By Kyle Brown
As the restaurant industry recovers from the pandemic and all of its accompanying headwinds, one area has instilled hope in the hearts of many restaurateurs: third-party online food delivery.
It’s a shining beacon of meaningful and sustained growth – to the tune of an expected US$24 billion in the U.S. and US$154.3 billion globally in 2023 alone, per Statista – especially amidst ongoing labour shortages, soaring food costs, and increasingly intense competition within the industry.
There are numerous benefits to restaurant operators when they finally decide to dip their toes into third-party online delivery: an expanded reach, increased brand awareness, improved delivery speed and customization for customers, potentially reduced labour and insurance costs, and, most importantly, a nice boost to their profit margin.
While online food delivery via third parties isn’t without its challenges, the real question becomes: how can restaurants capitalize on this additional revenue stream? And what issues should they keep in mind in order to achieve success?
Choose your third-party delivery provider carefully
There is certainly an abundance of third-party food delivery companies to choose from as the space becomes more and more crowded.
According to restaurant data analytics firm Unified Data, the top five online food delivery vendors in both Canada and the U.S. by market share are (in order) DoorDash, Uber Eats, Postmates, Grubhub, and Seamless. As of May 2022, DoorDash surpassed the rest, partnering with more than 160,000 U.S. restaurants and 20,000 Canadian ones. Uber Eats came in second with 123,236 in the U.S. and 15,916 in Canada.
How do you decide which one is right for your restaurant?
Consider the size of their user base, the usability of their app, and how much they charge in fees. For instance, DoorDash offers the most popular delivery app and multiple POS integrations (like Square and Toast) but charges heftier delivery commission fees. Uber Eats, meanwhile, has a large user network for you to take advantage of (including users of Postmates due to a merger in 2020) and a simple, easy-to-use interface.
Conducting an in-depth review and comparison of the various options will allow you to pick the right delivery partner for your circumstances.
Maintain visibility and track key metrics using software
Restaurant owners are obviously busy with a million different tasks every day, but it’s always a good idea to keep an eye on the data and to take steps to automate as much as possible.
There are several food delivery management programs available on the market that make it simple to monitor your delivery operations and KPIs (e.g., dispatch times, driver performance, route optimization, order data, and so on). Some popular options include Tookan, Shipday, OnTime 360, and DoorDash Drive. These programs typically allow restaurant operators to integrate third-party delivery ordering platforms into their own POS system to create a centralized location for all orders (even ones placed in a third-party delivery app), thereby eliminating manual order entry and further streamlining delivery operations.
Review menu offerings and staffing to meet customer demands
During the pandemic, consumers switched from making frequent lunchtime and late-night orders to mid-day and dinnertime orders instead. Similarly, recent research from Unified Data highlights a heightened interest by customers in the quick-service segment that tends to specialize in a single cuisine – often comfort food like tacos, burgers, and pizza.
As consumer and sales trends change, restaurants must consider adjusting their staffing availability and hours of operations, in addition to reviewing and tweaking menu offerings to make sure they are aligning with consumer preferences.
Serve up a high-quality and convenient online ordering experience
Customers are increasingly using third-party and restaurant platforms (both apps and websites) to place food delivery orders because they find it easy and convenient. Nowadays they’re wholly comfortable and familiar with this method of placing orders. Restaurants must respond in kind: with a seamless, fast, and user-friendly online ordering experience whether through their own site and/or app or via their third-party delivery partner’s platform.
This entails optimizing your website (think SEO) and ensuring that it includes a clear CTA, as well as utilizing technology to collect orders (potentially from numerous sources, including third-party platforms). Check that your online menu is easy to access and frequently updated, and don’t forget to make it simple for customers to place an order from it. If you choose to partner with a third-party food delivery service, your customers will likely be able to place orders through its app on their phone – nice and simple.
At the end of the day, there’s essentially been a seismic shift in the restaurant industry because of the explosive growth of online food delivery over the past several years. As interest in food delivery accelerated during the pandemic, numerous third-party players jumped into the space, and many restaurants decided to tap into this attractive revenue stream.
If you’re close to making the leap yourself, do your due diligence prior to picking a third-party food delivery company and take advantage of software to track the results and improve efficiencies. And pay attention to notable industry trends so you can ensure a satisfying delivery experience and menus, staffing, and hours that meet all of your customers’ desires.
Kyle Brown is Co-Founder and Vice President of data analytics provider Unified Data, which supplies decision-makers in the restaurant industry with key sales and consumer insights and trends.