Is Third-Party Restaurant Delivery Right For Your Business?

Often a blessing in disguise can turn out to be a curse in disguise. When the third party entities entered into the restaurant industry to resolve the age old concern of handing the takeaways/deliveries in a smart way, it felt as if the prayers of restaurants had been answered. They helped restaurants reach customers located remotely in any part of the city they are in. It all seems goody goody but well, every coin has two sides.

Restaurants tend to pay around 15-30% of fees per order and this eats up any profit they could have otherwise made. It might also not be pocket friendly for customers. Restaurants need to weigh down the benefits compared to the drawbacks of going for a third party service.

Many larger chains like Dominos and McDonald’s offer their own delivery service so they can stay independent and serve their customers the way they want. With the pandemic hitting the world, it becomes even more imperative to become self-sufficient and have own website ordering service instead of relying on third parties. 70% of the customers in the US prefer to order food directly from the restaurant website so the money goes to the restaurant directly instead of a third party.

How Third-Party Delivery Services Eat up Your Profit

The Cost

The food that customers eat might be exquisite but there definitely goes a lot in getting that on the plate at your home. Right from renting the place, paying the staff, the cost of all the ingredients in the menu, the electricity overheads and a lot more. After all this, restaurants expect to make decent profits.

The third party vendors offer more customers, more orders but they also charge a ownable fee to its customers.

It would be worth it if this managed to get you numerous takeaways however there are many external factors like the current ongoing pandemic that might make things go for a wrong turn.

While certain overheads cannot be eased off, restaurants can either go for delivery on their own or find services that charge very less. Since many restaurants had to be closed for a stated period of time due to pandemic, they not only need to recover the lost business but also ensure that things move forward with less overheads as possible.

The Profit Margin:

Any service that restaurants opt for is with the sole purpose of getting more profits and earning more. That said, it is very important that restaurants don’t lose out in noticing that more orders do not necessarily mean huge profits.

With a lot of effort and resources being put on putting up a dish, restaurants manage to earn some profit per dish but with the charge varying from  15-30% per dish, do the restaurants actually make any profit? If so, how much?

Over a period of time, restaurants have come to realise that hefty fees paid to third party services eat up their earnings and hence they are gradually shifting to having their own website ordering service or have a standalone Mobile App for customers to place orders. 

Are you listed with permission?

There have been instances when restaurants have been listed onto third party delivery sites without consent the first being how you are presented at the Customer’s end. Big restaurant chains if faced with such a problem can go on to pursue it legally however its not an affordable solution for everyone.

In such scenarios, restaurants can circulate a notice on their social media pages about such instances and the only modes through which they are accepting orders so customers know from where to order. Instagram, Twitter and Facebook are the major handles where you can reach out to your existing as well as potential customers to cement the modes through which orders are accepted.

Make sure to put the same information on your website too so visitors know about it.

Are the third party vendors being transparent enough?

Offering huge discounts, offers, festival promotions and various other  tactics are used to lure more customer base seek delivery orders. Food items are many times offered at 50% discount. But who bears these discounts? It is quite important for a restaurant to understand how these offers function before going on board with third party delivery services. Make sure that you are not facing the heat of these discounts essentially during these times when finances need to be managed as effectively as possible.

Third party vendors also possess the data of your customers before you can. Be sure that you are entitled to the customer data for your own marketing before partnering with any third party entity and that transparency terms are clearly defined.

Conclusion

Being self-sufficient helps your business any given day. With that, restaurants should try to get their own website ordering or a Mobile App to get orders. As stated earlier, it is always important to weigh out the benefits over the downturns if you are going for third party services. Ideally, once your customer base has been built, it is advisable to go on your own and forge ahead.