How is third-party delivery affecting your bottom line?

Michele Vance | May 1, 2019 Michele Vance 05/01/19

From QSR to casual dining, third-party delivery has been disruptive across the restaurant industry. Following the launch of our longitudinal study in late 2017, we’ve kept a close eye on this trend, the evolving behavior of delivery customers, and how restaurant brands are managing delivery.

Our initial report—4 things every restaurant needs to know about third-party delivery—looked at the sudden rise of third-party delivery and the implications for restaurant brands. Our latest report builds on these initial findings—evaluating how the industry has evolved, which providers are winning, who’s using third-party delivery, and how it affects brand reputation.

In a previous blog, we dug into the who and what of third-party delivery—today we’re going to look at the ­how by answering:

  1. How is third-party affecting your brand reputation?
  2. How does it impact customers’ future purchaser behavior?
  3. How is it affecting your business?

Here are some of our key findings:­­


When providers are mentioned in online reviews, scores are lower

­­­­It’s no surprise there’s an inherent impact to your brand’s reputation when giving up partial control of the experience to a third-party delivery vendor. And this can be so painful for a brand that has worked really hard to drive operational excellence. 

There are some generalizations we see in social ratings and reviews when one of the four main providers (DoorDash, Grubhub, Postmates, Uber Eats) is mentioned. First, the average rating mentioning a provider is less than 2 stars—about 1.8. When customers post a rating to your brand’s location on Yelp, Trip Advisor, Google, or anywhere else, and mention a provider, it’s typically to give you a 1-star rating—driving the average down to under 2 stars.

3rd_party_delivery_scores_1

The good news is that 1.8 is an improvement over last year where we saw an average rating of just more than 1.5 stars. So there’s your silver lining. But beyond that improvement, it’s hard to find another positive social angle given how willing customers are to share bad experiences so publically.

Additionally, Facebook recently changed their approach from a 5-star rating scale to a simple thumbs up or down—a “recommends” or “doesn’t recommend” rating. When a Facebook post mentions a third-party delivery provider, the “doesn’t recommend” is outweighing the “recommend” by as much as 6 to 1. 


Customer comments mention accuracy most often + most negatively

When we look deeper at the comments and run these social reviews through SMG’s text analytics engine to understand the sentiment and emotion behind them, we see accuracy pop to the top as the most-mentioned category, and it’s with the most negative sentiment. One in 4 comments mention accuracy and nearly 8 out of 10 times, it’s bad.

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When we look closer into those accuracy comments, we see that items aren’t just wrong—most often, they’re totally missing. And customers say they’re not just missing sauce packets— they could be missing anything from side dishes to entire entrees.  

What hasn’t changed much since our initial research is that customers don’t fully grasp the relationship between third-party delivery and your restaurant. You’re lumped together as a single experience in their minds, and customers still tend to blame the restaurant when issues occur.


Third-party delivery usage is going to continue to grow

Despite all this, I don’t want to paint a bleak future. Delivery is going to continue to grow as a significant majority of customers intend to keep doing it—nearly 9 in 10 are more likely or just as likely to use third-party delivery in the future as they are today. 

And because SuveyMini®—our location-based consumer research app—tracks actual visit behavior alongside attitudinal research, we know that users of third-party delivery already visit more restaurants in any given timeframe than non-users. When we look across one year’s worth of visit behavior, third-party delivery users make 10.5% more visits to physical restaurants than non-users.

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Third-party delivery users are still visiting your restaurant

One big question we really wanted to answer is: “Are delivery users just your same customers who would have dined with you anyway—only you can’t upsell them drinks and desserts, and you have to pay some platform a steep commission to serve your own customer?”

Luckily, the answer we’ve found to the question of brand cannibalization is no! Third-party users do not appear to be changing their actual visit behavior. By running an analysis comparing non-users in our first study to new users in our recent study, we found that actual visit behavior did not change. Using third-party delivery truly seems to be an incremental type of dining.

However, it is important to be cautiously optimistic. What is currently true could change as customers continue to adapt their behaviors. This is why we’ll continue to research and publish data on the evolving trends of third-party delivery—just because it’s not cannibalizing your business today doesn’t mean it won’t tomorrow.

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Know more. Do better.

These are just some highlights. Our newest report is full of data-driven insights every restaurant brand should know. Download it here: Sharpen your strategy to win at third-party delivery


Michele Vance | Chief Sales Officer