Restaurants of all sizes are becoming increasingly aware of the importance of an outstanding delivery service for end-customers. Same day delivery, personalized delivery time options and free delivery have all become more critical as restaurants start competing mostly on the quality of the customer experience they can provide.
Restaurants probably couldn’t afford to overlook the trend in food delivery. Most restaurants prefer third party delivery services like Uber Eats, GrubHub or Postmates, etc. because the cost of handling in-house food delivery models and delivery personnel is significantly high.
The other side to the tale is the restaurants preferring to own the end customer experience, and therefore investing in creating an in-house delivery model.
Let’s compare the two available options by looking at the pros and cons of these models.
Third-Party Delivery Services:
Third-party delivery means outsourcing the delivery services to a third-party company. While there are many advantages of starting own delivery system for your restaurant, we will go through these in the next section – using a third-party delivery model has its significant benefits.
Most notably, according to a study, 63% of young adults use third-party delivery apps. There are two types of delivery options in third-party delivery services i.e., you can link with online food aggregators (e.g., Swiggy, Zomato, UberEats). Otherwise, you might recruit people from different companies that would work solely for you.
Pros of Third-Party Delivery Service:
- Utilizing a third-party model can bring you the new business because each platform brings its loyal customers and target audiences, some of which you may not be able to reach on your own. This expanded accessibility can be particularly handy for small enterprises and startups. You can also collaborate with as many distribution partners as you need, so you can significantly extend your scope.
- Choosing to outsource delivery will reduce the fixed costs as you don’t have to pay the delivery workers any salaries and you don’t have to pay the insurance costs also.
- Working with third party companies allows you to work with a professional group of staff. You don’t have to think about spending time, energy or any of your resources on employee training. These companies provide you with an excellently trained team that treats every customer order with the utmost care.
- Outsourcing delivery lets you concentrate on your main business: cooking delicious meals and delivering enjoyable customer experience.
Cons of Third-Party Service:
- Delivery companies regularly charge high commission fees. Such payments may not be feasible depending on the company you operate and the margins, even with the facilities and expertise you’ll get in return.
- Third-party service provider involves a loss of control over one of the most significant customer experiences shaping aspects. Your business does not influence whether the company you pay is making mistakes or delivering the service that your clients want. While you do not influence this, insufficient staff training from third-party providers will affect your company. You will train the delivery personnel at the exact delivery standards that your company and its customers need, at least with in-house.
- Dealing with third party companies will leave you with no personal customer data. When it comes to your advertising campaigns or other marketing strategies, this will become relevant. Lack of customer data could have an effect on your revenue in the longer term because customer retention would be limited.
- While the fixed costs of introducing in-house delivery are higher, you can find that third party delivery undermines long-term productivity because the third-party company has to pay a fee on every order.
Own Delivery Service:
A restaurant may hire and invest in training a few food delivery employees to work at their restaurant. Hiring an in-house delivery fleet would guarantee that you have full control of their outside restaurant facilities, management, and activities. According to a study, 78% of delivery orders are placed through the restaurant itself, whereas only 22% of the orders are placed through third-party delivery companies.
Pros of Own Delivery Service:
- Your restaurant will take back control over the entire delivery process by not outsourcing the delivery. Today, delivering top-notch customer experience is vital for getting them to order again, so it may be a smart decision to keep the delivery process in-house. You will not only be able to train the delivery team; You are able to train the delivery team and can choose your own business model and product offering.
- Reduced issues relating to communication. Just two parties collaborate for distribution of your company and its end-customer, reducing any possible communication barriers or breakdowns in order and delivery.
- An in-house delivery executive may take less time to deliver your order as it handles only requests from a particular restaurant. In contrast, a third-party food delivery executive may process multiple restaurant orders at the same time.
Cons of Own Delivery Service:
- Establishing delivery services require capital and know-how. You need to buy a fleet of delivery vehicles, and you need to choose a secure payment system, pay for insurance for your drivers, find out how to manage deliveries and how to store and transport food, think about safe packaging. The ability to scale up your business depends on how much resources you have, and not how much money you have.
- When things go badly with an in-house model and customers end up disappointed, you can’t pass the buck on to a third-party company. With this method of distribution, you take full responsibility for bad experiences.
- You have to train the employees you hire for managing your delivery service that can be quite hectic and cost both time and money.
While taking the case of own delivery business you require many things like a truck or any vehicle, drivers, an online portal to get orders, notifications, updations for delivery and new order, etc.
For small and medium-sized restaurants, third party model is best suited, whereas the in-house model is the best for large enterprises.
Now you will be confused about how to start your own delivery service. Initially learn about how does delivery driver app work in many cases.
So, Both third-party and in-house models have both advantages and disadvantages. Before making a final decision, compare the choices to decide which form of delivery is best suited for your business.