Third-Party Food Delivery Service: Perfecting Your Strategy
You’ve done your research and decided that outsourcing your restaurant delivery service is the best option for your restaurant. Investing in delivery can be a very smart choice for any restaurant, especially third-party. You’ll be exposed to new customers, increase revenue potential, and cut down on staffing and labor. Investment banking firm Cowen & Co. predicts “the U.S. food delivery market will grow from $43 billion to $76 billion by 2022, mainly driven by the rapid expansion of delivery companies like UberEats, GrubHub, DoorDash, Bite Squad and new players continuously entering the market.”
Consumers love the convenience of ordering third party delivery, too. In fact, 87% of consumers say third-party restaurant delivery services make their lives easier, and 31% use the services at least twice a week. Also, third-party apps provide operators with a market share that they might otherwise not have. UberEats reported over 8 million users, providing plenty of opportunities to gain new business.
So, you know that investing in a third-party restaurant delivery service is a good business move, but how do you get started? We’ve broken down the steps to picking a third-party delivery partner, how to get your restaurant prepared, and the top third-party delivery companies to make your transition a successful one.
How to Pick a Third-Party Restaurant Delivery Service
The most important step to getting started with third-party delivery is to pick a partner. There are dozens of delivery partners out there and choosing the right one is essential to your building a successful delivery strategy. Here are a few items to keep in mind when shopping for a third-party food delivery partner:
Delivers Customer Experience
First and foremost, a good reputation for excellent customer service should be at the top of your list. The delivery company will be representing your restaurant – make sure they make a good impression. Check reviews on Facebook, and customer review websites such as Sitejabber and TrustPilot. When interviewing the delivery company, ask for customer satisfaction and average delivery time statistics. Find out about their employee screening procedures, onboarding process, and style of handling customer complaints. You’ll want to find a delivery company that conducts background checks and has an established onboarding process. This information to make narrowing down the right fit a little easier.
Avoid Long-Term Commitments
You don’t want to be tied down to a delivery company that’s not performing as expected. Constantly check metrics to make sure delivery times and overall performance match up with expectations. Also, some delivery services use exclusivity clauses in their contracts, so be on the lookout for that. If a delivery company isn’t meeting your expectations, keep in mind that there are plenty of great options that will surely provide you with the service you desire.
Consider Delivery Prices
Hiring a third-party delivery partner can be more convenient than managing delivery in-house, but don’t forget about profit margins. Once you have deducted the commission percentage (usually anywhere between 15-30 percent), you’ll need to deduct the additional cost from the net revenue per order so you can understand potential profit margins in a dollar amount. Adding a delivery charge to help offset the commission?
Keep in mind that customers will pay attention to the final price. You can use transactional data to evaluate whether there is any price sensitivity before you establish delivery prices. Another option would be to use a limited time only higher margin menu. This could help when getting started.
From small startups to large companies like GrubHub, there are plenty of third-party delivery companies to choose from. Use this to your advantage to negotiate the best rate and service for you.
Top Restaurant Delivery Apps and Platforms
When you start looking for a third-party delivery partner, you’ll likely be interviewing several until you find the right fit. We wrote a blog that covers the top delivery apps and platforms that goes over what you and the consumer can expect. Here’s a quick overview of some of the highlights of the top third-party delivery companies:
UberEATS says to delivery food within an average of 15 minutes without jeopardizing food quality. Order tracking is also offered to you and the customer so that you know where an order is located at all times. UberEATS has the largest market shares in Fort Worth, Houston, Austin, and Dallas.
GrubHub boasts more than a 20% increase in restaurant takeout orders after subscribing to their service. This service also offers custom tools such as online ordering link for your website to generate more orders. GrubHub has the largest market shares in El Paso, New York, Jacksonville, and Philadelphia.
DoorDash works with what you have (fax, computer, tablet, etc.) to send you your orders. A dashboard is also offered to users that allows you to view the number of orders, average order amounts, net sales, etc. DoorDash has the largest market shares in San Jose, Fort Worth, Indianapolis, and San Antonio.
ChowNow allows customers to place orders from your website or even your Facebook page. They have also noted that restaurants have increased their takeout sales by an average of 20% after subscribing to their service.
Prepping For Third-Party Restaurant Delivery
Just because you’ll be outsourcing your delivery service, doesn’t mean you won’t need to prepare your restaurant. Here are a few items you’ll want to consider before launching delivery in your restaurant:
Determine Your Menu
If you’re new to offering delivery, start with a menu that includes easy and quick-to-prepare items. You’ll want items that will travel well and maintain their quality. You can start off with a more focused menu and gradually add new items.
Packaging & Assembly
Once you determine the delivery menu you’ll offer, you’ll need to choose your delivery packaging. Certain food items won’t mesh well together so make sure you have the proper packaging. This could include insulated food delivery bags, individually wrapped plastic cutlery, soufflé/portion cups & lids, take-out containers, to-go bags, delivery menus, etc. Also, who will assemble and check the delivery items for accuracy? Do you have enough staff to help with this? These are all things to consider.
Global consulting firm McKinsey & Company revealed that speed of delivery is the biggest variable in customer satisfaction. You need restaurant technology that accounts for speed of service. One of the most important consideration when getting starting with delivery is that you’ll be managing two streams of traffic, dine-in and off-premise. A kitchen display system that supports capacity management can help you do this.
The capacity management feature of a KDS goes into effect when your restaurant reaches maximum capacity. Real-time quotes provided to the third-party delivery partner and its customers are based on real-time activity in a restaurant’s kitchen. This helps set a realistic expectation for when a customer will receive their order.
Where will you assemble your carryout orders? Will your restaurant need reconsider your layout in order to accommodate space for assembling delivery orders? This should be taken into account when launching delivery in your restaurant.
Follow these tips and you should be able to build a profitable delivery plan. Don’t rush into picking a third-party delivery partner for your restaurant. This can take time but will be worth it to keep your biggest priority happy – your customers.
Want information on building a successful off-premise dining strategy? Listen to our webinar about perfecting your off-premise dining strategy.
About the Author
Emily Elder is a Content & Social Media Specialist at QSR Automations. Emily was born and raised in Louisville but considers herself a die-hard University of Kentucky fan. For college, Emily attended Indiana University Southeast and obtained a degree in Communications with a track in Advertising. In her free time, Emily enjoys just about every water related activity but she is partial to kayaking and whitewater rafting.