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Why Restaurants Are Dumping Third-Party Food Delivery Services

Third-Party Food Delivery Services - Hero

Learn why restaurants are jumping ship on third-party delivery services and making the move to in-house online ordering systems.

Even before COVID-19 forced the world to shelter in place, the demand for delivery was on the rise. Delivery trends used to hone in on convenience – but in the age of social distancing and reduced indoor dining at restaurants, this past year has shown that food delivery services are an essential part of any restaurant business. Beyond pizzerias, we're now seeing both fine dining restaurants and massive restaurant companies like Wendy's and McDonald's joining the delivery game.

But given the complications that arise with outsourcing delivery to third-party companies, is there a way for restaurants and food delivery services to share a mutually beneficial relationship?

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Online Food Delivery Services + COVID-19

Since the first week of COVID-19-induced restaurant closing in March 2020 saw 7 million restaurant workers laid off and restaurant sales drop over 70%, restaurants around the country have been developing innovative ways to stay in business during the course of the pandemic.

Over the summer and in warmer regions many restaurants leaned heavily on outdoor dining. For restaurants in colder regions, some took the definition of “outdoor dining” to a new level with igloos (clear plastic tents) and other creative ideas. But more often than not, to make up for revenue lost during pandemic dining restrictions, increasingly more restaurants turned to offering food delivery services.

Food delivery quickly announced itself as the safest way to support your favorite restaurant. The FDA released a statement for food delivery pickup health and safety best practices and as a result more than 45 million Americans used a food delivery app in 2020, which is a 25% increase since the previous year.

On paper, this increase in food delivery appears to be a bright light in the restaurant world during a time as dark as COVID-19. But if you look a little closer at who is benefiting from this rise in food delivery services you’ll see why restaurants are dumping popular third-party food delivery services and getting the job done themselves.

A Quick Recap: How Online Restaurant Delivery Came to Be

Ten years ago, relatively few restaurants had a website, let alone offered the ability to order food online. And over the past five years, several key third-party food delivery services dominated the online restaurant ordering and delivery experience. 

A 2016 report from Mintel on food delivery use found that 12% of Americans reported using third-party delivery services in the past three months. And when non-users were polled, 30% reported they would prefer to order delivery directly from the restaurant itself.

Now, the market is shifting again. 

A report published in November 2020 found that 31% say they use these third-party food delivery services at least twice a week. And 74% of consumers say they’d rather order directly from a restaurant, preferring that their money goes straight to the restaurant and not a third party.

Why the big swing in just 4 years?

Of course, COVID-19 was a main player in the rise in utilizing third-party food delivery services. But the bright side is that there was an even larger rise in those who would rather order directly from the restaurant itself.

74% of consumers say they’d rather order directly from a restaurant, preferring that their money goes straight to the restaurant and not a third party.
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Why Online Restaurant Delivery is Changing

Additionally, as with online reservations, some restaurants are starting to take ownership of their own delivery, as they can address some of the pain points of third-party food delivery services.

Here are three key reasons restaurants are jumping ship on delivery aggregate sites and taking back control of their own deliveries.

1) Orders can come in on closed days

2) Menu changes aren't instantly reflected

3) Delivery can't be easily paused

Why Restaurants are Leaving Food Delivery Services for In-House Restaurant Food Delivery

1) Orders can come in on closed days

Picture this: a guest orders delivery on your closed day via an online ordering site. 

The customer notices the wait is past the delivery time and attempts to contact the restaurant directly. There’s no response so they reach out to the online ordering third-party. The guest is asked if they contacted the restaurant and is told the third-party will attempt to resolve the issue by contacting the restaurant. 

After another 30 minutes to an hour, it’s clear the order should be canceled and the guest receives a refund but must make alternate dinner plans up to two hours after placing the order.

How Internal Online Ordering Helps

Restaurants can set holidays up in advance via blackout dates.

When a guest attempts to order during affected dates they will automatically see the restaurant is closed without any staff member needing to flag the restaurant as closed the day of. This saves a hassle for the food delivery service and for you, too. 

2) Menu changes aren't reflected on third-party platforms

Have you ever changed your menu? Stupid question – of course you have. Maybe it was an update in price or in offerings. Either way, the changes are not immediately reflected in the online menu with some third-party services, and you have to go in and make the change yourself.

This puts restaurants in the awkward position of calling up guests and explaining the menu change – or worse – taking a hit on their bottom line.

How Internal Online Ordering Helps

With in-house online ordering systems that integrate with your POS, menu changes made on the fly are reflected in your online ordering. 

3) Delivery can't be easily paused

It's Football Sunday and your chicken wing restaurant is quickly mobbed with college students who want delivery. The demand is so high that you stop taking phone orders for delivery. But wait – what about the food delivery service? There's no way to just shut down.

How Internal Online Ordering Helps

Taking online ordering in-house makes it possible to turn off delivery orders from your restaurant POS and turn it back on when you're re-stocked on your customers' favorites. 

Additional Benefits of Restaurant Online Ordering Systems

  • Less money spent on delivery costs (instead of 15-30% commission fees on every order)

  • All customer data collected stays with you, giving you new opportunities for marketing and advertising your restaurant's loyalty programs

  • More frequent interactions between diners and your branding, helping your brand stay memorable

  • Better communication with delivery recipients, improving the restaurant customer experience

What's the Future of Food Delivery Services?

While plenty of restaurants still offer delivery through third-party solutions, both restaurants and their guests are taking note of serious problems with the current food delivery service market.

Making the move to an internal online ordering program and bringing delivery in-house can include a small learning curve for your customers, but with a little bit of customer education - and maybe a card in the bag of your third-party delivery orders explaining that your restaurant keeps 100% of the revenue from orders that come directly to the restaurant - your customers will love the improved guest experience and keep the orders coming. 

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