list of restaurants and place their order through the app. After receiving the order GrubHub redirects it to the particular restaurant. The restaurant in turn prepares and packs the order for delivery. GrubHub delivery personnel picks up the order from the restaurant and delivers it to the customer.

Commission

GrubHub’s commission ranges from 5% to 15 % per order depending on the location of your restaurant and the number of restaurants in your vicinity. The average commission charged from restaurants is around 13.5 % per order. This does not include delivery charges, if you want to avail of their delivery services, you would have to pay an additional cost of 10% per order taking the total rev-share to 23.5% on average.

Grub hub allows customers to place pick-up orders. Further, if your restaurant has its own food delivery service in place, you can use GrubHub to expand your customer base.

Marketing and Advertising for Restaurants

Restaurants can pay an additional amount to appear on the top of user searches as sponsored listings. The average commission to appear as a sponsored listing comes close to 20% per order.

Postmates

Postmates offers delivery or pickup services from restaurants, retails shops, grocers, and more to its clients. Postmates workers move around the city waiting for an order to come in, much like Uber drivers.

How it Works

Customers can search and select the restaurant they want to order food from. After they have confirmed the order and paid for it, Postmates relays the orders to the partner restaurant. A Postmate shows up at a particular restaurant to pick up and deliver the food to the customer.

In all probability, the app connects the customer to the Postmate courier nearest to the restaurant they wish to order from.  Customers can order from your restaurant via Postmates even if the restaurant has not partnered with Postmates. However, “Postmates Partnered restaurants have access to superior marketing/visibility on the application as well as faster and cheaper deliveries for customers.”

Postmates charges the customers a flat delivery fee of $3.99 for deliveries from restaurants that have “partnered” with and $5.99 for restaurants that haven’t. In addition, no service fee is charged from customers ordering food from partnered restaurants. So, if you have partnered with Postmates customers find it cheaper to order from your restaurant.

Commission

Depending on various factors, Postmates charges a commission between 15 and 30% per order from restaurants.

Marketing and Advertising for Restaurants

Restaurants can pay an additional amount to appear on the top of user searches as sponsored listings.

Restaurant Sign-up 

Postmates- sign-up

Caviar

Caviar is an on-demand food delivery startup owned by Square. You can order from Caviar’s website or the Caviar iOS and Android app. It caters to higher quality restaurants and is selective in choosing its restaurant partners. 

How Does it Work?

Customers can place an order from your restaurant on the caviar app.  Caviar allows customers to place both pick-up and delivery orders.

Commission

The average commission is around 12% for pick up orders. If you want to avail of their delivery services, Caviar will charge a standard delivery fee of 28% of the order value.

Marketing and Advertising for Restaurants

Restaurants can pay an additional amount to appear on the top of user searches as sponsored listings.

Restaurant Sign-up 

Restaurant- Sign-Up

Are Third-Party Delivery Services Good for your Restaurant?

In an era where convenience takes precedence overall, more and more customers are choosing to order food from restaurants that offer delivery. To keep up with customer expectations, restaurants are under pressure to provide a seamless delivery experience.

However, the cost associated with setting up in-house delivery is significant. On the other hand, third-party delivery services, which seem like the smart choice in this scenario, are extracting hefty commissions. Most restaurant owners are in a  dilemma over the in-house versus third-party delivery debate. In this article, we discuss the pros and cons of both these options to help you choose better.

In-House Delivery

In-house delivery requires restaurants to hire a dedicated delivery staff and preferably their own fleet of vehicles to deliver food to customers.

Pros

a. Control over the Customer Experience

Setting up your own delivery services allows you to control the entire delivery experience, including the timeline or any additional benefits you may want to offer to your customers.

b. Customer Engagement:

By offering in-house delivery, you have a greater opportunity to engage directly with your customers and immediately resolve any issues that may crop up in the delivery process.

c. Customer Data:

If your customers are placing their orders directly through your website or app, you have access to all relevant data for these customers, which helps you to strategize and build on your future marketing plans.

d. Builds Brand loyalty:

When a customer uses your website or app to order, the customers are engaging directly with your brand. This helps you to build brand loyalty in the long run.

