Third-party delivery for restaurants is becoming more popular as more companies begin to pop up to offer these services, but does this mean your restaurant needs to utilize them?
Before you decide, you’ll want to weigh the pros and cons that third-party delivery services provide your customers.
But first, let me explain what third party delivery is and give you a bit of background history.
Understanding Third-Party Delivery Services
You may have heard of some of the most common companies like Uber Eats, Postmates, Grubhub and DoorDash.
Every company is a little different when it comes to process, but let’s use DoorDash as a general example. An individual will sign up to be a delivery driver for a company (similar to a pizza delivery driver), but they will work for DoorDash and not an individual restaurant.
Someone will go to the delivery service’s website or their app to place an order for the restaurant of their choice. The order will be sent directly to the restaurant OR the driver for the third-party service will place the order themselves. The driver will then pick the order up and deliver it to your location.
Seems simple, right? This allows more restaurants to have delivery options when they don’t normally offer it to their customers.
Believe it or not, third party delivery has been around for 20 years, so why does it seem like so many companies came out of nowhere?
As technology and digital marketing advanced, entrepreneurs saw this as an opportunity to reach a younger audience by offering a convenient option for ordering food. In fact, 63 percent of young adults use third party delivery services.
So, this brings us back to the question of should your restaurant utilize third party delivery?
For the sake of this blog, we’re going to look at third party delivery from the customer standpoint.
Let’s start with the pros:
1. Ease of Customer Journey and Convenience
We talk about the customer journey a lot, but that’s because it’s so important for every type of business!
As I mentioned before, the digital world has advanced drastically in the past 15 years, and ordering food online is just one improvement (you aren’t limited to pizza and Chinese nowadays).
Offering third party delivery allows customers to easily place an order from a Google My Business (GMB) listing, website or app directly from their phone. There’s no need to make a call or feel rushed when deciding on what to eat.
This makes it extremely convenient for customers that are on-the-go or need to place an order ahead of time.
Placing a food order online should be easy and convenient (see point one of the pros if you missed it). If a customer sees that you have a third-party delivery option, it’s more likely they will choose your business.
In turn, the popularity of your restaurant will increase because you’re offering third party delivery, unlike your competition.
Popularity can mean more visits to your business listing, which can improve your local search ranking (double win for you!).
3. Money Spent
On average, 34 percent of customers spend at least $50 per order when ordering food online. Why? It goes back to the convenience online ordering offers.
When ordering food online, customers can visually see the options to choose from, which makes it more impulsive to include add-on items, like drinks, desserts and sides.
Even adding an extra item or two can really increase the cost. However, customers justify these purchases for two reasons:
- The additional items are needed to complete the meal. If there’s too much food, there are leftovers for the next day.
- They don’t feel the cost impact as much because they’re using a digital form of payment compared to using cash or physically swiping their card at a machine.
Now that we’ve talked about the pros, let’s discuss the cons of third-party delivery for customers:
1. Price (Delivery Fee and Tipping)
Although customers tend to spend a decent amount of money on their food orders, the delivery fees and tipping can be the make or break for some people.
Every third-party delivery service has a different fee, so it can be frustrating as a customer to not know exactly the cost if you use multiple services.
If the delivery fee is too high, some people will tip the driver less. Does this affect the restaurant? Not directly, but it may have the customer reconsidering using the delivery service in the future.
Between the fee for delivery and tipping, some customers may prefer picking up the order themselves or choosing a different restaurant/delivery service.
2. Not Available in Certain Areas/Demographics
Third-party delivery is becoming more popular, but it’s still not available everywhere yet. Once again, this is extremely frustrating as a customer to not be able to place an online order for delivery.
Unfortunately, there’s not much you can do as a business owner to solve this problem. The only way to combat this is to offer your own delivery service.
On the flip side, perhaps it is available in a specific area, but the customer demographics don’t align.
For example, a college town or a big city is more likely to utilize third party delivery while senior citizens or a small city won’t.
3. Bad Experience Leads to Less Loyalty
Do you have a favorite restaurant you always go to? If that restaurant were to make a mistake, would you return? The answer is most likely yes, and that’s because if you dine in at a restaurant, they have the opportunity to fix the mistake.
With third party delivery, if your food arrives cold or incorrect, customers are likely to blame the restaurant and not the delivery service.
A bad experience can truly damage a customer’s loyalty to a restaurant.
To sum it up, third party delivery has several benefits for customers, but there are some cons that can steer people away.
Whether your restaurant has been in business for years or you’re just getting started out, it’s important to keep in mind the best interest of your business. If third-party delivery doesn’t seem like the right option, you don’t have to utilize it!
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