Third party delivery got big during COVID-19 but can also cost restaurants a lot. How can restaurants save money?
Delivery is a huge component of a restaurant’s business, and those that don’t offer it miss out on a lot of sales. However, there are also both hard and soft costs when it comes to delivery and operations. How can restaurants cut these costs? A panel at the Interactive Customer Experience Summit examined this topic in detail.
Cherryh Cansler, VP of events for Networld Media Group, moderated the panel with Bob Andersen, president of The Great Greek Mediterranean Grill, Robin Robison, COO of Modern Restaurant Concepts and Sam Stanovich, SVP of development and alliances at Big Chicken.
A big point of discussion were third-party delivery partners. When COVID happened, restaurants had to adopt delivery in great numbers just to stay afloat.
“We tapped into third party delivery. We did delivery before COVID but tapped into third party after,” Robison said.
“The pendulum has swung so far, but consumer wants it,” Stanovich said.
However, since third-party platforms demand a hefty fee, many restaurants have a love/hate relationship with the platforms and are attempting to shift customers to first party or reduce costs.
“Third party is a necessary evil. They’ve yet to figure out how to make their business model profitable so you have some room to negotiate,” Stanovich said.
In addition, some bad actors are figuring out how to game the third-party delivery platforms to get refunds on food. As a result, Stanovich said that technology platforms have popped up to fight back against those refunds, but that is an extra cost.
“Yes it’s a love hate [relationship],” Anderson said. “Deliver is here to stay.” He pointed out that third-party companies do have a lot of data which can be useful to utilize.
So how do restaurants save money on these costs? One is to try to push customers to first party by calling in to order directly from the restaurant.
Anderson pointed out that customers are figuring out the hidden costs with third party and that they can save up to 30% on costs just by ordering directly from the restaurant.
“We did an ‘order directly from us’ campaign to encourage people to order and save,” Robison said.
Anderson said that restaurants should offer robust loyalty programs to further encourage first party usage.
When asked if they would consider doing delivery themselves, the panelists said that the costs were too prohibitive, but there were other ways to save such as packaging.
Robison for example said they cut back on packaging by only offering one lid for both sizes of salad boxes and by using less color on delivery bags.
Anderson said that luckily Greek food travels well, so they have been able to keep packaging costs low.
Robison said they also use a guest relations team that takes orders calls remotely as if they are from the restaurant. This team also helps get money back from third party operators who fail to deliver food to customers and save money for the restaurant.
Robots can also play a role with delivery. Robison said Modern Restaurant Concepts used a robot in an urban area that could deliver food a few blocks away and ultimately was cheaper than third-party delivery.
The panelists all agreed, however, that drones may not have much use for delivery, especially as Stanovich pointed out that some customers may target the drones with weapons or they may interfere with air space.
Ultimately all of the panelists agreed that delivery is here to stay and restaurants will need to make adjustments to make it work for them.
Bradley Cooper is the editor of ATM Marketplace and was previously the editor of Digital Signage Today. His background is in information technology, advertising, and writing.