Picking a Food Delivery Service | Third Party Vs. In-House
The convenience of having a Skip the Dishes courier deliver you a bottle of wine, or a bowl of soup when you’re too sick to leave your home is the culprit behind high demands for food delivery services- which are getting increasingly more popular and available.
Third party delivery services have the ability to help you market your restaurant to a whole new audience and cover potential additional labor costs that you would otherwise be faced with if you use a in-house courier model; but they can also pose other issues. Here are 5 things to consider for both in- house and third party delivery services.
Third party food delivery services, pros and cons
Pros
- Make Money & Network
According to research done by the National Restaurant Association, “younger consumers are more likely to accept and even request technology options being part of their dining experience”, like third party delivery apps. In conjunction with user friendly third party platforms, you're able to reach out to more consumers than you normally would via foot traffic or normal marketing tactics. The third party apps do the networking for you. This can be an easy networking/marketing tool for new restaurants and help boost your sales.
- Cut Down on Staff/ Labor
Third party delivery services will take care of all the staffing and labor required to get food from point A to point B, so while you can save money on labor costs, you won't have to worry about liability either.
On the other hand, they’ll also take care of all of the heavy lifting that goes into having a delivery service, such as marketing and app development!
Cons
- Commission fees
Third party delivery services can be really convenient, but they do take a chunk out of all of your delivery sales. Most third party companies, like Skip the Dishes, charge anywhere between $3.00- $7.00 delivery fee to the customer, but they also have a profit- share agreement with the restaurant. Companies like UberEats and Postmates take a hefty 30% of your sales revenue right off the top as their commission rate.
- Lack of quality control
As soon as food leaves the restaurant, the quality of the food is completely out of your hands. Factors like cold food, missing items or anything that happens enroute to the customer may become a burden on the restaurant instead of the delivery service. Returning customers are important for profits, and it's possible that outsourced delivery services may unintentionally negatively affect your restaurant's reputation.
- Dependency
With third party delivery services, the sense of uncertainty can be strong if a large portion of your orders are made through the apps. They can overtake the dine-in option of your establishment. And if you decide to forego the delivery app route, the sense of uncertainty can be daunting if you don't have the data that the apps have on their platforms.
In-house food delivery services, pros and cons
Pros
- Higher Profits
Running in-house delivery can be less expensive than using third parties as you will not need to pay any commission fees! You'll be able to keep all of your sales revenue instead of handing over a big share of it to an external company.
- Branding & Control
Customers generally prefer ordering directly from their chosen restaurant, which gives you more business. They know what to expect and as you are in control of all of the delivery operations. This way, you can ensure that the quality of food will not be compromised. Good service will always incentivize people to come back and order from you again, leave you reviews, and give you the opportunity to continue your services.
Additionally, by streamlining your delivery routes, your restaurant can serve customers quicker and more efficiently. This will allow you to serve more customers, while enhancing the customer experience and elevating your brand's reputation.
You won’t have to worry about someone else's lousy work affecting the reputation of your restaurant. You'll be able to communicate with your customers first hand; instead of having a third party service that puts a barrier between you and your customers.
Cons
- Liability
With complete control over your delivery services, comes complete liability. If you are running an in- house delivery service, you are responsible for everything that happens from the restaurant to the doorstep of the customer. If the driver drops off an order that wasn't up to your standards, you're able to pinpoint what went wrong. Whether it was the driver getting lost or if the food sat too long before pick up, factors like these are easy to fix when you're aware of them from the start.
- Startup and Labor Costs
Because having in- house delivery means accounting for staffing, and administrative costs (like fuel). Depending on your budget, you may find that offering this service may be slightly out of your reach. Properly managing all of your orders and maintaining quality service may hike up labor costs for you. On the other hand, startup costs for an operation like this is high. If your restaurant is already bustling in the profit department, your operating costs will be higher too.
- Dine- In Guest Experience Compromise
With so much attention being put into the quality of your food delivery service, and the high demand for delivery orders, your dine- in guests may notice a lack of attention to customer service. However, there are ways to balance out the two, like by making separate kitchen spaces for delivery orders, or for taking extra steps to ensure management and organization of delivery services is being taken care.
The verdict
Having food delivered to your doorstep is convenient, and most people are willing to pay a bit extra for delivery charges. Despite a few of the risks mentioned above, third party delivery services can be a great tool for busy restaurants that may not have the time or resources to provide an in- house delivery service, and could also be a quick and easy way to get your restaurants’ name out there.
In- house delivery is always a great way to maintain quality assurance, and to directly market your brand to your customers, but it is important to make sure that the proper budgeting, planning and staffing go into the implementation of your delivery service.
Having a food delivery service in general can really compliment your sales and satisfy a lot of customers- a win win. With some careful planning and budgeting, you can find what works for you!
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