Ordering food online has become more popular than ever with both local restaurants and national chains offering a restaurant delivery service.
The industry has responded to customer demand and there is now a wide range of apps for restaurants that use an online platform to connect restaurants, delivery drivers and customers, or discerning restaurants can choose to offer a DIY delivery service, or “native delivery,” keeping profits in-house.
Choosing the right app can lead to increased profits and new customers, but restaurant owners should take price, service and consumer preferences into consideration when designing or choosing a food delivery service.
Why Should Your Restaurant Offer Delivery Services?
Restaurant delivery is no longer just for fast food, pizza and Chinese. Depending on your location you can now get all types of food delivered to your door. If a restaurant doesn’t already offer delivery options, offering online food delivery could be a great way to attract new customers and boost restaurant sales.
Food delivery has seen massive growth over the last few years with mobile apps and third-party food delivery services dramatically increasing the options available to customers. For many consumers, being able to order whatever they want and have it delivered to their door has become the preferred option over both eating out and cooking at home.
Customer spending on takeaway food has also increased as a result of the coronavirus pandemic. As diners are forced to stay at home ordering dishes from their favorite restaurant has become the only option and the only way many restaurant operations will survive COVID-19.
Benefits of offering an online delivery service or partnering with a food delivery app include:
- Increased Sales
- Access to New Customers
- A Share of the Rapidly Growing Takeaway Market
- Serve More Customers Without Needing to Expand
The impact of offering a delivery service varies by restaurant, but offering delivery can increase sales, profit margins and customer base. All types of restaurant businesses are getting in on the action with pubs, hotels and fine dining restaurants joining the traditional takeaway options online.
If you only offer in-house dining you are limited by the capacity of your premises, and even if you are fully booked customers might not show. Adding delivery options can allow for growth in sales and revenue without having to expand.
When it comes to offering food delivery there are two main options. Partner with a third party delivery service, or create your own in-house delivery team.
The third option which ShiftPixy brings “to the table” provides for restaurants the opportunity to take advantage of a superior technology, allowing for native delivery, that has already been developed that enables and equips an in-house delivery team.
What Is Third-Party Food Delivery?
Third-party food delivery is where the person who delivers your food does not work directly for the restaurant you ordered the food from but for a third party instead. This is an industry that has seen massive growth in recent years.
Popular food delivery apps such as Uber Eats, GrubHub, Caviar and DoorDash offer a third-party food delivery service for restaurants. These mobile apps allow customers to order online from a wide variety of options and make the process easy for restaurants and customers.
Third-party food delivery does come at a price. Generally, they charge a delivery fee to customers and a commission to restaurants. However many offer a subscription option for customers to ensure loyalty and commission rates vary depending on the food delivery app chosen (still not the best for affordability or branding).
What a Native Delivery App?
Native delivery is by far the number one option for restaurants.
Why? Native delivery keeps profits in-house and reinforces branding across the internet including social media.
The app is built in a specific programming language, complete with delivery routes, GPS, customer information and much more. Native delivery powered by ShiftPixy offers the most rapid go-to-market solution for restaurants to make use of human capital by making it easy to start your delivery service, with the people you already have working for you (in most cases).
What’s even better? You don’t have to go to the trouble of years of development and millions of dollars to create the perfect solution for your business. Take control of every aspect of your delivery with a fully customized experience with ShiftPixy (see it in action here).
What Are the Benefits of Partnering with Third-Party Delivery Companies?
Third-party food delivery services are available in almost all major cities and any other areas. They can offer many benefits and could be the best option for plenty of businesses. There are some notable success stories such as Uber Eats, DoorDash, GrubHub and Seamless as well as many other delivery app options including more niche players such as Caviar that offer a high-end service focusing on upmarket restaurants as well as broader players that offer services such as grocery delivery and alcohol.
Restaurants partnered with these platforms will appear on their delivery app. Customers using the app can browse menus and place orders all from the same platform, comparing factors such as price and delivery times without having to go to different websites, pay through the app using their credit card and have food delivered to their doorstep.
From the restaurant’s perspective, they get access to new customers without having to pay huge advertising fees, there’s no ringing phone to answer as everything is done online, and the fees are commission-based.
Some of the benefits of using a food delivery app include:
- Access to new customers.
- Increased revenue.
- Catering to customer needs.
- Reducing administrative tasks.
- No need to invest in delivery infrastructure
Access to New Customers
Restaurants looking to attract new customers are given access to hungry consumers that are willing to spend money and try new places. They’ve decided they want to order food but might not even have heard of your establishment.
Finding new customers via a delivery service can also lead to customers dining in as they have already tried and enjoyed the food.
The bigger and more popular apps will have a large existing customer base to whom you can expose your brand, and this can be particularly useful to new start-ups who do not have an existing customer base.
More customers mean more revenue and partnering with online food delivery services can be the easiest and most affordable way to gain access to a wider audience.
