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Should Your Restaurant do Delivery In-house or via Third Party?

Posted by Kevin Lentz, Restaurant & Hospitality Product Manager

For a large portion of the restaurant community, offering delivery is no longer an option. Guests have come to expect the ease and convenience of online shopping and delivery, and off-premises dining is proving to be a substantial growth opportunity for many. But the question of how to successfully roll out delivery remains a difficult one to answer.

A good starting point is to determine whether to deliver through in-house staff or a third party. One advantage to selecting a third-party delivery service is that you immediately get “experts” in the art of order delivery. Rather than having to build, train and maintain a delivery team, professionals won’t need time to ramp. And the best providers will be able to suggest strategic suggestions for offering delivery, which will lead to a more successful delivery program for your restaurant.

Existing third-party delivery partners bring their drivers, network, route management, communications, payroll and labor management – essentially offering delivery-in-a-box for a speedy rollout. But these companies are under incredible pressure to optimize their solution: to shave seconds here and there, to ensure the optimum route is taken and to deliver all foods at the optimum temperature. Uber is even testing air-drop deliveries via drones. As these companies continue to invest in fulfillment efficiencies, it will become more and more difficult for a restauranteur to keep pace.

And while your delivery partner is sharpening their pencil and focusing solely on getting hot food to customers quickly, you are free to do what you do best: make great food and provide an exceptional guest experience.

All this is not to say that outsourcing delivery doesn’t come with its disadvantages. Perhaps most critically, you lose quite a bit of control in that last 30 feet of the guest experience. It’s important to consider tactics to extend your reach to the guest that are on brand. Packaging, for example, is a prime opportunity to re-claim a bit of the experience in a delivery format.

This loss of control also extends to food quality and presentation. A lot can happen between your restaurant and the customer’s front door, and it can be difficult to capture the quality of the final, delivered product. A solid delivery strategy will include feedback mechanisms to capture guest feedback and more importantly, ensure food safety. But these feedback loops can be challenging to implement, so a solid partnership with your vendor is quite helpful here.

Keeping delivery in-house gives you more control in both of the scenarios above. Additionally, you can rely on your training efforts to ensure a consistent guest experience whether in-store or off-prem, which often isn’t the case when relying on a third party to represent your brand. Also consider the possible inconsistencies and loss of control when it comes to print and digital collateral and menu updates when using a third-party delivery company.

Our discussion wouldn’t be complete without a mention of the cost of outsourcing. As the industry matures, we will likely see several new pricing/business models, so it will remain essential that you keep an eye on the costs, which can significantly erode hard-won margin. Before rolling out delivery, the prepared restaurateur should know the plated cost of each of the menu items. With plated cost established, various pricing and menu configurations can be tested, as well as the impact of delivery to the bottom line. It can’t be stressed enough that the unit economics of each item on the menu be tested in various in-house and outsourced delivery scenarios, as the added cost of delivery can turn cash cows into dogs quickly.

New efficiencies will evolve around meal delivery, and the profitability of delivery methods should be reinvestigated. It is imperative that businesses invest the necessary resources, in time, technology and guest experience to ensure that this fulfillment channel supports the overall business. When implemented atop a thoughtful strategy, delivery offers a tremendous opportunity to delight your guests and boost your bottom line.

Learn about NetSuite’s software for restaurant and hospitality businesses.