Should Your Restaurant Use a Third Party Delivery App?
As we said in Part 1 of this Delivery App article series (which you should read first) takeout and delivery represent over $70 billion in restaurant sales each year. This is expected to rise to $75 billion by the year 2020. But the more important stat for this Part II article is that it’s expected that by 2020, over 40% of delivery revenue will be through these third-party delivery service apps.
Despite this, managers and owners in the restaurant industry still have their reservations about signing up with a delivery service partner. So in this article, we will give you the pros and cons of both sides. If you decide it’s right for you, see our recommendations and to-do’s for choosing a partner and getting started.
Reasons To Sign Up With a Third Party Delivery Service
- Stand Out Amongst the Competition (or at Least Keep up with Them). According to the stats provided by the delivery service app DoorDash, about 80% of U.S. restaurants still don’t provide delivery service. But keep in mind that more and more restaurants are signing up daily, so don’t wait until you’re struggling to keep up.
- Increase your profits and sales (see part 1 for details).
- Find new customers and increase brand visibility. Many customer testimonials prove that they would have never known about a restaurant if they hadn’t first found it on one of these delivery service apps.
- Monetize on the Millennial generation’s buying power. Millennials (now ages 21-37) make up somewhere between 80 and 88 million people of the U.S. population. These are the primary users of delivery service apps.
- Increased customer repeat orders. The apps save all the payment and delivery information, making it easy to reorder. And they also make it easier to reorder from you. The delivery service apps also save customers’ past orders, so it’s as easy as one click to reorder. And that’s half the reason people love delivery apps…they’re easy.
- No need to hire an in-house delivery team. Hiring a delivery team takes a lot of time, and can also be costly. Especially when you first start your delivery service and are still trying to get the word out. You’ll also face direct competition with all of the other delivery apps.
Reasons Not to Partner up
- Some delivery services require exclusivity. Some of the delivery app agreements require you to sign away your opportunity to partner up with any others.
- There are potential liabilities. Take car accidents, or something that could negatively impact you greatly (even though it wouldn’t be your fault). Such as your food going bad from sitting in the car too long. That’s your restaurant and brand reputation on the line.
- It could be cheaper. It’s estimated that it can be up to 40%-50% less to hire your own in-house staff. One thing to keep in mind here though is how much revenue you could be losing out on that the third-party delivery app could bring in.
- Gives you complete control over the whole process. 76% of customers will still hold you accountable for food delivery services issues. If those issues are out of your control, that is going to be very frustrating.
Our Recommendations and To-Do List Items Before You Partner Up
- Preorder an inventory of delivery supplies, so you’re ready to go as soon as you hit the app. Remember that a lot of suppliers of custom delivery food containers and custom disposable cups take weeks and weeks to deliver. If you’re looking for a high-quality printer and supplier that takes half the time (and is also more affordable), we recommend taking at Houston-based Cup Printing. As soon as that’s done, it’s time to do your homework and pick a service.
- Find one of the apps that does not require you to sign an exclusivity agreement. Your customers don’t just use one service, so neither should you. There also may be a new app for your local area that you want to take advantage of.
- Choose one of the delivery apps that use GPS tracking to establish responsibility in the case of foodborne illnesses. Ensure that they also comply with industry standards for safe food handling.
- Require drivers to provide ownership of vehicle and proof of insurance. This insurance should also name the companies they’ve partnered with.
- Sign up with platforms that offer rewards and points. This is another one of the things Gen Y and Millennials look for when registering for an app as a user.