Providing you have a good business model and your profit margins are greater than the commission costs, this increase in revenue will translate to increased profits, allowing you to build your business while focusing on what you do best.
Catering to Customer Needs
Coronavirus pandemic or not, diner preferences seem to be moving toward the convenience of dining at home. Not being restricted to one option and having a choice of all your favorite restaurants in one place is also appealing to customers.
Being available to customers even when they can’t book a table to dine in is a great way to build loyalty and offer an exceptional service.
Partnering with an experienced third party also allows restaurants to utilize their experience and resources. Customers are likely to have a smoother ordering experience, and there are likely to be fewer order errors. Plus you get access to a network of trained delivery drivers.
Reducing Administrative Tasks
Most food delivery apps can be integrated with your current system and give you the option of how you want to receive orders. You no longer need to have someone available to answer the phone during a busy evening’s service.
Restaurants are also not responsible for hiring extra delivery staff and coordinating the times of deliveries. Third parties will ensure a delivery driver arrives to collect each order and deal with delivery addresses and payment.
This allows restaurants to focus on their core business. Preparing the most delicious food and ensuring the best possible customer experience.
No Need to Invest In Expensive Infrastructure
Creating an in-house delivery service can be expensive.
There are the costs of hiring and training drivers. The costs of fuel and insurance as well as potentially buying delivery vehicles and other equipment such as packaging and GPS tracking.
Plus there is the cost of creating a sales platform. This can include website design and web hosting, as well as the cost of creating a native delivery app that gives customers comparable user experience.
All this can mean high levels of investment that require business loans and divert focus away from the core business of making food. While this may be a viable option it might not be, particularly for smaller businesses, local restaurants and start-ups.
What Are the Potential Disadvantages of Partnering with Third-Party Delivery Companies?
While there are many advantages of using a third-party food delivery service there are also notable disadvantages.
Third-party delivery services can be costly, making their money from high commission charges that can significantly eat into profits. They also take part of the process out of the hands of the restaurant which might be great if they provide an excellent service but will reflect badly on the restaurant owner if they do not. Plus there can be a loss in customer loyalty and limited access to customer data.
The Fees and Your Profit Margins
The first and most obvious potential disadvantage is the fees and the effect these can have on your profit margins.
Commission is generally between 15% and 30% depending on the restaurant and the app chosen. Plus there is generally a delivery fee charged to the customer. For many restaurants, their already tight margins do not allow for such high commission rates and there is the possibility of losing money.
Loss in Customer Loyalty
As well as a reduction in profits, there is also a risk of a loss of customer loyalty. If loyal customers start using a mobile app, they can easily be drawn to competitors.
It can also be hard to build loyalty with new customers when you are not responsible for the delivery process and have no direct contact with the customer.
Loss of Control Over the Delivery Process
Losing control over the delivery process means you do not get to have a say in how the food will be delivered to the customer or build brand awareness and loyalty.
The fact is that most consumers will hold the restaurant at least partially responsible, even if it is the delivery companies fault. Meaning you are putting your reputation in someone else’s hands when you choose to use a third party.
Using a third party also doesn’t allow you to train your own drivers or give them uniforms to build brand awareness and deliver your ideal customer experience.
A Lack of Access to Customer Data
Finally handing over the ordering and delivery process can mean limited access to customer data. This can make marketing more difficult as well as customer retention strategies such as loyalty and reward programs.
Third-party delivery services are also going to put their own profits and business growth first, meaning they may use data analysis to promote competitors.
What Are the Benefits of Building an In-House Delivery Team?
Alternatively, there is the option of DIY delivery services which can save money on commission fees and can be a good option if you have a loyal customer base.
And while delivery service at restaurants is growing many consumers still prefer to order directly from restaurants. Maintaining direct communication with your customers makes it much easier to get and act upon feedback and make sure you are delivering exceptional service at every step that will have customers coming back.
Choosing to have your own in house delivery team also allows you to train drivers and gives greater control over your pricing and business model.
Setting up an in house delivery service will require an initial investment but as commission fees can be so high this will be made back over time and lead to higher profit margins and a loyal base.
What Are the Potential Disadvantages of Building an In-House Delivery Team?
However, there are potential disadvantages as well. Setting up a delivery service requires investment and expertise at a level which can mean it’s simply not viable to many businesses. As well as the cost running your own delivery service means you are fully accountable for any mistakes so it is important to have systems in place.
Delivery drivers not turning up for work can also cause massive delays and result in poor customer experience, and an in-house service often means you do not have a large pool of drivers to call on.
Choosing not to be visible on food delivery apps and websites can also reduce visibility and even cause a loss in customers who would rather have the convenience of ordering from an app on their phone.
The Best of Both Worlds
What if you could have the best of both worlds? ShiftPixy offers an innovative solution for native delivery. It allows for increased control, higher profits, brand awareness and a better customer experience by sending a uniformed delivery driver trained by you. Find out what it would take with your current resources to get your very own native delivery service to hit the ground running. Book a demo today! 🔥🔥🔥