Getting delivery set up for your restaurant can be a rush, but it's also often quite frustrating. Over the years, more and more third-party delivery services have popped up in the market, hoping to get a piece of something which is becoming an ever-growing business - delivery.
So if you're trying to figure out which is best for you, if any, or trying to establish your own food delivery service, it's crucial to know the pros and cons of each. We'll discuss which delivery model is best for your restaurant.
What’s Better: In-House Delivery Or Third-Party Delivery?
The key difference between third-party and in-house delivery services is the entity responsible for the delivery process. Restaurants using the in-house delivery model maintain control over the delivery process, while outsourcing the delivery service to third-party companies means trusting the contractor with the delivery.
One model isn't better than the other as there are pros and cons to both third-party delivery services and in-house delivery so let's evaluate both options.
In-House Delivery Services
While you’re able to have the maximum control over your delivery radius, wait times, and the actual people who do the delivery, you’re also left with several pretty big expenses. But why would a restaurant owner opt to invest in a delivery fleet, drivers, and all of the hassle that comes along with that when they could just let another service do it? Here are some of the reasons.
In-House Delivery Service Pros
- Keep The Money In-House: With in-house delivery, you get to keep 100 percent of the meal price rather than sharing any portion with a third-party delivery service. After you've made the initial investment to establish your delivery service, you'll be able to maintain higher profit margins on delivery orders and maximize profits in the long run.
- Build Customer Relationships And Insights: When strangers from a third-party service deliver food, getting to know the customer is impossible. In-house delivery changes that. Your drivers can form bonds with customers and vice versa, and you can always be sure of the kind of services you want them to provide. This increases loyalty, as customers will begin to recognize your staff rather than just seeing a new face.
- Bigger Pool of Customers: The data shows that while third-party delivery services are booming, they still have ways to go. A 2019 study by Restaurant Business found that 78% of delivery orders were placed through the actual restaurant itself (or its website), with only a 22% remaining for third-party services to battle over.
- Extend Your Reach: The simple truth is that a brick-and-mortar restaurant is only successful as its foot traffic and positioning allow it to be. Delivery changes that by allowing you to serve new areas and communities that you otherwise simply wouldn’t.
In-House Delivery Service Cons
- Requires Initial Investment: This is the most apparent downside to in-house delivery. Your available capital constraints your ability to scale in-house delivery operations. You'll have to invest in materials, packaging, delivery cars, delivery drivers, insurance, an online ordering system (and, therefore, a website), and additional wages, among other expenses. While some businesses opt to pay mileage and maintenance for delivery drivers' vehicles, this will not be cheaper. No matter how you cut it, in-house delivery is an expensive endeavor.
- Full Accountability: If anything goes wrong with your in-house delivery service, it's all on you. A lack of competency in delivery logistics can negatively impact your customer experience and business reputation. For example, if an order is ruined due to poor packaging, the customer could leave a negative review.
- Visibility: Not signing up with delivery partners may result in less visibility and potential customers. Your current clientele may order directly from your app, but how will you extend your reach? Third-party delivery markets your restaurant on a more visible platform with far more users - millions of annual users vs. the dozens of regulars you already have.
Third Party Delivery Services
In the rapidly evolving world of restaurants, third-party delivery has emerged as a game-changer. This model, where restaurants partner with external platforms like Uber Eats, DoorDash, and Grubhub, represents a significant shift from traditional dine-in and self-managed delivery systems.
Third-party delivery services operate independently of your restaurant, using their own resources to take the delivery responsibility entirely out of the restaurant's hands. Delivery apps offer small businesses an opportunity to significantly impact the market and help bring new names to the forefront for customers.
Third-Party Delivery Service Pros
- Discoverability: You don't need to advertise and promote your service because customers are already on the third-party delivery apps browsing through the available restaurants. If you are starting with your restaurant business, you will quickly gain access to these companies' established marketplaces and broader delivery regions. This will also increase your chances of getting several orders in a limited time. And the more people that know your business exists, the more people will visit in-person as well.
- Simplicity & Low Up-Front Cost: Perhaps unsurprisingly, services like Uber Eats make it painless to get your restaurant on their service. They make their money on commission and processing fees and then pay the drivers with the delivery commission, allowing you to jump right in without much up-front cost. And the fact that each of the big names has a team dedicated to helping you get it up and going means that you can be delivering in as little as three days (for your tablets to ship).
- Focus On Other Business Goals: If you opt to run in-house delivery, chances are you will make deliveries until you can get a foolproof system and staff. With food delivery outsourcing, that's not an issue. Since these third-party delivery apps handle a considerable part of your restaurant's business, you get more time to focus on your business - your food, employees, and customers. For example, you can focus exclusively on tasks to help grow your business, like improving your restaurants dine-in experience or email marketing strategy, without worrying about delivery.
Third-Party Delivery Service Cons
- Fees: One of the most significant disadvantages of working with third-party food delivery outsourcing services like GrubHub, DoorDash, or Uber Eats is the high margin they take from individual restaurants per order. It's around 30%. These high margins have led restaurant owners to look for alternatives. While this isn't always true and will vary based on your business model, knowing how much they charge is quite essential.
- Extremely Competitive: When running a traditional brick-and-mortar restaurant, your only competition is the other restaurants on the block. But things change when you step into the world of food delivery apps. While partnering with a third-party delivery app will increase your customer reach and visibility beyond your neighborhood, it also puts you in a position to compete with hundreds of restaurants at once. Getting noticed on third-party delivery apps can be incredibly challenging as they're loaded with options for customers by their very nature.
- Tablet Hell: Tablet hell refers to the moment when you have third-party orders from each of your tablets going off at once while in the weeds. It is representative of the mad scramble that’s become oh so familiar in recent years for restauranteurs, fighting to wrangle orders and keep them accurate and timely. But this isn’t a permanent issue. Cuboh’s tablet consolidation software makes it easier than ever before to eliminate tablet hell and keep your business running smoothly. Reach out and schedule a demo today to see what Cuboh can do for your restaurant.
- Menu Management: Keeping menus updated and in sync across multiple delivery apps can be another painful task for restaurants. When modifiers or ingredients run out you have to update them across multiple tablets and menu mistakes can leave customers dissatisfied. Cuboh’s menu management simplifies this, enabling easy updates and synchronization across different delivery apps with just a few clicks.
Deciding which option to rely on for delivery between third-party delivery services and in-house delivery can take time and effort. It will ultimately come down to the specific needs of your business. First consider your budget, market, and business goals, then decide which is the right choice.
If you do decide to go with third party delivery services, you’ll need a third party aggregator likeCuboh to help you efficiently and accurately handle the influx of online orders you will be receiving from multiple different delivery apps. Without a tool like Cuboh, you risk losing orders and order inaccuracies, which will impact your restaurant’s credibility.