It’s no secret that demand for food delivery from restaurants has skyrocketed over the last few years. A service that began out of convenience became a necessity when the COVID-19 pandemic left most restaurants unable to serve diners within their walls. Between 2019 and 2020, food delivery revenue grew by nearly 40%, demonstrating just how much of an impact COVID-19 has had.
Today, food delivery is a $344 billion global industry, according to Statista. Third-party deliveries account for nearly two-thirds of this revenue, while direct restaurant-to-consumer deliveries account for the remaining third.
With most delivery demand going to third-party services, should your restaurant work exclusively with these apps? Or, is it better to focus exclusively on growing your direct delivery revenue stream? We’ll answer those questions in and more in this guide to third-party delivery services for restaurants. You’ll learn:
- What the options are for third-party delivery
- The pros and cons of third-party delivery vs. direct-to-consumer delivery
- Best practices for using third-party delivery services
- How to create your own delivery service
A Guide to Third-Party Food Delivery Services for Restaurants
With so many third-party delivery services out there, which ones should your restaurant use? Look for partners that are popular in your market and take the least commission. Here’s an overview of the popularity and pricing of the top third-party food delivery services.
- Market share: 29%
- Fees: Grubhub offers three pricing tiers. It takes between 5% and 20% of each order, depending on which level of marketing you choose. Grubhub also takes an extra 10% to fulfill deliveries for you.
- Market share: 27%
- Fees: Uber Eats also has three pricing tiers and offers various levels of marketing visibility. These fees range from 6% for pickup orders and between 15% and 30% for delivery orders.
- Market share: 15%
- Fees: Doordash takes a 6% fee for pickups, between 15% and 30% for delivery and 15% for delivery orders in which your restaurant fulfills the deliveries.
- Market share: 9%
- Fees: Since it’s owned by Uber, Postmates has the same pricing structure as its parent company. That means pickup orders incur a 6% fee, while delivery fees range from 15% to 30%.
Third-Party Delivery vs. Direct-to-Consumer Delivery
Using third-party delivery platforms isn’t your only option for bringing food to your customers. You can also offer direct online ordering through your restaurant’s website and fulfill deliveries on your own or with a contracted fleet. Here’s a close look at the pros and cons of your delivery options.
Pros of Third-Party Food Delivery Services
Third-party delivery services for restaurants have brand name recognition and large user bases. This means that partnering with a third-party delivery service will expose your restaurant to many people.
In addition to the marketing benefits delivery apps provide, they also make fulfilling deliveries convenient by doing them for you.
Cons of Third-Party Food Delivery Services
The most significant downside of using a service like Uber Eats or Doordash is their steep commission fees. With some services taking as much as 30% of each order, these fees cut into already slim restaurant profit margins.
Moreover, third-party delivery services pit your restaurant against the competition by promoting other restaurants along yours on their platforms.
Finally, these apps give you less control over the delivery experience. For example, if a delivery driver takes an hour to deliver a meal, the meal will arrive cold, and the customer will likely blame your restaurant, not the delivery service.
Pros of Direct-to-Consumer Delivery
When your restaurant is responsible for fulfilling delivery orders, from start to finish, you have more control over the delivery and customer experience. This means you can communicate with customers if a delivery is delayed, offer a concession if deliveries go wrong and recover frustrated customers.
When you fulfill your own deliveries, you also keep 100% of your profits and control the costs associated with making deliveries.
Cons of Direct-to-Consumer Delivery
While you gain more control by fulfilling your own deliveries, this requires more work and resources than outsourcing does. You’ll have to hire people to make the deliveries and may need to provide delivery drivers with vehicles, or cover some of their expenses. You’ll also need to optimize delivery routes.
Additionally, you’ll have to do more marketing to promote your restaurant than you would when you use a third-party app.
Best Practices for Third-Party Food Delivery Services
In this day and age, it’s unrealistic to rely only on in-house deliveries because of the popularity of third-party apps. However, when you convert third-party customers into direct delivery customers, you can take advantage of third-party audiences while keeping commission fees at bay. Here’s how.
First, sign up for the third-party service(s) of your choice. Use these platforms to expose your restaurant to new customers.
Then, create postcards or fliers that invite third-party customers to order directly with your restaurant next time. Explain how ordering directly helps your business. You could even provide an incentive for new customers to order directly, such as by giving a small discount on their first online order.
Finally, insert these postcards into third-party customers’ delivery order bags. If they’re happy with their meal, they will hopefully order directly with your restaurant next time. The goal is for these third-party customers to become loyal direct customers going forward.
How to Create & Optimize Your Own Delivery Service
Follow these tips to launch a direct-to-consumer delivery service and ensure you’re doing all that you can to turn third-party customers into direct regulars.
1. Choose an Online Ordering Partner
Consumers love third-party delivery apps for their convenience. They can order food with a few taps or clicks, and without having to speak to anyone on the phone. Make direct delivery as convenient for your customers as these third-party services by offering online ordering.
Choose an online ordering platform that works in your restaurant’s best interests. Look for one that charges a flat fee instead of a commission and that lets you show off your brand.
2. Optimize Your Google My Business Profile
Third-party delivery apps aren’t the only way people discover your restaurant. Many people also find new restaurants through Google. In your Google My Business profile, set your direct online ordering page as your preferred delivery platform. This will encourage customers to order directly through your restaurant and bypass third-party apps.
3. Create a Delivery Fleet
Finally, develop a fleet of delivery drivers who will fulfill orders. You can outsource to a third-party fleet until you have enough demand to hire in-house delivery drivers. Make sure your drivers have experience making deliveries and working with customers, and have a driver’s license and a vehicle or a bike.
Wrapping Up: Third-Party Delivery Services vs. Direct-to-Consumer Delivery
Consumers love the convenience of food delivery. Fortunately, there’s room for both third-party and direct delivery in your restaurant’s off-premises dining strategy. Leverage these services with intention to build loyalty while keeping commission fees at bay.
Want to get started with direct deliveries? Learn more about SevenRooms’ delivery and pickup platform. Request a demo today.
FAQs About Third-Party Delivery Services for Restaurants
1. How Do I Partner With a Delivery Service?
First, choose which service or services you want to partner with and pick the best partnership plan for you. Next, choose your order protocol and share your menu and store hours with the partner. Finally, add a bank account and you’re ready to get started.
2. What Is a Third-Party Delivery Agent?
A third-party delivery service partners with restaurants and creates a marketplace that customers can search to browse restaurant menus, place orders and have orders delivered.