Third Party Delivery Life or Death for the Restaurant Operator

The conversation surrounding food delivery continues to be a major concern for today’s restaurant operators as they wade through a number of new technologies providing third-party delivery solutions.

GrubHub is up by over 38 percent in sales. The online delivery marketplace has also acquired Tapingo, Eat24, and LevelUp, and recently partnered with Dunkin’. However, not far behind, DoorDash just overtook GrubHub in U.S. monthly food delivery sales. The ever-popular Uber maintains a steady 91 million monthly active users in over 20 countries and provides food delivery for 50 percent of the U.S. population.

Nevertheless, our research here at Foodable Labs shows that there are some beginning signs of fatigue in both the operator and the consumer in terms of sentiment toward third-party delivery. An analysis of over one million conversations about third-party delivery reveals a few key areas that consistently problematize the companies’ claims to convenience.

Top 10 Third-Party By Sentiment Rating

Source: Foodable Labs

The Fees hit both the operator and the consumer. Operators typically pay third-party companies 20 to 30 percent of the base cost of the ordered food. Depending on the delivery service, consumers may pay a yearly fee or pay fees for delivery from certain restaurants. In just this past quarter, there has been a sentiment drop of 3.6 points on the consumer side across the top ten delivery services. On the operator side, the drop is even direr: sentiment fell by 5.8 points.

The Data represents a constant battle between the operator and the delivery service: who owns a guest’s information, order habits, items, and frequency of purchase? The restaurants believe the guests’ data belongs to them because the customer is their guest eating their food, whereas delivery services want to leverage the data to the max with deals, app notifications, and constant marketing.

The Brand is a key area that hits home for every restaurant business. Because the restaurant loses control of the delivery, brand continuity often comes into question. Food safety and new packaging is a constant concern for restaurants to ensure they maintain each customer’s business and overall enjoyment of the restaurant.

The Jimmy John’s sandwich chain, one of the first restaurants to embrace delivery services, has refused since its beginnings to deal with third-party companies due to these issues. “We’ve been researching … what is best for our customers and our brand,” says Jimmy John’s Chief Marketing Officer John Shea. “In our exploration, we came to the conclusion that we do it better.”

The question still remains whether food delivery companies like GrubHub and UberEats can come up with a program to solve these issues. My take is that the industry is incredibly complex: businesses range from independent to franchises to emerging chains to Titans of QSR, and each business has different needs and complaints regarding the current model of third-party food delivery.

Some members of the industry are seeking the bottom line of profit, while others are looking for top-line sales and incremental lift. The brand also comes into play, and profit is always a factor. The guest connection could also change the entire landscape of food delivery over the course of the next few years.

A few brands are taking matters into their own hands. Third party delivery can deeply cut profits, so fast-casual restaurants like Modern Market and Panera Bread are investing in their own ordering and delivery platforms. This move is risky, as it could limit the company’s competitive potential. But the choice ensures that the restaurant can maintain brand continuity and better address customer concerns regarding the food delivery process.

Third party delivery providers have a fiduciary responsibility to grow the business and create stockholder value. And history shows that pushback from the community can be a deterrence to the growth of these companies. The real difference here is that the dynamics of the restaurant industry does not fare well for third-party deliverers. The real future for the third-party delivery companies lies in the development of their own foodservice brands —whether they are cloud and virtual kitchens, or full on commissary systems that can meet massive demand. In my video report from last November, I break down the idea of how third-party restaurant brand development is the real gold rush for likes of Uber and GrubHub.

Restaurants Pinky’s Space & Cosa Buona Improve Packaging and Hold Times to Win Delivery Dollars

Restaurants Pinky’s Space & Cosa Buona Improve Packaging and Hold Times to Win Delivery Dollars
  • These restaurants are upping the ante when it comes to food delivery.

  • Colorful to-go boxes and menus cultivated for transit are methods to stand out in the food delivery industry.

Diners these days are looking for ease and convenience. They want food right from the oven to their door. With apps like GrubHub, UberEATS and Seamless delivery options are easy to find.

According to a study, the number of deliveries has risen ten percent. As a result of consumers craving convenience eating at home offers over eating out, restaurants are changing the way it does business.

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GrubHub Partners With Yelp to Offer Delivery From More than 80,000 Restaurants

GrubHub Partners With Yelp to Offer Delivery From More than 80,000 Restaurants

According to a report from the Wall Street Journal, GrubHub and Yelp have expanded their partnership. GrubHub delivery will now be made available from twice as many restaurants on the Yelp website bringing the total number of restaurants to more than 80,000.

This move may prove to be extremely beneficial for GrubHub who has been feeling tension with the many food delivery companies like UberEats and DoorDash trying to grab the top spot.

This partnership with Yelp is actually the last step in what has been a major move for GrubHub. The food delivery giant acquired Eat24 for $288 million. This partnership is aimed at not only garnering more market visibility but also increasing convenience and cutting delivery fees and delivery time. Digital Trends says ”if multiple orders are generated through Yelp, drivers will be able to make multiple deliveries on a single trip.”

“I see a point where we could conceivably have extremely low if not free delivery for consumers,” GrubHub co-founder and Chief Executive Officer Matt Maloney told The Wall Street Journal.

Yelp is adding to the pot as well by trying to up their game as customer’s first stop before a dining experience. With this new focus on delivery, Yelp just released a list of the top-ranked restaurants on their site that offer delivery through their app.

With even super-cheap restaurants like McDonald’s and Taco Bell adding themselves to the delivery game, delivery companies will need to figure out how to get delivery prices below the price of a dollar menu meal if they want to scrape up that market.  

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Uber Eats— "...A Necessary Evil" ?

Uber Eats— "...A Necessary Evil" ?

Is the food delivery service market lopsided?

Apparently, it is. Or, at least, in Miami, where Uber Eats launched its delivery services in the summer of 2016.

“From some restaurants, [Uber Eats] takes a 33 percent cut,” reports “Miami New Times.” “And though other delivery services, such as Postmates, Amazon, and GrubHub, take a smaller percentage, many restaurant owners say Uber’s market share makes its service a must-have, whatever the cost.”

So what is it exactly about Uber Eats that makes some restaurant operators think it’s indispensable?

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There is Expected Growth for Virtual Restaurants

There is Expected Growth for Virtual Restaurants

These days food can be ordered from various “existing” restaurants since businesses are increasingly offering delivery options to their guests. Also you have an array of choices when it comes to delivery apps.

But, as Foodable has reported in the past, “virtual” restaurants are on the rise— especially since these “side” businesses present themselves as an additional source of revenue to places with the extra kitchen space. 

Chances are you have ordered from one yourself, already. Services like Ando, Munchery, Savory, DoorDash, Grubhub are available to order from depending on where a customer lives and which nonrestaurants exist in their area.

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