For many busy individuals and families, food delivery is a convenient service that allows them to enjoy great food without having to go through the usual hassles of stepping out of the house or prepping meals from scratch at home.
As such, it should not come as a surprise that many consumers have begun to embrace third party delivery services. These third-party businesses add a new layer of convenience that is often missing in in-house delivery systems.
For example, these third-party entities can pick up meals from restaurants that do not have an in-house delivery service. For consumers and establishments, that is undoubtedly a win-win situation.
Third-party delivery services can also allow consumers to get their meals faster during peak hours when a restaurant’s own delivery team is swamped with orders.
Weighing the pros and cons of partnering with third parties
The benefits of third-party delivery to customers are apparent. But what about restaurants? If you are a restaurant owner, does it make sense to partner with third parties, or should you keep food deliveries in-house?
To arrive at an objective decision, it is worthwhile to compare the pros and cons of each option.
In-house delivery pros and cons
- The chief advantage of offering your delivery service is that you get to control the customer experience. That includes delivery times as well as a few perks or benefits that you may want to offer.
- Having your delivery system also affords your restaurant greater opportunities for customer engagement. At the same time, if issues arise, customers can talk with your staff directly to arrive at a suitable resolution for any of these.
- Another advantage of having your delivery service, especially if you are planning to use a website, an app, or a combination of both, is that you own the data. In turn, this can help you analyze and interpret customer information to suit your strategies.
- Finally, an in-house delivery service can help your restaurant build and fortify brand loyalty through direct customer engagement.
But along with these benefits come a few drawbacks that you need to be aware of.
- For starters, offering a delivery service comes with a few additional costs. These include the acquisition of vehicles, recruitment and training of new staff, and building of websites and apps.
- When you offer delivery to your patrons, you should also be aware that you may need to make substantial changes to your operations and use of available resources.
- Finally, if there are delays in delivery or the wrong items are sent to the customer, the responsibility lies squarely on your and your team’s shoulders.
Third-party delivery pros and cons
- One of the advantages of partnering with a third-party delivery service is that you can forgo some of the investments that are typically associated with in-house delivery. That includes acquiring vehicles and recruiting and training new staff.
- In turn, you can enjoy the benefits of having a delivery service at a fraction of the cost. These savings, in turn, can be allocated for other endeavors.
- This partnership also allows you to tap the growing market segment of consumers who prefer delivery over dining out. These include prospective customers who have previously shied away from your restaurant because you did not offer delivery. But more than that, you can also see new customers trickle in and eat at your restaurant, impressed by the meals delivered to them from your establishment.
- Finally, many third-party delivery platforms offer marketing and advertising for their partner restaurants, enabling your establishment to widen its coverage.
But like in-house delivery, there are a few cons associated with third-party delivery that you need to be aware of.
- For one, you can lose substantial control over customer experience. With another entity handling delivery, you lose control over delivery times, food quality after delivery, and more. All of these can put a negative impact on your restaurant’s reputation.
- When you are dealing with a third party, you should also look closely at your profits. There have been incidences wherein establishments reported declining revenues through service charges levied by third parties.
- There have also been restaurants that have experienced a decline in profits despite a massive increase in orders. An increase in the volume of orders can mean additional investments in equipment and staffing, which, in turn, can negate the profits coming in.
- And although more customers become aware of your restaurant, this does not necessarily translate to a new batch of loyal followers. On the contrary, these customers may become loyal to the third-party delivery service.
- Compared to having your delivery service, partnering with a third-party service provider means a lack of access to valuable customer data. That means that you will need other tools to gain insight from your customers.
Making the partnership work
If you think that the pros of working with a third-party delivery outweigh the cons, there are a few strategies that you can enforce to make things work to your advantage.
1. Monitor your numbers
Before starting a partnership with a delivery service provider, it is a good idea to establish a baseline for your gross margins. This will help you see the impact of your partnership with a third party.
2. Check the fees
Reach out to the different delivery service providers on your shortlist and inquire about their service fees. It may be tempting to go with the company with the broadest reach, but do not forget to take into account the service fees involved.
3. Integrate POS
Check with your delivery service provider if you can integrate with your restaurant POS system. The more prominent industry players can incorporate some POS systems.
4. Adjust your menu
With a few things left beyond your control, quality becomes a more critical issue. To ensure consistent quality for food delivery items, there are a few things that you can do.
For starters, you can limit the items that can be ordered via third-party delivery. Second, you can try limiting the modifiers for available menu items. Finally, invest in better packaging for your products to go with your restaurant’s innovative digital menu.
5. Consider raising prices
Some customers will willingly exchange higher food prices in exchange for convenience through a third-party food delivery. At the onset, try experimenting with additional fees until you find a happy medium.
As customer tastes and habits change, so should your restaurant. In this case, that may mean partnering with a reliable third-party food delivery service provider.
AUTHOR BIO
Ahmad Alzaini is the co-founder and CEO of Foodics, a fast-growing food tech startup. A businessman by nature, Alzaini is an app aficionado, developing businesses in Saudi Arabia within several industries. Today, Foodics has extended to new markets across the MENA region, processing over 1 billion transactions, and offering the latest technology in POS and restaurant management.
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