If you’re not exploring third-party delivery (3P) for your restaurant brand, you’re already behind. But trusting someone else to get your product to your customer can make plenty of brands nervous—and with good reason. Introducing an outside delivery service to your customer journey means a loss of control over many factors that contribute to a highly satisfying customer experience. And a poor delivery order can have a big effect on your brand perception.
I’ve had less-than-stellar experiences with 3P delivery. In one instance, I received the wrong order and it was unclear who made the mix-up. The delivery provider’s customer service was only reachable by email, and the restaurant took no responsibility after I mentioned using a 3P service. The unwillingness to right the wrong reflected poorly on both parties, even though I eventually got my money back.
It’s up to your brand to determine how to use these services to the best of your advantage, and to do what you can to ensure no loss of quality along the way—especially since the trend isn’t going away anytime soon. Big changes in customer demands and the restaurant industry as a whole have made the 3P delivery service industry explode in the last few years:
Many restaurants struggling with a decline in traffic—especially in the highly-competitive casual dining space—are eager for new ways to increase sales volume. That, combined with strong customer demands, makes offering delivery a must if your brand wants to stay ahead. And 3P services are a way to get on board quickly, without the investment of an in-house delivery service.
A force to be reckoned with
It’s important to know who uses 3P services and how they’re spending within the restaurant space if you’re going to take steps to mitigate the challenges that come with using an outside delivery provider. A recent study estimates that off-premise dining accounts for $210B of the $490B in total annual restaurant sales—with $30B representing delivery alone. Excluding pizza delivery, online delivery sales represent $4B of the total market—and that’s where restaurant CEOs and CFOs are now looking to gain share.
The average 3P customer demographic skews millennial, has an average annual income of $75K+, and tends to live in the Northeast or West Coast regions of the U.S. Baby boomers and people living in the Southeast substantially under-consume 3P services. For those who do use 3P services, consumption is strong—85% of 3P customers have used the service in the last 30 days.
Proceed with caution
The sheer market size, strong customer demand, and availability of provider options mean that an estimated 80% of publicly traded restaurant chains are at least testing delivery services—if they’re not using them already. And those who have integrated these services successfully are seeing big leaps in delivery sales. One SMG client has seen delivery volume double to over 15% of total sales in just the last 12 months! But there are some snags we’ve seen some of our clients encounter that your brand should be aware of before going all-in:
Put it into action
Knowing how to prepare for these snags will put you far ahead of your competition if you decide to offer 3P delivery. Here are a few specific ways to do it:
Putting these steps into action can help you successfully integrate these 3P services into your regular operation. SMG has been working closely with our clients to find the right ways they can make the best use of the 3P delivery experience—and maintain their brand perception and loyalty in the process.
Director, Client Insights