Third-Party Delivery: A Game-Changer for Restaurants

Image depicts a customer accepting food from a delivery driver. In the fast-paced world of the restaurant industry, third-party delivery has emerged as a game-changer. As we dive into 2023, it's clear that this trend...

Image depicts a customer accepting food from a delivery driver.

In the fast-paced world of the restaurant industry, third-party delivery has emerged as a game-changer. As we dive into 2023, it's clear that this trend is here to stay. Even as the pandemic wanes and guests return to on-premise dining, the demand for delivery remains high and shows no signs of slowing down. With the number of people using meal delivery apps expected to reach 2.64 billion by 2027, restaurants can't afford to ignore this lucrative revenue stream.

Exploring Delivery Options

Phone ordering system

Traditionally, restaurants relied on phone orders, requiring customers to call in and place their orders. However, this approach is time-consuming, inefficient, and doesn't align with the modern customer's preferences. Millennials, who make up a significant portion of the customer base, often experience "phone anxiety" and are reluctant to share personal and financial information over the phone. Moreover, the potential for order errors and misdelivery adds unnecessary costs and headaches for restaurants.

Bespoke digital ordering system

While it may seem ideal to have your own digital ordering platform, the reality is that building and operating one requires substantial resources. The upfront costs can be quite steep, making it challenging for many smaller restaurants to justify the investment. This is where partnering with a third-party delivery service becomes a viable solution. Companies like Uber Eats and Grubhub offer an easy and relatively inexpensive way for restaurants to bring their delivery services into the 21st century.

Unveiling Third-Party Delivery

Third-party delivery refers to hiring another business to handle food deliveries on behalf of a restaurant. The restaurant prepares and packages the food, while the third-party service takes care of the delivery logistics. Customers place their orders through the partner's platform, such as Uber Eats or Grubhub, and the entire transaction, from ordering to payment, is facilitated through the app.

Image depicts a delivery driver knocking on a door.

The Power Players in Delivery

In the world of third-party delivery, several major players dominate the market:

Uber Eats: With its vast customer base and international presence, Uber Eats is a leading platform for food delivery. Restaurants benefit from the exposure to Uber's extensive user network and have access to various partnership levels, ranging from basic delivery services to integrated marketing campaigns.

DoorDash: Known for its efficient delivery and wide coverage in the U.S., DoorDash offers restaurants a range of options, including integration with POS systems and menu management tools. Their subscription service, DashPass, helps drive customer loyalty and increase order frequency.

Grubhub: As a popular food delivery platform, Grubhub provides a comprehensive suite of partnership options and additional marketing opportunities for restaurants. Their loyalty program, Grubhub Perks, incentivizes customers with rewards and exclusive offers.

Postmates: Acquired by Uber in 2020, Postmates goes beyond just restaurant meals and also delivers groceries and other items. This platform is an excellent choice for restaurants looking to expand their delivery beyond traditional menu items.

Caviar: A subsidiary of DoorDash, Caviar caters to an upscale dining market, partnering with high-quality restaurants. Their platform helps restaurants reach a higher spending audience.

Seamless: Popular in urban markets, especially in New York City, Seamless offers commission-based pricing and marketing opportunities for restaurants targeting specific markets.

Restaurants choose one or more of these platforms based on their budget, target customers, and specific needs. Although most third-party delivery companies operate similarly, it's essential for restaurants to research each platform's terms and offerings to find the best fit for their business.

Image depicts a delivery driver handing off food to a customer.

Weighing the Pros and Cons

Pros of third-party delivery

There are several compelling reasons why restaurants are flocking towards third-party delivery services:

Ease: Partnering with a third-party delivery service takes the burden of delivery logistics off your shoulders, allowing you to focus on running your restaurant.

Speed: Integrating with a partner that works seamlessly with your POS system enables quick setup and efficient operations.

Cost Savings: Third-party delivery platforms offer upfront savings compared to building and maintaining your own custom digital ordering system.

Staffing: By relying on third-party drivers, you eliminate the need to hire and manage a dedicated delivery team, particularly during labor shortages.

Visibility: These platforms expose your restaurant to a broader audience, helping you attract new diners and grow your business.

Cons of third-party delivery

While the benefits are significant, it's crucial to consider the downsides of third-party delivery:

High fees: The most significant drawback is the high fees charged by delivery platforms, often ranging from 15% to 30% of sales. This can eat into your profit margins, affecting the financial health of your business.

Trust concerns: There have been instances where third-party delivery companies engaged in questionable business practices, such as creating fake versions of restaurants or obscuring fee structures. Some restaurants have formed delivery co-ops owned by themselves to bypass using these third-party partners and regain control over their operations.

Understanding the pros and cons enables restaurants to make informed decisions about their delivery strategy. While third-party delivery is a popular choice, it's essential to explore alternative options or even create a unique system that aligns with your restaurant's goals.

Remember, in the ever-evolving landscape of the restaurant industry, adapting to change is essential for success. Embracing the delivery trend can bring new opportunities and help restaurants thrive in the dynamic world of food service.

Image depicts a delivery person dropping off food to a diner.