While the allure of increased orders is strong, the reality involves commission fees, a loss of direct customer contact, and potential brand dilution. This decision isn't just about getting your food to more people; it's a strategic choice that impacts your profitability, customer relationships, and overall brand identity.
The Appeal Of Third-Party Delivery
Why are so many businesses signing up for these platforms? The advantages are significant, especially for those looking to grow their customer base quickly without building their own delivery infrastructure.
Expanded Customer Reach
The most compelling benefit of using a third-party delivery service is instant access to a massive, established user base. These apps spend millions on marketing to attract and retain users who are actively looking to order food. For a small restaurant, tapping into this pre-existing market can lead to a surge in visibility and orders from customers who might have never discovered you otherwise. It's like opening a new digital storefront in a bustling online mall, exposing your menu to thousands of potential new regulars.
Convenience And Reduced Overhead
Building and managing an in-house delivery system is a complex and expensive undertaking. It requires hiring and training drivers, purchasing delivery vehicles, paying for insurance, and developing an online ordering system. Third-party platforms handle all of this for you. For small businesses with limited resources, this convenience can be a lifesaver.
Marketing And Promotion Opportunities
Beyond just listing your menu, delivery apps often offer built-in marketing tools. You can participate in promotions, offer special discounts, or be featured in curated collections like "New & Notable" or "Local Favorites." These features can provide valuable exposure and drive orders during slow periods.
The Downsides Of Outsourcing Delivery
While the benefits are tempting, it’s crucial to consider the significant drawbacks that come with handing over a core part of your customer experience to another company.
The High Cost Of Commission Fees
The most significant disadvantage of using third-party delivery services is the hefty commission fees. These platforms typically charge restaurants anywhere from 15% to 30% per order. For an industry with already thin profit margins, this can be a devastating blow to your bottom line. Before signing up, you must carefully calculate whether the increased order volume will be enough to offset these substantial fees.
Loss Of Control Over Customer Experience
When a customer orders through a third-party app, their experience is largely in the hands of the delivery driver. A late delivery, cold food, or unprofessional driver can reflect poorly on your restaurant, even if you did everything right. You have little to no control over the final "last mile" of the customer journey, yet your brand's reputation is on the line.
Disconnected Customer Relationships
Third-party apps act as a middleman, creating a barrier between you and your customers. You don't get direct access to valuable customer data, such as their contact information, ordering habits, or feedback. The customer's loyalty is often to the app, not to your restaurant. They might order from you one day and a competitor the next, based on whatever promotion the app is pushing.
Exploring The Alternatives
If the downsides of third-party delivery outweigh the benefits for your business, don't worry. There are other ways to offer delivery without sacrificing your profits or customer relationships.
Building An In-House Delivery System
Creating your own delivery service gives you complete control over the entire process. You set the delivery fees, manage the drivers, and own the customer relationship. While the initial investment in technology and staffing can be high, it can pay off in the long run by eliminating commission fees and allowing you to build brand loyalty. Modern software solutions can also make managing an in-house system more affordable and efficient than ever before.
Hybrid Models And Self-Delivery Platforms
Some businesses opt for a hybrid approach. They might use third-party apps for discoverability, but encourage customers to order directly through their own website by offering discounts or loyalty rewards. Another option is to use platforms that provide online ordering software and a network of on-demand drivers without the marketplace structure. These services give you more control and often charge a flat fee per delivery instead of a percentage-based commission, making costs more predictable.
Quikstone Capital Solutions has officially reached its 20th anniversary, a moment that reflects two decades of dedication to supporting small businesses across the country. If you need cash for your business, contact us today. We have only one goal: to help your business succeed.
