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    | 8 min read

    Third-party delivery services vs. in-house delivery: Which one is best for your restaurant?

    We don’t even need to ask. We’re pretty sure that you, your friends and just about everyone you know have used a third-party delivery service at least once in the past year. 

    According to recent data, 185 million people are expected to use online food delivery services by 2025. And 71% of millennials reported that they’re now more likely to get their food delivered than before the pandemic!

    Of course, that’s not really surprising, is it? Especially since third-party food delivery apps like Uber Eats make it incredibly convenient for customers to find new restaurants, check reviews and get food delivered right to their door.

    BUT… does that mean your restaurant should rely on them for delivering food to your customers? Maybe... Maybe not. 

    That’s why, in this article, we want to help you decide whether third-party apps are all you need or if you should also consider developing an in-house delivery service for your restaurant. 

    With that goal in mind, we’ll be discussing: 

    • Information on three of the most popular delivery apps, including the fees they charge restaurants 
    • The pros and cons of using third-party delivery services 
    • How to get your restaurant on third-party delivery apps 
    • How to create an in-house delivery service for your restaurant

    But, before we get into those topics, let’s look at some quick facts on third-party delivery services. 

    What are third-party delivery services?

    Third-party delivery services are companies that list your restaurant on their food ordering app. Within the app, customers can browse multiple restaurant menus, place orders for delivery and get their food delivered by someone working for the service as an independent contractor. 

    And, whether you like them or not, these delivery service apps are here to stay. Here are some quick facts that show why we say that: 

    • In a recent survey 29% of consumers reported ordering online delivery at least a few times a month
    • In another survey, 37.5% of restaurants said they wouldn’t have been able to stay in business without being on third-party delivery apps
    • In that same survey, 28.8% of restaurants said 21-30% of their sales now come from those apps

    Examples of third-party delivery apps: facts, fees and features 

    The third-party delivery service app market is extremely competitive despite the large market size. Here are some of the key facts, fees and features from three of the most widely used food delivery apps. 

    DoorDash

    With over half of the market share in the food delivery market, DoorDash is the most popular food delivery platform in the United States.

    So far, they have partnered with more than 310,000 restaurants in more than 4,000 cities. In December 2020, the company went public on the New York Stock Exchange

    DoorDash features a business performance tool for their restaurant partners that aims to help them to grow their business and improve the customer experience.

    For delivery orders, DoorDash charges restaurants a 15-30% commission fee. The exact fee amount depends on the DoorDash subscription plan you choose.

    Uber Eats

    As of December 2021, Uber Eats is the second largest player in the food delivery market with around 24% of the market share. Uber Eats also acquired Postmates at the end of November 2020.

    To date, Uber Eats has partnerships with more than 700,000 restaurants and is used in more than 500 cities worldwide.  

    In addition to providing tools for marketing, Uber Eats supports their restaurant partners by providing POS integration and a tablet that can be used to manage online orders and deliveries.

    For delivery orders, Uber Eats charges restaurants a 15-30% commission fee. As with DoorDash, the exact amount depends on the Uber Eats subscription plan you choose. 

    GrubHub

    Founded in 2004, GrubHub has been one of the leading food delivery services long before the pandemic began. GrubHub also owns other food delivery subsidiaries, such as Seamless and Eat24, which contribute to their total market share that’s around 15%. 

    Currently, GrubHub has partnered with more than 300,000 restaurants in more than 4,000 U.S. cities. 

    On top of the standard marketing tools that help restaurants grow their delivery business, GrubHub also gives newly joined restaurants a 30-day free service promotion.

    GrubHub charges restaurants a 20% marketing fee applied as a percentage of each order, a 10% delivery fee for delivery services and a $0.30 + 3.05% processing fee.

    Pros and cons of third-party delivery services

    Before deciding whether your restaurant should partner with one or more delivery service apps, it’s important to know what to expect. Here are some of the most important pros and cons for you to know about beforehand. 

    Pros of using third-party food delivery apps

    Outsourced delivery process

    By using third-party delivery services, you get to avoid the tedious and costly delivery process. This could save you money on payroll and liability. Since you only have to pay for the apps’ service fees, you don’t have to cover the salary of a food delivery driver, which is an average of $29,845 a year according to ZipRecruiter.

    Increased customer reach

    There were more than 111 million food delivery users in 2020, and that number is continuing to grow. By listing your restaurants on these platforms, you get more exposure that can be converted into sales. Your restaurant might only serve local neighborhood customers for now. But by partnering with these food delivery apps, you can tap into a new customer base.

