Every week we comb through the news to find employment trends affecting the hospitality industry so you don’t have to. This week’s topic: self-delivery vs. third-party delivery.
Delivery service isn’t a new topic in the restaurant landscape, but when the coronavirus rocked the hospitality industry in 2020, thousands of restaurants began to rely on it for revenue during lockdowns. The following statistics from Upserve highlight the influence of online ordering/delivery:
- 60% of U.S. consumers order delivery or takeout once a week.
- 20% of consumers say they spend more on off-premise orders compared to a regular dine-in experience.
- 60% of restaurant operators say that offering delivery has generated incremental sales.
- Digital ordering and delivery have grown 300% faster than dine-in traffic since 2014.
- Delivery sales could rise an annual average of more than 20% to $365 billion worldwide by 2030, from $35 billion.
Reviewing these stats, we know that the ‘delivery industry’ is here to stay and only expected to continue growing – particularly in the pandemic landscape we’re currently living in. For consumers, the ability to order delivery from their favorite restaurants offers the dine out experience while staying safe. But for restaurants, it’s a little more complicated.
When offering a delivery service, there are two options for businesses: use a third-party partner or self-delivery. Below, we’ll cover information about both options and provide pros and cons so you can decide what works best for you.
Some restaurants opt to employ their own delivery drivers to handle the flow of online orders, rather than finding a delivery partner. This allows the business to control the entire experience but comes with its’ own set of benefits and disadvantages. Here are the pros and cons to doing self-delivery:
- Better control of brand image by managing the entire ordering and delivery process.
- Don’t have to pay service fees (typically a percentage of the order total) that are associated with using a third-party.
- Retain the valuable connection between customers and the business.
- “70% of consumers say they’d rather order directly from a restaurant, preferring that their money goes straight to the restaurant and not a third party.” (Via Upserve)
- Must create a process for receiving and facilitating online orders.
- Costs associated with hiring and maintaining delivery drivers and vehicles – including insurance.
- Any issues with your delivery team (call offs, complaints, etc.) must be handled by you.
- Marketing is necessary for customers to know that you offer delivery.
Third-party delivery has been around for long enough that the key players in this industry – like Grubhub and DoorDash – have become household names. When partnering with a third-party delivery service, restaurants work with them to “create a marketplace that customers can search to browse restaurant menus, place orders, and have orders delivered to their homes.” The partner is responsible for providing the driver, picking up, and delivering the food. But what are the pros and cons?
- Increase visibility and find new business from customers browsing the marketplace.
- Readily available network of delivery specialists.
- “Working with a third-party delivery service has been found to raise restaurant sales volume by 10 to 20%.” (Via Upserve)
- Partner handles operational aspects of delivery.
- Errors caused by the delivery partner will likely reflect badly on the restaurant.
- The partnership requires restaurants to pay a commission which can add up.
- Variety of restaurants on the marketplace means you could lose customers to the competition.
- Little power over the delivery process.
There’s no wrong answer when deciding between third-party and self-delivery; the only wrong answer is not offering delivery at all. Statistics show us that offering delivery service is key for attracting and retaining customers, especially with the uncertainty of the pandemic throughout 2021. Carefully consider the pros and cons of each option along with what’s right for your business before making any decisions.
Did you know that LGC can help with delivery by providing drivers? Contact us today to learn about our range of staffing solutions.