The Pros & Cons of Delivery Services for Restaurants
With the hype around restaurant delivery services, along with the stats pointing towards increased off-premise dining, it’s hard not to think about adding delivery services to your restaurant. LEK Consulting projects that “restaurant delivery will grow at more than three times the rate of on-premises sales by 2023.”
However, the decision to partner with third-party delivery services is complicated. That’s why Restaurant Business reports on Greg Flynn, Applebee’s largest operator, saying they won’t offer restaurant delivery services unless it is a “margin-neutral channel.”
Before picking a direction for your business, review these pros and cons of partnering with restaurant delivery services. Then dive into your data to determine which makes the most sense for your company.
The pros of partnering with restaurant delivery services
The Tillster Delivery Index report shows that “more than half of customers would order more often if delivery were offered.” By partnering with a third-party service, you avoid labor concerns and have access to advanced technology and new customers.
Hiring isn’t getting any easier in the restaurant industry. With a third-party delivery service, you eliminate significant labor concerns and costs associated with food delivery, such as commercial auto insurance.
More high-tech options
In an interview with CIO Dive, Aaron Allen, founder and chief strategist for Aaron Allen & Associates, said that the restaurant industry is broadening the “separation between the haves and the have-nots with technology.” From driver tracking software to downloadable apps, by adding restaurant delivery services, your customers benefit.
As delivery agents compete for market share, your restaurant gains by their constant marketing efforts. With the Zion & Zion market research team finding that “63% of young adults use delivery apps,” by partnering with a third-party service, you broaden your market reach.
The cons of partnering with restaurant delivery services
Restaurant owners face several issues when partnering with restaurant delivery services. Not only do you lose control over the final mile of customer service, but you also have less access to customer data. Plus, expensive fees and a drop in efficiency plague restaurant owners.
Once your food leaves the building, you lose control over that last aspect of food delivery. This puts you at the mercy of the driver’s customer service skills.
Steep delivery fees
Although we’ve seen reduced prices as restaurant delivery agents vie for market position, it’s still a expensive.
With staff inputting data from multiple tablets into the POS, and greeting customers, peak hours can get tricky.
Loss of customer data
When someone calls your restaurant and places an order, then you gather their information into your POS system. However, those who use a restaurant delivery service lose some access to their delivery customer’s data.
Before making a decision, it’s crucial to review the benefits and consequences of providing restaurant delivery services. Many restaurateurs report that their customers want off-premise options.
That’s part of the reason that Ben Gaddis, president of T3, told Restaurant Dive that “We’re in a place now where there’s no going back. Delivery has reached the same level as e-commerce in that it’s here to stay.”