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Should You Outsource Restaurant Delivery or Keep it in House?

Consumers can get virtually anything they want delivered right to their door in the digital era. Restaurant delivery service is one of the fastest growing services out there, as more people opt to eat their meals at home, rather than heading out to their favorite establishment on a work night. Restaurant delivery is no longer relegated to pizza joints. Intelligent food establishment owners all over are taking advantage of this growing trend.

The stark reality is that business owners who fail to offer restaurant delivery services to their customers will lose significant market share in the coming years. In fact, failure to give customers the option to dine at home rather than visit your restaurant is likely to result in the eventual closure of your business.

Options for every restaurant owner’s needs

In house delivery is always a viable option, as some restaurant owners may have the staff needed to deliver meals as needed. Dedicated deliver staff can often be hired to work on gratuities only. Finally, third party restaurant delivery services are now available in all major cities and towns in North America and overseas.

Rather than trying to guess which option is best for you, take a look at the list of advantages and disadvantages of in house, and third party delivery services and decide which is best for you and your clients.

In-house pizza delivery guy

Advantages of In-House Delivery

Increased revenue (with increased responsibilities)

There’s a good argument that an in house delivery team circumvents a lot of the setup costs and other incendiary fees you’d pay for a third party service. As mentioned, many restaurants will already have the staff in place to make delivery requests a reality. Particularly in small town businesses with lower order volumes.

Branding consistency

In house delivery is great for maintaining the branding you’ve worked so hard to establish. Over three-quarters of customers polled prefer ordering directly from the business they want to eat from as opposed to contacting a third party. With in house delivery, you maintain full control as to how your customers are treated, and how your delivery staff operate. A third party service brings in possible branding and customer service issues including how menu items are handled before getting to the customer.

You’re the be-all, end-all

The plain and simple fact is that the in house delivery route leaves you in complete control of all processes. Obviously, this can be a bad thing if you’re not well-versed in all aspects of delivery, or don’t have the time to monitor delivery staff. However, you have complete autonomy over what’s working well and what’s not, and the ability to identify issues and make changes before they affect your brand. Being in complete control means you profit 100% from deliveries, rather than giving a significant portion to a delivery service.

Taking customer orders for delivery

Disadvantages of In-House Delivery

It’s all on you

Being the beginning and end of the entire delivery process comes with benefits, as mentioned already. However, this is a double-edged sword as you’re liable for everything that happens, good or bad. You and your staff get the pleasure of dealing with disgruntled customers. Your brand is hurt when a delivery driver doesn’t treat a customer like they want to be treated. For several of you reading this, the increased burden isn’t worth pocketing more profits over hiring a third party to handle all the details.

Staffing and overhead increase

You’ll need to recruit new, or dedicate current staff to handle deliveries. In addition, you need to provide vehicles for doing deliveries and pay for the overhead (fuel, insurance, upkeep) or pay drivers fairly for using their own vehicles. As a restaurant owner, you’re responsible for recruiting, training, monitoring, and potentially firing delivery staff. Again, these and other associated headaches may not be worth it if you don’t have the time or resources to do everything on your own.

Not ideal for the inexperienced

As briefly mentioned earlier, if you don’t have experience delivering food items to customers, starting a delivery service can place costly burdens on the service you offer. Deliveries must be timely and professional, which can have a sharp learning curve, particularly if you have lots of on-premise reservations and waiting lists to deal with and/or offer complicated (time-consuming) menu items for delivery. Often, a third party is ideal when launching a new restaurant or adding delivery to your existing list of services. A third party offers the flexibility to get your kitchen staff up to speed with the increased strain deliveries add to the business.

Outsourced meal delivery service

Advantages of Outsourcing to Third Party Delivery Services

Expand your customer base

Consider people who exclusively order delivery or are new to town, who find your restaurant based on a category such as “Southern Barbecue” or “Organic”. Many third parties have a loyal customer base and offer filtering/suggestion tools like Uber Eats to help clients find the kinds of foods that tickle their fancy. If you were to never offer a delivery service, or strictly offer in house service relying on your own marketing, these customers might never find your business. This benefit also helps to capture delivery-minded travelers who make a quick stop in your area for an evening or two, and don’t have the time or desire to travel to your restaurant and wait to be seated and served.

Increased Revenue Potential

Given a third party service can offer clientele you may have otherwise never had access to, it should be a given that revenues can actually rise higher than they would have if you handled your own deliveries. By leveraging a reputable third party’s customers and resources, you can focus on balancing in house and delivery orders for maximum customer satisfaction. Outsourcing deliveries empowers management to focus on making sure all in house processes are running as smoothly and efficiently as possible.

Fewer staffing headaches

Quite simply, third party delivery services handle all the staffing hiccups on their end. You won’t have to worry about calling in drivers when your opener calls in sick. This helps all parts of your in house operations run more smoothly. Front of house staff don’t have to deal with increased phone calls related to delivery orders. Lack of delivery staff hanging out on premises means fewer distractions for everyone, including management and kitchen staff. In addition, you’re not liable for issues like automobile accidents or drivers being abused by mean customers.

Sushi delivery box

Disadvantages of Outsourcing to Third Party Delivery Services

Lower profits

Outsourced delivery companies charge a percentage on each ticket they deliver on your behalf. Thirty percent of each bill is fairly typical in this industry, meaning you’ll definitely want to consider how many deliveries the business will be making, and the average ticket price. For instance, $10 for homemade hamburger and fries would result in $7 to the restaurant, after the delivery company takes their fee, and before you subtract your overhead. On the other hand, a $100 order would result in a loss of $30 potential profit, meaning you’ll need to seriously consider the margins offered on the delivery menu items offered.

Less control of service variables

Once you hand off a delivery to a third party, there is a lot that you don’t have control over. They could mishandle the food, take too long to deliver, or treat your customers rudely. Customers will only see your brand when they get bad delivery service. Consider too, that most dissatisfied customers will flat never order again, rather than calling you directly to inform you of their service woes. They’ll also refer to your restaurant directly when telling their friends about the cold chicken they received, or the aggressive delivery driver who acted menacingly when they didn’t like the tip offered.

Potential brand confusion

A third party delivery can indeed boost business by showcasing your restaurant and menu on their platform. However, this can create a disconnect between you and your customers, as they’re more likely to associate “Herb’s Delivery” with providing the best pasta in town, rather than “Luigi’s Fine Italian Cuisine.” Since third parties take care of the entire ordering and delivery process, it can be hard to distinguish yourself with customers. This can also create obvious issues if you need to switch providers, as their customers will leave with them.

Conclusion

Hopefully you now have a better understanding of the advantages and disadvantages of in house delivery versus outsourced third party services. Which is right for your restaurant will depend on your business, resources, and long term branding goals.

If you’re looking to add either version of delivery service to your restaurant, ConnectSmart offers a leading kitchen display system that can help manage all areas of the restaurant, from real-time order tracking to menu throttling.

A KDS is a must for any business that takes ticket management and customer service seriously. ConnectSmart also allows guests and delivery customers to track the progress of their orders.

About author

Ivan Widjaya
Ivan Widjaya 3211 posts

Ivan Widjaya is the Owner/Editor of Noobpreneur.com, as well as several other blogs. He is a business blogger, web publisher and content marketer for SMEs.

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