Comparing In-House Delivery and Third-Party Delivery Apps

Consumers appreciate speed and convenience. Pair this with a pandemic that’s encouraged people to stay at home and you have the premise for why online ordering has recently seen exponential growth. While there’s no longer room for argument as to whether deliveries should be an option for restaurants, the debate of how they should be administered still stands.  

Did you know?

Did you know that revenue generated by off-premise dining makes up 44% of all restaurant sales, with 25% of those orders accounting for delivery?[1]

As such, the aim of this article is to guide restaurant owners through the decision-making process when it comes to answering the following question:

Should restaurants provide delivery themselves (DIY) – or should they rely on third-party services?

To help you work out what’s best for your business, let’s work through the pros and cons of the two options. 

Here goes:

DIY Delivery

Pros

• If you want full control of your restaurant’s order and delivery system, then DIY delivery is the way to go. Having complete reign gives you the ability to control your delivery logistics so that you can put every effort into keeping your customers happy with your service.

• In-house delivery methods allow restaurant owners and managers the freedom and flexibility to define their own product-offering and business model. For example, there are many third-party services that are restrictive by the type of products they can deliver. 

• By cutting out the middleman, you can reduce the potential for communication breakdown. There is less room for error when customers direct their orders to the source. At the same time, you can own the conversation with your customers where you provide them with options to order online or via a phone call.
  
• Using your own vehicles is a great branding opportunity. Many companies use vehicles wrapped in eye-catching designs to get them noticed when driving around. It’s like a mobile billboard for your business, instead of a solo cyclist with a cuboid backpack.

Cons

• Hiring delivery staff and delivery vehicles with in-house delivery operations can become costly.  It can also be a complex procedure that adds to your admin, weighing you down with paperwork.

• Even if you have been in the restaurant business for years, your expertise in modern-day delivery expectations may be lacking. This could lead to disrupted logistics and incompetence that could give your restaurant a bad rep. So, if you are not prepared to master new skills, then “DIY” may not be the way to go. 

• If things go wrong with an in-house delivery, there’s just no way to “pass on the buck”. If your customer is dissatisfied, then you will have to take full accountability for bad experiences. It’s fully up to you to provide ways to keep your restaurant customers happy.

Third-party Delivery Pros and Cons

Pros

• Outsourcing delivery gives you room to breathe. By relying on delivery service apps to do the hard parts for you, you can focus exclusively on the tangible things you provide to your patrons. You have more time and resources on your hands to concentrate on other important day-to-day efforts and bigger projects.

• Choosing to outsource delivery to a third party can lower your fixed expenses. It cuts out the need to pay wages to delivery staff and you won’t need to take out extra insurance. You also won’t need to purchase a fleet of delivery vehicles – which can put a huge dent in your profits. 

• Using a third-party delivery service has the potential to direct new business to you. Most third-party delivery services use web and mobile applications to run their services, with big advertising budgets to get consumers on board. The apps are out there doing the hard work of bringing you potential new customers.

Cons

• When you rely on a third-party service application to run your deliveries, then you lose a certain amount of influential control over your patrons. For instance, you cannot customise your customer experience so that it completely meets the goals and values of your brand. You also rely on third-party staff members, who you may never meet, to be the face of your restaurant.  At least with in-house delivery, you can train employees in exacting the delivery standards that you would like your customers to experience. 

• Commissions and fees. Third-party delivery software services are convenient in the sense that you typically only pay commission per transaction. However, this commission can take a hefty chunk out of your profits, sometimes up to 35%. Depending on your type of establishment, staff, wages, and vehicle availability may work out cheaper for a DIY delivery operation. 

• Third-party apps rely on technology to work and if there’s been a technical hitch in the system, it can lead to broken communication and an unhappy customer. While it may be the third-party’s fault that your customer is dissatisfied, it’s still your reputation on the line. 

The Bottom Line…

Both DIY in-house and third-party delivery options are weighted with advantages and drawbacks. But regardless of how you decide to run your delivery operation, it’s always a good idea to incorporate some sort of delivery software into your system. Technology comes in all shapes and sizes and with its help, you can streamline your logistics and optimise your operation as a whole. 

If you’re looking for more control and flexibility, DIY is the best option. However, if you favour speed and convenience, outsourcing with a third-party delivery app would be a better fit.

References:

[1] Restaurant Business Online. How Do the Third-Party Delivery Players Stack Up? June 21, 2018

Sources:

1. Moz. Third-party vs. In-house Delivery: A Guide to Informed Choice, 22 June, 2020
2. Glympse. In-House vs. Third-Party Delivery: Pros and Cons, May 15, 2019