Cons

a. High Costs:

The costs required to set up and maintain your own delivery fleet can be quite high.

b. Logistical Concerns:

Offering a smooth in-house delivery experience requires a lot of effort in terms of people, time, and resources, and management of the delivery drivers.

c. Responsibility:

If anything goes wrong with the delivery experience, such as a delay in delivery orders or food not reaching the customers in the right state- your brand is directly affected, there can be no blame-shifting in this case.

Third-Party Delivery

As an alternative, you could outsource the entire delivery service to another company. You can tie up with companies like GrubHub, Doordash, and Ubereats to take care of processing orders and delivering food to customers on behalf of your restaurant.

With 60 percent of U.S. consumers ordering delivery or takeout once a week, the third-party delivery market is expected to grow to a value of $24.5 billion by 2022.

Pros

a. Convenience:

Opting for third-party delivery services is definitely the more convenient way of delivering food to your customers as it outsources the entire gamut of logistical concerns related to processing orders and delivering food on time to another company.

b. New Customers

57 percent of millennials claim that they prefer food to be delivered by restaurants so they can stay home to watch movies and TV shows. If you are not offering delivery, you are missing out on these customers.

By tying up with the third-party delivery services you gain access to a much wider audience native to these apps. Many customers who may have previously shied away from ordering from your restaurant due to the nonavailability of delivery services would now be ready to order from you. In many cases, customers who get a taste of your food through these online orders may choose to visit your location at a later stage.

c. Cut Down on Costs

By opting for a third-party delivery service, you can save a significant amount of costs required for setting up and maintenance of the delivery fleet.

d. Increase in Sales

60 percent of restaurant owners claim that offering delivery services has generated incremental sales. Offering your menu on these platforms introduces your brand to a wider set of audience, thereby increasing the average number of online orders your restaurant receives.

e. Better Allocation of Resources

Once you have outsourced delivery, you have more time and resources on your hands to focus on the quality of food and services that you bring to the table. 

f. Marketing and Advertising

Most third-party delivery companies provide advertising and marketing for restaurants on their app for an additional cost. You no longer have to worry about devising strategies to reach new customers, as these services take care of the same.

Cons

a. Loss of Control Over Customer Experience

By opting to outsource deliveries to a third-party, you lose control over several aspects of the customer experience. Factors such as traffic, an excessive number of orders, the state in which the food is delivered can affect your brand reputation.

Several restaurants have complained of untrained delivery staff hired by third-party delivery services. There have been several reported incidents of delivery drivers disrupting the normal functioning of the restaurants during pick-ups, or sour behavior with the customers. 

b. Declining Revenues

In the long run, many restaurants claim that in spite of the increase in the number of online orders received per month, they are witnessing a decline in their profits due to the high margin charged by these services on every order placed through their app.

Your restaurant may not be equipped to handle the increased number of orders that you are likely to receive via these apps. To meet the demand and to ensure the smooth operation of your in-store services, you may have to handle additional staff. There are several such administrative costs that may arise in the long run, which impinge on your margins.

c. A Decline in Brand loyalty

When a customer orders from your restaurant via these apps, there is no direct engagement between these customers and your restaurant.  So, effectively customers who are ordering from your restaurant via the app become customers of the app or the service. They owe their loyalty to the app instead of your restaurant. According to a survey, 43 percent of restaurant professionals said they believe third-party apps hamper the direct relationship between a restaurant and its customers. 

d. Loss of Customer Data

Most third-party delivery services in the restaurant industry are not sharing customer data with the restaurants. Restaurants no longer have any means to reach these customers directly or build on their marketing strategies to retain these customers in the future.

e. Vulnerable to Competition

Once you make your restaurant available on these apps, your brand is competing with all the restaurants in the vicinity that offer similar food. So a customer will choose to order from you only if you are at the top of your game.

Further, your restaurant may not appear at the top of search results on third-party apps, in spite of having higher ratings, as ranking on these apps is also determined by the amount you are paying to these services.

Most of the third-party delivery services are big companies with huge marketing budgets. In order to promote their app, they are offering huge offers and discounts on orders placed through their app. Individual restaurants may not be able to compete with these offers, further discouraging customers to order directly from them. Many restaurant owners feel it’s similar to losing your customers to the app.

Wrap-up

When faced with the question of whether to opt for a third-party delivery company or set up your own,  you must consider all the above-mentioned factors before deciding what would work best for you. A detailed cost-benefit analysis with a long term perspective- will help you make a better decision.

Request a Demo
close slider