Third-party delivery services have been a great solution for many restaurants – but lots of challenges still need to be ironed out.
With guests looking for both convenience and the dining-out experience, third-party delivery has been a rewarding solution for many restaurants.
But many issues still need to be worked out, including increasing fees, operational hassles and brand confusion, said speakers at the National Restaurant Association’s recent Restaurant Innovation Summit in Dallas. Their observations:
- The situation is rapidly evolving. Christopher Webb, CEO and co-founder of ChowNow, an online ecommerce and ordering solution, compared what restaurants face today to what hotels faced about a decade ago. Ten years ago, online travel booking seemed a convenient solution, and Expedia and other aggregators convinced hotels to participate. “As they got more hotels, the rates went up,” Webb said. That’s what’s happening now, Webb says. As third-party delivery companies sign up more restaurants, “the commission rates got higher and higher” – prompting restaurants to step back and rethink their approach.
- Go slow if needed. Skip Kimpel, vice president of IT at South Florida-based Anthony’s Coal Fired Pizza, said his chain signed up with third-party partners when they saw the delivery trend start to take off. “We didn’t think it through, and it was too disruptive,” he said. “All due to fear of missing out.” Problems with food quality and late or missed orders threatened the chain’s reputation, Kimpel said. Coupled with the percentage of sales Anthony’s paid out to third-party delivery companies, the experience led the chain to pull back and search for tools to manage the challenges, while still benefiting from third-party partnerships. Anthony’s prioritized its vendors and reevaluated contracts. This year, he said, Anthony’s is focusing on POS integration, to ease the headache of receiving orders from multiple sources.
- Ask partners for what you need. Shane Wheatland, CEO of Omnivore, said services will evolve as third-party vendors and operators work together. Wheatland, whose company helps restaurants with technology, data insights and POS integration, said restaurants must ensure they’re getting what they need from third-party partners when it comes to order input, menu management and commissions. He said a universal API could enable operators to tap and analyze the ordering data vendors hold, and also help manage the menu and brand messaging.
- Get innovative. Alex Canter, CEO of Ordermark, proposed another tech tool to help manage third-party vendors: a receipt system that allows restaurants to handle multiple online ordering services. Canter’s family owns Canter’s Deli in Los Angeles. He said when the 2008 recession hit, “we had to figure out new ways to reach customers. We needed to invest in technology.” The restaurant created its own online ordering service, in addition to teaming up with third-party vendors. He described the “tablet hell” involved in receiving orders through multiple tablets and having to transcribe each order into the company’s system. “We wanted to standardize orders to one place,” Canter said. The company developed a tool that funnels all the orders from multiple platforms into one system. They now market the technology to other restaurants.
Restaurants need to become digital businesses, Canter said. “There’s a huge opportunity,” he said. “If you’re not thinking about this, it will be very challenging to stay in business. Rather than resist it, embrace it.”
Learn more about our Restaurant Innovation Summit.