With the Winter Olympics around the corner, the team here at NetWaiter is getting into the perfect 10 spirit. As you skate into 2018, think about what kind of challenges you faced last year and those you want to tackle this year. Will you hit your profit goals over the next 12 months? Are you seeing an increase in new and returning customers? Do you have control over your delivery service? This last question is key in helping you answer “yes” to the previous two questions.
Over the past few years, restaurant delivery has been booming. Restaurant owners are constantly looking for ways to invest in proper tools to support their business and brand to attract more customers. In 2016, delivery transactions made up about 7% of total U.S. restaurant sales. This number has the possibility of reaching 40% of all restaurant sales, dependent on location of the restaurant. Delivery adds an additional revenue stream that can either be controlled in-house or by a third-party service. Think about what you are currently doing at the moment and what is and isn’t working. Could your process be improved? Do you wish you had more control over the process? Do you even have a process? Let’s take a deeper dive into one of the most complicated and anticipated restaurant events – delivery.
Adding delivery immediately makes your restaurant more accessible – attracting more customers and more orders. In a world where you can purchase almost everything through a website or mobile device, you are encouraged (if not required) to add online ordering to your restaurant’s website for both delivery and takeout. If you don’t have a website, use an online ordering platform to communicate your restaurant’s menu for customer convenience. By adding online ordering to your site, you open the door to receiving orders faster, with higher ticket averages, and from more loyal customers. An online menu helps customers bypass waiting on the phone or driving directly to your restaurant to place an order. According to recent surveys, 51% of Americans use delivery services to purchase meals from casual dining restaurant, and 26% order takeout or delivery at least once a week. An online ordering system makes it easier to communicate with delivery drivers since each order has its own order print-out, with the customer’s address, phone number, and other information included.
Incorporating delivery as part of your normal restaurant operating procedures can come with a hefty price tag. Do you handle delivery in-house? Do you bring in a third-party delivery service to make deliveries? If you decide to use a third-party service, do your research to ensure you get the best deal for your restaurant, knowing that you will be outsourcing order facilitation and putting your brand on the line. The cost of a third-party delivery service can be more expensive than hiring your own delivery drivers to handle the same job. Be sure to crunch your numbers to determine what loss or gain you will take by bringing in an outside party and if ultimately, there is a potential increase to your bottom line by using a third-party service vs handling delivery in-house. If done correctly, hiring and training your own delivery drivers can lead you down a more profitable path since you’ll be avoiding the extra expense and fees of using an outside company.
Another item to consider when adding delivery to your business is how you want your business to be perceived by your customers. Using a third-party service means you are taking a risk by having people outside of your business ultimately represent your brand and product. You have no control over any issues that might arise as a result of a negative experience. Additionally, it has been found that customers aren’t loyal to using a third-party service when ordering food online.
If you are considering using a third-party service, again, do the math to make sure it’s the right choice for your restaurant. Once you add up the pricing, delivery fees, and overall expenses, the total can be alarming. Many third-party delivery services charge fees exceeding 25% of each order and, if a significant portion of your business comes through these types of services, the fees will not be sustainable. Most restaurant profit margins are less than half of the fees these services charge. In a world where ALL of the orders coming from these third-party delivery services are incremental, and extra to your normal business, those fees are affordable. BUT, in the real world, where routine customers place orders over and over again through these services, the fees will not be sustainable for your restaurant.
This challenge is something the restaurant industry faces together. With services like Amazon Prime, and free same-day delivery, customers are brainwashed to believe they are entitled to free delivery. The reality of food-delivery, however, is completely different. Making sure an order is delivered within 60 minutes, and still hot, is not a cheap proposition for a restaurant. These expenses cannot be fully absorbed by restaurants and some fees have to be passed along to customers to make the process sustainable.
That said, a recent survey reported that only 12 percent of Americans say they have used a third-party delivery service in the past three months. Among non-users, three in 10 (30 percent) say that they would rather order delivery directly from the restaurant itself, citing concerns over price, as more than one quarter (27 percent) believe that delivery fees are too high. You don’t want to risk losing customers due to price when pricing can be within your control.
You have the opportunity to create a better brand experience and customer loyalty by providing your own delivery rather than rely on a third-party service to promote your restaurant along with 30+ other restaurants in your area. Customers often look for the best deal and an experience or product they will enjoy the most. Do you think your customers will receive a more positive experience through you and your team, or do you want this to be handled by someone outside of your establishment? At the end of the day, the customer is always right – so do what is best for them when making your decision.
By handling your own delivery, you are able to better forecast delivery orders for the future. Knowing how long it takes to make your food and timing that with your delivery drivers can make or break a customer’s experience with your restaurant. During a 6 month study by McKinsey & Company, it was revealed that speed of delivery is the biggest variable in customer satisfaction, with an average of 60% of consumers citing it as a key factor. The optimal wait time is no more than 60 minutes. Having a driver in-house reduces your restaurant’s of risk having an unhappy customer due to a timing error. You’re also not battling with other restaurants to get items delivered since your driver will only be focused on delivering your food.
Delivery is a tough process to master, but with the right tools and support, you are well on your way to receiving that gold medal! If you ever are looking for help and guidance in learning how you can begin building out your own delivery team, feel free to reach out to a NetWaiter team member to talk through any questions or concerns you might have to get started.