July 31, 2023

In-House vs Third-Party Delivery for Restaurants: Pros & Cons

As the culinary world shifts further into the digital age, delivery services have become pivotal in the restaurant industry. A growing demand for delivery services has created a significant dilemma for many restaurant owners – should they use third-party delivery services or opt for in-house delivery? Both options have their pros and cons, and the choice between the two can significantly impact business operations. Continue reading to explore everything you need to know about in-house vs. third-party delivery to increase your restaurant sales.

Benefits of third-party delivery services

Increase brand awareness

A simple, effective way to increase your restaurant’s visibility is to partner with a popular third-party delivery service platform. Each platform has its own group of loyal users who can become your new customers. By acting as a storefront for your business, these platforms reach a vast audience without the need for heavy investment in marketing. Essentially, third-party delivery services provide ready-made infrastructure, from a network of couriers and secure payment methods to delivery tracking and packaging materials, all with little to no upfront investment. Consequently, your chances of receiving several orders in a short timespan are significantly high due to the extensive reach of these aggregator platforms.

Simplify food delivery process workflow

Third-party delivery services have revolutionised the food delivery space by streamlining the process for both restaurateurs and customers. Once you sign up, these platforms manage the entire process, from the customer placing an order and delivery to driver management and platform infrastructure.

Concentrate on your core for profitable growth

Outsourcing delivery enables you to focus on your restaurant’s core business: preparing delectable food. Using third-party apps not only extends your reach more than your own delivery platform could, but also significantly reduces workload. Additionally, they offer exceptional customer service. It lets you invest your time in what you love the most: making delicious food, managing staff, and creating unique food experiences.

Drawbacks of third-party delivery services

Huge commission fees

A significant downside of using third-party delivery services is the high commission fees, often ranging from 20-30% per order, which can take a sizeable chunk out of your profits. It’s important to weigh this cost against the overall sales increase that partnering with third-party apps may bring. It is wise to use business analytics tools to track and manage your restaurant’s performance.

Lack of customer control

Outsourcing delivery may result in losing direct communication with your end customers. This can make maintaining positive brand awareness and delivering the customer experience you desire more challenging. 

Increasing competition in the market

Despite expanding your restaurant’s reach, third-party delivery services also increase your competition. Your restaurant is listed alongside many others, making it more difficult for your to stand out.

Benefits of in-house delivery

Claim full margin

Avoiding commission fees means you earn 100% of your delivery profits — a significant advantage, especially for smaller, local restaurants. Plus, you can quickly adjust prices, menu items, and time-bound offers, which can be a hassle when partnering with third-party delivery companies.

Greater control over customer experience

In-house delivery puts you in control of your business model, from hiring staff to setting business standards. You can ensure a top-notch customer experience, from order receipt to delivery.

Own customer data

In-house delivery also means access to customer data, allowing for retargeting and promoting loyalty through rewards programmes — an important consideration for those seeking to build strong local customer relationships.

Drawbacks of in-house delivery

Tackle logistics

Running a delivery service requires substantial investment and expertise, from purchasing delivery vehicles to choosing reliable payment systems and tracking deliveries. 

Continuous upkeep

Maintaining in-house delivery for your restaurant requires ongoing effort, such as training staff and delivery drivers, ensuring the ordering website runs smoothly, and obtaining necessary delivery licences.

Reduced customer reach

Without the expansive user base of a third-party platform, your visibility and potential to attract new customers might be significantly reduced. While your existing clientele may well order directly from your app, expanding your reach might necessitate more significant marketing investments than joining a third-party platform that can expose you to a fresh pool of customers.

The best delivery model for restaurants: the hybrid approach

Many restaurants find that a combination of both third-party and in-house delivery services can provide the best of both worlds. This hybrid model allows you to benefit from the reach and capacity of larger platforms during busy times while retaining the ability to offer a personal touch to customers who prefer to order directly. 

It’s essential for each restaurant to choose the best delivery model according to its individual goals, size, and resources. By offering multiple delivery options, you can cater to a wider customer base and provide flexibility that meets various customer preferences. It’s also worth noting that this model may enable you to reduce the costs associated with either model alone.

Pick what is right for you

Deciding between third-party and in-house delivery isn’t a one-size-fits-all situation. It’s a decision that should be tailored to your restaurant’s specific needs and resources. 

Third-party services offer great reach and ease of operation, allowing you to focus more on your food and customer service, while in-house delivery gives you more control over the entire customer experience and access to valuable customer data. The hybrid model might serve as a compromise, providing a balance between cost, reach, and control. At the end of the day, the choice depends on what’s best for your business.

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