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 percent of all restaurant foot traffic will be outside the restaurant by 2020. These delivery services are here to stay: this segment is expected to grow 25 percent per year through 2018. The good news is that 67 percent of their business in incremental or additional sales, according to McKinsey & Co.

If you doubt the growth and longevity of this new business category, ask yourself a question, “When was the last time I called an airline to book an airline ticket?” Most people now book air travel online and will never go back to calling for a reservation.

To begin, or in some cases to improve, your journey with these services, consider the following:

  1. Remain open to multiple platforms.
    Delivery platforms retain up to 80 percent of their existing base with consumers rarely leaving their favorite platform. This consumer loyalty suggests a restaurant operator would be wise to keep all options open and decline signing an exclusive with one platform. Since there are several popular platforms, working exclusively with just one can limit opportunity for growth, Start with one vendor 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 restauranteurs 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 percent, third-party delivery should be managed carefully. Be sure primes 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. If this is a consideration, be sure to schedule heavier during those time. Nevertheless, the most profitable sales will be during peak periods. Though tougher to execute, productivity per person – and – profits – increase when employee are already busy.

    Track the performance of each vender.
    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 replacement to delivery. Track sales, discounts and profitability by vender. 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.

    Delivery services provide a unique opportunity to expose your brand to ew audiences. While paying as much as 30 percent 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 performance, contact AMP Services at rbraa@ampservices.com. Rick Braa is the co-founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.