ERIN MCPHERSON — FSR, October 1, 2019 |
OPERATORS NOW HAVE A THIRD OPTION FOR ADDRESSING CONSUMER EXPECTATIONS FOR ON-DEMAND FOOD.
Delivery is now a fact of life no longer relegated to pizza joints and Chinese food, but covering the breadth of industry segments from fast casual to fine dining and everything between. Customers want food brought to their door—or picnic table or desk at the library—and they want the meal to be of equal quality to what they would eat in the restaurant’s dining room.
“More than ever before, our economy is powered by convenience, and it’s all driven by the capabilities of handheld smart devices,” says Scott Absher, co-founder and CEO of ShiftPixy. “Everything from prescription deliveries and ridesharing to on-demand dog walking is available to us right in the palms of our hands. So, it makes sense that as consumers become more accustomed to this kind of instant gratification across all facets of their lives, they would also expect their favorite restaurants to comply by offering equally-convenient delivery services.”
The online food delivery market is expected to balloon a whopping $134 billion by 2023, according to data from Statista. But for operators, meeting the demand for delivery while still ensuring consistency and quality without breaking the bank has proven a challenge
“Third-party delivery partnerships drastically eat into a restaurant’s profits, with some taking up to 30 percent off each individual order,” Absher says. “In fact, roughly 55 percent of operators who use delivery apps report that they’re only slightly profitable for the business, while 21 percent say they’re not at all profitable.”
In addition to costing restaurants a large fee, outside platforms can also contribute to significant brand damage, resulting from mishandling of orders by poorly-trained drivers, late deliveries, and even half-eaten food.
In a recent survey conducted by US Foods, responses were collected from 500 food drivers affiliated with the major household names for delivery services. The data collected shows that nearly 30 percent of all third-party drivers admit to snacking on the food they are tasked with delivering — sneaking french fries and even sipping on drinks. The problem for restaurants is that they have no control over who shows up to transport their product to the customer, and little course of action to take against an offending driver. Customers, however, have a harder time identifying the disconnect between restaurant staff and delivery personnel, and negative experiences with the latter can result in bad customer reviews and loss of business.
“Despite their ease of use,” Absher says, “third-party delivery services take away a significant amount of control from the operators themselves. When using outside platforms, drivers don’t often receive proper training from the employer around meeting customer expectations or proper food preservation practices.”
To address these problems with third-party delivery, many restaurants have reverted to using an in-house delivery staff. However, labor shortages and high levels of employee turnover create a different set of challenges, according to Absher.
“At no real fault of their own, part-time restaurant employees are more likely to change jobs frequently or call out due to last-minute schedule changes, which typically leaves managers scrambling to cover those shifts,” he says. “For those running the restaurant’s everyday operations, adding in the responsibility of managing a delivery fleet to help facilitate the influx of orders makes their job exceedingly more difficult.”
In addition, if an in-house delivery driver fails to show up for his or her shift, that can create slowed order fulfillment times, as other staff members try to fill in the gaps. There are also several administrative and compliance burdens associated with directly managing a delivery workforce, which takes up valuable time that should be spent catering to customers. From monitoring employees’ schedules to training new drivers and dealing with paperwork for workers’ compensation, insurance, and more, trying to run a self-delivery service in a restaurant can be a big challenge.
What all of this adds up to is the fact that restaurant operators are constantly faced with making a choice between the challenges of third-party delivery—especially the potential for loss of repeat customers and damage to brand reputation—and the pain points caused by trying to implement an in-house delivery service, which can severely strain existing labor and administrative performance.
The Best of Both Worlds
In 2015, Absher partnered with Steve Holmes to launch a labor management and scheduling platform that tackles the afore-mentioned challenges associated with delivery—both third-party and in-house. By leveraging the human capital already on premises at a restaurant’s location, or in nearby units, ShiftPixy optimizes the delivery experience for operators and customers alike. For example, restaurateurs can appoint two employees per shift as delivery drivers, and ShiftPixy provides comprehensive commercial driver coverage and liability protection—as well as complete route mapping. Customers are charged a flat rate of $5 per food order, allowing operators to keep 100% of the order profits.
“This technology facilitates a best-of-both-worlds scenario for restaurant operators,” Absher says. “By hiring delivery drivers away from a restaurant and then effectively leasing them back to the operator, ShiftPixy technically serves as the employer by handling any and all employment-related duties for the restaurant itself. However, these employees are still trained by the restaurant’s managers, and for all purposes look and behave like direct brand representatives, enabling operators to deliver the desired customer experience.”
By sending a uniformed employee to complete customer transactions, operators can ensure better delivery satisfaction. In addition, operators who want to keep delivery in-house for quality control purposes no longer have to purchase driver insurance for the full year—which can be incredibly costly for businesses—but instead, they can simply pay for it on a per-ticket basis, as needed.
“Third-party delivery platforms are well on their way to delivery dominance, but they’re making advances at the expense of restaurants, who bear the brunt of customer dissatisfaction and growth pains,” Absher says. “To prevent this, operators must shift ownership of delivery back to themselves in order to build their own communities and affinity around their brands—and avoid handing over their profits to third-party giants.”
All About the Hustle
How restaurant operators can harness the gig economy
The restaurant industry has been greatly impacted over the past several years by toxic levels of employee turnover. When staff members call out of their shifts, or simply stop coming to work, it can be a challenge for managers to get the shift covered on short notice, putting additional strain on existing staff and causing disruption in operational efficiency.
By incorporating a gig economy technology like ShiftPixy into the restaurant scheduling program, restaurateurs can more easily access available human capital to fit their needs on any given day.