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08/26/2022

Delight or Delay? Making Delivery More Worthwhile with First-Party Systems

By setting up internal first-party delivery systems, restaurants can save themselves from profit-eating commissions.
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Let’s face it: every consumer wants a delivery option. Nerdwallet reports in 2020 alone, 112 million Americans used a food delivery service, generating $26.5 billion in revenue. While third-party delivery apps might have been a lifeboat for many restaurants during COVID, they’re now a sinking ship for a lot of those same establishments. With this in mind, some restaurants are hesitant to adopt delivery solutions. But are these restaurants missing out on potential customers by forgoing delivery? By setting up internal first-party delivery systems, restaurants can save themselves from profit-eating commissions of up to 30% - read on to find out why this is an important switch.  

  1. Customers Top Choice

According to a 2021 report from Deloitte, when considering the channel from which to order food, 40% of consumers prefer to use a restaurant’s own branded website or app, compared to 11% who prefer a third-party food ordering and delivery platform. This is a huge plus for restaurant owners -- with the right marketing and advertising tactics, they’re able to design ordering platforms that highlight what they see as most important- whether it be a timely promotion, repeat orders for returning customers, or new menu items.

86% of restaurants surveyed say they’re leveraging POS data for loyalty programs and for upselling/special offers in 2022, according to HT's 2022 POS Software Trends report

Customers have also been continually catching on to how much of their money is taken from the restaurant and given to the platform - from service fees to upcharging food items -  and many are eager to support their favorite restaurants in other ways. By implementing a first-party delivery solution, restaurants are able to provide the same convenience for customers, while still getting more out of each order. It can prove difficult to get this system off the ground without the added cushion of third-party name recognition; restaurant owners should take the time beforehand to work out a plan for promotion and socialization. Getting the word out, offering promotions and even creating limited-time offerings can all help establish a first-party delivery system where customers will go before a third-party app. Finally, once a restaurant has established its delivery system, they won’t be competing on a third-party’s home page with larger chain franchises.

  1. Don’t Risk Reputation Management

Every consumer has had one issue or another with third-party delivery apps. Unfortunately, while customer service teams typically rectify the issue, it can come with decreased brand loyalty for both the platform and the restaurant. A study from SMG shows that 35% of customers who use third-party delivery services have experienced a problem—and more than half of them ended up blaming the restaurant. Additionally, more often than not, the mistake is a result of a miscommunication between the delivery app and the restaurant- not the fault of the restaurant itself. When restaurants implement their own delivery systems, owners are able to better manage, process and track orders, cutting down on errors and improving quality of customer service. Even further, if an error does arise, a customer complaint goes straight to the restaurant instead of going through a third-party customer service operator. With this streamlined process, restaurants can correct the issue and offer discounts or credits, instead of credits to a third-party app’s ecosystem- ensuring that customers will return to redeem their credits instead of choosing another restaurant on the delivery app.

  1. Know Your Customers Better

One of the most important ways for restaurants to innovate is by tuning into what customers want. This can prompt new technology, menu items and a host of other crucial improvements on a regular basis. Many of these insights are gleaned by reviewing order data- getting to know the time of day, the avenue and the items that customers most prefer. However, by using third party apps, restaurants are forfeiting that knowledge- the apps give no statistical insight into ordering or customer trends. This gatekeeping around customer data makes it more difficult for restaurants to build an understanding of the customer base, ultimately unable to deepen and retain these relationships. First-party delivery systems provide not only improved communication, but improved insights and data analysis.

Conclusion

Any way you slice it, the restaurant industry will continue to lean into tech solutions to create better experiences and offerings for customers. What’s critical now is that restaurants adopt first-party delivery solutions early, before the next big delivery app sweeps interest industry-wide. By implementing a first-party delivery solution, restaurants have more autonomy over their processes and offerings, can communicate better with customers on orders and issues, and ultimately, will know their users better to create more personalized ordering experiences. Delivery will continue to play a huge role in the restaurant world, and it’s up to the restaurants to decide how big of a presence they want in that realm.

About the Author

Andy Lowder is a Technical Sales Manager and Business Development lead at Menufy, an online ordering SaaS platform for restaurants. Lowder cut his teeth in the delivery space working for Chinese and Pizza takeout restaurants. Since then, he has launched numerous delivery programs and campaigns to help spur revenue growth and improve margins for restaurants with their own fleet and through nationwide partners Uber and DoorDash. Andy has been with Menufy for seven years and is now part of the HungerRush team since Menufy's acquisition by HungerRush in October 2021.