    Time to focus on other business goals

    Since a huge part of your restaurant’s business gets taken care of by these apps, you also get more time to focus on your business. For example, you can use the time that would be spent managing deliveries to do other important tasks to help grow your business, like improving your restaurant's dine-in experience or digital marketing strategy.

    Cons of using third-party food delivery apps 

    High service fees 

    The service fees charged by these delivery companies can be a huge expense for your business—especially if your restaurant is already struggling amid the pandemic. Unsurprisingly, these fees tend to be among the top complaints from restaurant owners who use these third-party services. 

    Stiff competition

    While partnering with a delivery app will increase your customer reach and visibility beyond your neighborhood, it also puts you in a position of competing with hundreds of restaurants at the same time. When using these apps, customers get to compare prices, reviews and ratings across multiple restaurants.

    Lack of control

    Once the food is picked up from your restaurant, you have almost zero influence on or knowledge about the customer experience. If something does go wrong, it could show up in a negative customer review. A recent study from Raydiant found that 38.5% of restaurants have received negative customer reviews due to an issue with a third-party delivery app. On top of that, you might not be able to access any of your customer data from third-party delivery services to improve your business. 

    Consumers prefer direct orders

    In another study, 64% of adults said they’d prefer to order directly from a restaurant for delivery. This is likely because consumers using these apps also face higher fees and menu prices than they would if they were to order directly from your restaurant. 

    How to partner with third-party delivery service apps

    If you’ve decided the pros of third-party delivery apps outweigh the cons, here are the steps you can take to get your restaurant on one or more of them. Or, if you’d rather set up an in-house delivery service to avoid the cons of these apps, skip ahead to the next section of this article.

    Step 1 - Research your options

    There are quite a few third-party delivery service providers available in the market apart from the three major players we mentioned earlier. Depending on the city your restaurant is in, you might be able to list your restaurant on multiple platforms. 

    Step 2 - Understand the policies and fees

    Each delivery partner has different policies. Make sure you read the fine print before signing the contracts, especially if there are any that request you to sign an exclusive contract. 

    Step 3 - Create a delivery-focused menu

    Once you have chosen the right third-party partner(s), you should review your current menu and select the items that are best suited for delivery and most likely to attract customers.

    Step 4 - Set up your system

    You will need an additional tablet to manage the incoming orders if the third-party app cannot be integrated with your existing Point of Sales (POS) system. You might even need or want to create a delivery pickup area in your restaurant for the third-party delivery riders.

    Step 5 - Train your staff and streamline the process

    Your in-house staff will need to learn how to use third-party apps and manage online orders. You will also need to formulate a standard operating procedure for packaging the food for delivery. 

    How to create an in-house delivery service for your restaurant 

    Here’s what you need to do if you decide you’d rather process and manage deliveries without using third-party apps or in addition to using those apps.

    Step 1 - Get the right technology

    Look for a cost-effective online ordering software that is compatible with your POS. You should also link the ordering system to your restaurant website and mobile app (if you have one). 

    Step 2 - Staff your team

    Of course, you’ll need to hire delivery drivers to make this work. You may also need to hire more cooks if your current cooks don’t have the work capacity to handle additional online orders. To make the process of hiring these workers easier, consider using an all-in-one hiring solution like Workstream.  

    Step 3 - Purchase delivery vehicles

    If your delivery drivers don’t already have their own vehicles, you’ll need to purchase some that are suitable for your operations. On top of that, you should make sure to get insurance for your drivers and vehicles.

    Step 4 - Train your delivery drivers

    In addition to ensuring they have a valid license, you should train your drivers in delivery logistics and customer service. Every interaction counts for customer experience, so you should form an SOP that the drivers can reference. Make sure your drivers also know how to comply with COVID-19 safety protocols.

    Step 5 - Stock up on delivery equipment

    Next, make sure you have a constant stock of takeout containers for both delivery and takeout orders. To use delivery as an opportunity for marketing and advertising, you may also want to consider creating a printout with promotions, discounts or general information about your restaurant to include in your delivery bags. 

    Step 6 - Let customers know you deliver 

    If delivery is a new service for your restaurant, make sure your customers know. They may assume that because you’re not listed on delivery apps that you don’t deliver. So, make a special announcement about your delivery options on your website, put up a flier in your windows and share how customers can order from you on your social media accounts. 

    Final thoughts 

    There are pros and cons to both third-party delivery services and in-house delivery. Deciding which option to rely on for delivery can be difficult. But we hope that the information helps make that decision a little easier! 

    And if you want more advice on how to improve your restaurant, check out our blog where we share tips on topics like how to retain restaurant employees during the current labor shortage. 

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