SCOTT ABSHER Co-Founder and CEO of ShiftPixy — FastCasual, March 27, 2019 |
Food delivery is proving to be an increasingly critical revenue stream for restaurants, allowing them to capitalize on their loyal customers/ desire for on-demand convenience, while simultaneously attracting new customers through the offering. A recent survey found that over 51 percent of customers would spend more frequently at a restaurant if delivery were offered, making the service a necessity for brands hoping to compete in the crowded space.
With the growth of food delivery, third-party platforms like Uber Eats, Doordash and Grubhub are thriving. In fact, third-party delivery app downloads are up a whopping 380 percent since 2015, and with this growth comes pressure for restaurants to sign on with the services and meet consumer demand. However, there are massive implications associated with enabling this group of well-capitalized players to continue growing the third-party delivery market that restaurants will need to rely on more and more as consumer loyalty for delivery apps evolves.
When devising their delivery strategies, restaurants must consider the reliance they/re placing on third-parties that is allowing them to grow at an alarming pace, and the subsequent impact of this reliance on their own futures. To mitigate this co-dependence, restaurants, be they major global brands or local chains – can make bold moves to cut ties with third-parties and build their own delivery workforce to maintain control over their profits, brand and future.
Increasing reliance on third-party delivery
Consumers are increasingly opting to order delivery from third-party platforms due to their convenience and prevalence, and, as a result, restaurants feel obligated to sign on with them and sacrifice their own profits to feed consumer demand. While corporate franchisors will not see the impact of these services on their bottom lines, franchise owners bear the brunt of third-party delivery fees which hold real potential to devour their profits. Even further, delivery platforms work with independent contractors who don/t have direct ties to the restaurants themselves, meaning the drivers aren/t in uniform, haven/t been versed on the restaurant/s culture and customer expectations and, ultimately, sever the direct relationship between the end-user and brand.
Despite these challenges, hundreds of thousands of restaurants across the U.S. have inked partnerships with third-party delivery platforms and pulling out now could seemingly isolate a portion of their customer base. While only 13 percent of delivery connoisseurs would rather order directly through a third-party service, restaurants, which already reckon with slim profit margins, are often hesitant to cut ties with third-party deliverers for fear of losing customers.
Will third party become first?
Third-party players are responsible for strategically establishing the food delivery wave and for getting consumers accustomed to on-demand convenience, but this has all been done on the backs of restaurants themselves. At this stage in their lives, well-capitalized third-party companies are now under immense pressure to continue their growth, which is putting restaurants at risk. Uber Eats, for example, is currently entering into an aggressive global-expansion period through virtual restaurants, and this segment growth is a key part of the company/s rumored plans for going public this year.
Therefore, in order for third party to thrive and continue to feed the convenience demand, it will need to become first party and is quickly on its way to doing so. In order for restaurants to combat this looming threat, they will need to choose a more brand- and customer-safe approach to last-mile delivery.
Brand-sensitive solutions to last-mile delivery
At the expense of restaurants, their drivers and even end-customers, third-party platforms are well on their way to delivery dominance. To prevent this, brands and franchise operators must harness the positive delivery momentum that has the potential to do wonders for their business and make it their own again. As seen with Jimmy Johns, who recently launched a public campaign vowing to never work with third-parties, this is a decision that’s done with the restaurant’s brand at front-of-mind versus third-party deliverers.
In order to successfully regain control of delivery from third-party providers, restaurants must shift ownership of their mobile order flow back to themselves, and build their own communities and affinity around their brands. This approach will enable them to better connect with and retain their brand loyalists, but more importantly, will allow them to take their customer-base back from third-party giants.
Pizza brands both small and large have successfully mastered the art of self-delivery with limited help from third-party platforms. If they can do it, other restaurant brands across the country can as well. In order to stop third-parties from dominating the restaurant delivery industry and devouring their profits, brands must take bold steps to reclaim their brands, customers, and most importantly, future.
Read full article: https://www.fastcasual.com/blogs/regaining-control-of-last-mile-delivery/