Originally published May 13, 2020. Edited October 28, 2020.
Did you know that 26% of U.S. consumers order delivery at least once per week? There are many ways for customers to place their delivery orders now, whether it is over the phone, on a website, using a restaurant’s app, or using 3rd party delivery apps such as Grubhub, DoorDash, UberEats, Postmates, BringMeThat and Seamless. Customers log onto the 3rd party app of their choosing, search nearby restaurants, select food options, and submit payment to the online food delivery company. The food is then delivered directly to the customer by delivery drivers hired by the online food delivery company.
Benefits of Using 3rd Party Delivery Apps
3rd party delivery app providers have partnered with restaurants to provide customers a wide variety of food choices that can be delivered to their doorsteps. Restaurants have begun using 3rd party delivery services for a wide variety of reasons. Some of those reasons include:
- Convenience – Restaurants don’t need to hire their own delivery drivers, purchase delivery vehicles, or purchase additional automotive insurance. They also do not need to manage the delivery process as the 3rd party delivery service does this. These savings can be significant.
- Reduced cost for restaurants – Restaurants don’t need to develop their own apps or website to reach a large group of people.
- Ability to reach new customers – 3rd party delivery companies have millions of users. Studies show that 63% of young adults use 3rd party delivery services. This allows restaurants to be seen by many people, some of which may not have visited the restaurant previously.
Potential Problems with Using 3rd Party Delivery Services
Some restaurants have discontinued using 3rd party delivery apps. Here’s why:
- High costs – 3rd party delivery companies charge an average of 15-30% service fee.
- Lost income – Besides the service fees charged by the 3rd party delivery companies, restaurants lose out on higher margin items such as soda and alcohol if the food is delivered rather than the customer dining in the restaurant.
- Quality of food – Food can become cold and soggy while it is waiting to be picked up by the delivery driver and during transport. There have also been complaints of incorrect orders – where the customer makes a special request, but the request is not relayed to the restaurant.
- Presentation – “You eat with your eyes first” is a well-known expression. The appearance of your food may change from the time the food is cooked and packaged until it is safely in the hands of the customer. For example, food often moves during transport, bouncing around in the back seat or trunk of the vehicle.
- Unhappy with the process – Restaurants may try a 3rd party delivery service and come to the conclusion it just isn’t what they expected. This may lead the restaurant to try a different 3rd party delivery service or discontinue using one altogether.
How to Minimize Risk When Working with a Third Party Delivery Service
Choose Your 3rd Party Delivery Service Wisely
With increasing competition between 3rd party delivery services it’s important to weigh your options and ensure the return on investment is worth it. CNBC reports, ‘The battle for delivery customers could lead to more mergers and acquisitions down the road as companies in the industry seek to cut costs and combine resources.’ So, choose your 3rd party delivery service carefully. In addition, legislation is being introduced in certain parts of the country to further regulate 3rd party delivery services so it’s important to stay well informed.