Q: I’ve been approached by several third-party delivery services over the last year. Is this something I should consider?

A: Third-party delivery services are not a flash in the pan. According to Toast POS, 70% of meals will be consumed outside restaurants by 2020. The move toward these services is here to stay as this segment is estimated to grow 25% per year through 2018. The most encouraging upside is 67% of these sales are estimated to be incremental or additional according to McKinsey & Co. If you doubt the growth and longevity of this category, ask yourself a question, “When was the last time I called an airline to book an airline ticket?” The clear majority book air travel online and will never go back. To begin or in some cases improve your journey with these services, consider the following:

Remain open to multiple platforms

Delivery platforms retain up to 80% of their existing base with consumers rarely leaving their favorite platform. This consumer loyalty suggests to a restaurant operator to keep all options open and decline signing an exclusive with one platform. Since there are several popular platforms, signing an exclusive with only one can limit opportunity for growth. Start with one vendor without an exclusive and then add several more as you see results.

Design your restaurant to accommodate growing delivery revenue.

If delivery is popular, product can build up. Be sure to provide a food friendly place for product to be held. Designate an area where multiple tablets can be located and accessed. Invest in packaging and optimize menus to minimize the impact of travel time on food quality. Many restaurateurs insist guest expectations go down with delivery and the same standards used for dine in sales are not applied to food quality. This may be partially true but who wants to be average? This is an opportunity to stand out from your competitors. Study national fast food companies, their packaging has been vetted millions of times.

Treat delivery like its own business

The goal of every business is to make money. With fees as high as 30%, third-party delivery should be managed carefully. Be sure prime cost is acceptable and profitable. Adjust labor schedules to fit the new influx of business and maximize performance. Many restaurants try to shift sales to the shoulders of a typical rush period so if this is a consideration, be sure to schedule heavier during those times. Although, the most profitable sales will be during peak periods. Though tougher to execute, productivity per person increases when employees are already busy and so does profit.

Track the performance of each vendor

There are many measurements to put in place. The most important data to track is the ideal delivery time which must be one hour or less from order placement to delivery. Track sales, discounts and profitability by vendor. Measure the timeliness of pickup. Track reliability of pickup and number of adjustments required by the vendor. Track the market performance of each vendor with the amount of social media outreach, number of customers and market share. Make a list of what is the most important to you to measure and require that of the vendor. Remember, all services are trying to improve their platforms, you can be helpful in doing just that.

Overall, the opportunity to expose your brand to a new audience is unique. While paying as much as 30% for delivery doesn’t seem profitable, the margins on incremental sales more than offset this and profitability will improve if managed correctly. By picking the right partners for your area and product, running delivery as its own business, and requiring high performance from all parties, you’ll see a better top and bottom-line.


For more information on improving profitability and driving sales, contact AMP Services at rbraa@ampservices.com. Rick Braa is the founder of AMP Services, a Seattle restaurant accounting and consulting firm specializing in helping companies grow profitability.