Should You Choose Third-Party or In-House Delivery Services?

Should You Choose Third-Party or In-House Delivery Services?

Grow Orders, Save Time & Eliminate Tablet Chaos
Cuboh integrates your delivery apps and online orders with your POS and consolidates them into a single tablet.

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 what they each offer.

Today, we’ll discuss precisely that - establishing which delivery model is best for your restaurant. 

What’s Better: In-House or Third-Party Delivery?

Now you have two primary options, which break down into even further ones farther down the line. To start, we need to discuss the traditional model, in-house delivery. That means no fancy-schmancy tablets, no mystery delivery drivers, and no need to bring a third party into your business.

In-House Delivery: The Good

Now, I’m not going to tell you that in-house delivery is an only good thing; it’s not. It’s a double-edged sword. 

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 (we’ll get to that soon, just you wait). But why would a restaurant owner opt to invest in a delivery fleet, drivers, and all of the accouterments that come along with that ask when they could just let another service do it?

Well, there are quite a few reasons.

Keep the Money In-House

This is perhaps the most apparent part of the conundrum. With third-party delivery services, you need to pay the fees that come along with the service. When running your own delivery service rather than outsourcing food delivery, you can cut a large part of the overhead out.

It’s worth noting that, realistically, you keep everything the customer pays when running delivery in your restaurant. Sure, you’ll need to add a delivery fee to pay for the driver, but it could be worse.

Build customer relationships and insights

When strangers from a third-party service deliver food, it is impossible to get to know the customer. In-house delivery changes that; your drivers are able to form bonds with customers and vice versa. This increases loyalty, as customers will begin to recognize your staff rather than just seeing a new face. 

Another critical point to remember is that the data shows that, while third-party delivery services are booming, they still have a 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 measly 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. And truth be told, having more customers is a pretty good problem to have.

In-House Delivery: The Bad

As mentioned above, in-house isn’t all roses and happiness. It comes with a few critical downsides that business owners need to be aware of before continuing.

Spendy

This is the most apparent downside to in-house delivery. Before you can start delivering, you’ll need packaging and to-go gear, an online ordering system (and, therefore, a website), delivery drivers, and, most importantly, delivery cars.

While some businesses opt to pay mileage and maintenance for delivery drivers’ personal vehicles, this is not going to end up cheaper. Remember that if you opt to do this, you’ll be left at the whimsy of their vehicles’ performance - that’s no good.

No matter how you cut it, in-house delivery is an expensive endeavor.

The Buck Stops With You (I.E., Accountability)

With third-party delivery services, quite a bit can go wrong. This makes it far easier to resolve issues, as it’s a third party. If anything goes wrong with your in-house delivery service, though, it’s all on you.

Should a driver get into a car crash on shift, you now get to pay for that and wrangle someone to replace them until their car is back up and running. If an order is ruined due to poor packaging, once again, that’s on you.

Ultimately, responsibility isn’t the worst, but it’s another thing to remember when making the decision for what’s best for your business.

Visibility

As much as we’d love for in-house delivery to be as easily discoverable as third-party, that’s not how the world works. Even though nearly 80% of delivery orders were placed through the restaurant itself in the above study, that fails to take something into account.

Those people already know you’re there and realize you exist. Third-party delivery puts your restaurant on a much more visible platform with far more users. And by visible, we’re talking millions of annual users vs. the dozens of regulars you already have.

In-house delivery also pigeonholes you into needing to keep it going, making it far harder to scale and expand your business, should you wish.

Third-Party Delivery: The Good

As for food delivery outsourcing with services like GrubHub, there’s quite a bit of good news. Third-party services like this offer an opportunity for small businesses to have a big impact on the market and help bring new names to the forefront for customers. And that’s not all!

Discoverability

This is pretty cut and dry - the more people that know your business exists, the more people that will visit. While you can certainly opt to invest in a marketing campaign to grow your business, that’s expensive. Do you know what isn’t expensive? Getting started with third-party delivery.

Simplicity & Low Up-Front Cost

Perhaps unsurprisingly, services like Uber Eats make it painless to get your restaurant on their service, generally charging our favorite price - free fifty. 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 any 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 the Real Stuff

You didn’t start a restaurant to stare at tablets all day. More likely than not, you did it out of love for food, drinks, and the community they foster. If you opt to run in-house delivery, chances are that you will be the one making deliveries until you can get a fool-proof system and staff in place. 

With food delivery outsourcing, that’s a non-issue. You can pay attention to what matters - your food, your staff, and your customers.

Third-Party Delivery: The Bad

Just as with in-house, third-party delivery comes with its own downsides that you’ll need to weigh. Let’s start with the one that every business owner understands the best - money.

Fees

This is a no-brainer. Most third-party food delivery outsourcing services like GrubHub, DoorDash, or Uber Eats charge a pretty hefty fee to cover the driver’s services. It’s generally right around 30%, and you already know that’s a lot. Most restaurants don’t even operate with 30% margins on food, meaning that you could end up losing money on the endeavor. 

While this isn’t always true and will vary based on your business model, knowing how much they charge is quite essential. Businesses like ghost or virtual kitchens thrive on third-party delivery, fees or not, as do things like pizza that are specifically designed to be high-margin and efficiently delivered.

Extremely Competitive

When running a traditional brick-and-mortar, your only competition is the other restaurants on the block, your “Jimmy Pestos.” But things change when you step into the world of food delivery outsourcing. You’re one of dozens in a sea of names, meaning you’re suddenly fighting in a much larger market for a smaller piece of the pie.

This isn’t to say that third-party delivery services are too competitive, but it’s worth noting that they’re loaded with options for customers by their very nature.

Tablet Hell

We’ve talked about this a lot. Tablet hell is, for the uninformed, 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 - middleware from Cuboh makes it easier than ever before to get tablet hell out of here and keep your business running smoothly.

So reach out and schedule a demo today to see what Cuboh can do to get your business back in the limelight where it deserves.

Grow Orders, Save Time & Eliminate Tablet Chaos

Integrate your delivery apps and online orders with your POS and consolidate them into a single tablet. Helping you reduce order issues, grow your sales, and eliminate delivery headaches.


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