In-house, third-party companies, lead generation
There are three main options for restaurant delivery: in-house delivery drivers (employees), third-party companies offering delivery only and lead generation companies with integrated delivery. See our insight about 3rd Party companies offering lead generation with delivery integrated:
Third-Party Lead Generation with Integrated Delivery
I consider this the easiest and fastest way to start a delivery business. I wouldn’t say it is the best long-term and profitable solution. Nowadays restaurants owners are still learning how to leverage these services in a positive and symbiotic relationship. I have noticed love and hate relationships. Here is why?
One-Stop Shop – marketing, online ordering, customer service and delivery are all integrated. Just sign one contract, receive a tablet and start taking orders. You may get a significant volume of online orders without any marketing efforts depending on the commission percentage on your agreement. Some companies will even offer a free online ordering widget for your website, free of any commission. There is a catch. See the disadvantages.
Immediate Brand Exposure, No Up Front Cost - lead generation apps are designed to attract hungry delivery diners. With large marketing budgets backed by billions of dollars in venture capital. These services have a more significant advantage over the restaurant's brands when competing for exposure. Often your restaurant can get free service if you own a famous brand. In exchange, your brand attracts more diners to the lead generation domain. The less popular brands will most likely have to pay a hefty commission (15% to 30%) to gain some traction through the platform.
Worry-Free Customer Service - because the customers identify more with the lead generation brand and not your restaurant. You don’t have to worry as much about the customer service aspect of the delivery orders they have sold and brought to your restaurant. Those are their customers, and they will handle the customer service, refunds, and comps. Your responsibilities are to make sure the food is of excellent quality upon the driver pick-up and ready on time. They will take it from there. All the calls and complaints will be directed to their customer service team.
Easy to Use Technology, Scalability and Larger Coverage - lead generation companies are investing heavily in technology, some may provide POS integrations and nationwide coverage which can be attractive for large restaurant chains.
Delivery can be available to hundreds of U.S. markets and international markets as well covering thousands of locations.
Data Hungry - The lead generation companies want the data from your loyal customers so they can convert the diner to order through their app and promote the discovery of other restaurant brands. They offer discount coupons, marketing signs and free online ordering widget (orders free of commission) for your website. All in exchange for gaining and collecting the information/behavior of your loyal clientele (a new user for their platform).
Driver Behavior - most companies sign up drivers online, with little to no onboarding training and insufficient driver support. The turnover is much higher than in-house drivers or local delivery only services. There is hardly an in-person orientation. Have you ever noticed those drivers at your restaurants who seem not to know what is going on? That’s the result. Though delivery can be a simple task, it still requires some level of knowledge from the delivery drivers. Navigation skills, proper food handling, customer service, professional appearance, and equipment (bags and cart) are mandatory. Insufficient compensation and unresponsive online driver support could also play a significant role in the quality and motivation of drivers.
Unpredictability - their potential to subsidize promotions and drive volume can quickly overload your kitchen without warning. Often it becomes a queuing issue, surprising your staff and slowing down the dine-in service.
Since you are not in control of the consumer demand, a slight change in the commission percentage can determine a significant volume variation.
In other words, if you don’t agree with a commission price increase, you will lose brand exposure and access to most of their users.
The True Cost of Delivery - there is not such a thing as free delivery. The cost of marketing, technology, driver labor, mileage (car depreciation and gas), insurance, workers compensation and legal services is the same for everyone.
Nowadays, data is more valuable than it has ever been. It is estimated that the cost to acquire a new delivery diner through a lead generation platform averages about $80 per person.
When your restaurant receives a great deal on lead generation and delivery service, be conscious that your delivery partner is monetizing it somehow.
Often passing the entire cost of delivery to the consumer by increasing the delivery fee, up marking menu items, adding extra service fees (sometimes hidden as taxes & fees), or by merely collecting customer information from your website.
For those restaurants paying a higher commission, the cost of delivery for the consumer will be super low through the lead generation platform. That can motivate the diner to order through the led generation app instead of using your website.
If you would like chat more about your delivery options then contact our sales team. Though Jolt Delivery is not a lead generation company we can still advise and refer some of these services to you. Also, take the opportunity to check out the pros and cons of using In-House Drivers (Employees) and a 3rd Party Delivery Only company.
Follow our post Components of Restaurant Delivery to find out more about Customer Service and Ordering options for food delivery.