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The sudden rise of third-party delivery + where brands are falling short

Michele Vance | Aug 2, 2018 Michele Vance 08/02/18

Life is hard—dinner shouldn’t have to be. That’s the basic principle that’s been driving the convenience economy in the restaurant industry for decades. Today’s consumers are ordering through mobile apps with food delivered right to their doorsteps—but a lot can happen in between.

To help brands understand what to expect (and what’s on the line) with these third-party delivery services, we used SurveyMini®—SMG’s consumer mobile research app—to trigger a custom survey to more than 60,000 users across the largest DMAs in the U.S.

What we found was that problem occurrence for third-party delivery customers is, well, a problem. Our report shows that problem occurrence for third-party delivery users is 35%—a significant increase over the average 10% problem occurrence rate across SMG’s restaurant benchmark. That’s more than 3X the industry average!

To get a better understanding of where the greatest opportunities lie, we did a deep dive into problem occurrence with third-party delivery and uncovered 3 key takeaways:


Family dining and polished casual are taking the biggest hit

Though problem occurrence is an issue across the entire industry, when broken down by segment, family dining (brands like Cracker Barrel and Denny’s) and polished casual (like The Cheesecake Factory) are struggling the most.

Restaurant_Experienced_Problem

Respondents cited family dining most often when they experienced a problem. Although family dining wins just 10% of the stated orders, third-party users reported experiencing a problem 57% of the time. And polished casual diners also experienced a higher than normal problem occurrence at 49%. These segments could be having issues for a number of reasons: larger orders to accommodate families, more special requests and modifications, or inadequate delivery packaging.


Underperforming during late night/early morning is costing restaurants new customers

Of the respondents who had reported using a third-party delivery service only once in the past 3 months, 77% placed their order from midnight–6 AM. That group also experienced a problem 85% of the time. This is a huge turnoff for these first-time/infrequent users and could potentially deter them from giving your restaurant another try—whether it’s via a third-party delivery service or not.

Frequency_of_order

Service can often slide in the late hours of the night, but your customers are still expecting a good experience. This daypart represents great opportunity and shouldn’t be neglected—especially with the potential to convert new third-party users into loyal customers.


Customers blame the restaurant for problems with accuracy

Right or wrong, 44% of customers attribute problem occurrence to the restaurant. And when we dug into where that 44% attribute their problem, we saw that Accuracy (36%) and Freshness (15%) lead the pack. On top of that, problems with Accuracy are 19% higher for those who blame the restaurant instead of the third-party delivery service.

Where_customers_put_blame

Accuracy issues also see the highest amount of comments with negative sentiment, which means that respondents unhappy with Accuracy are 56% more likely to shout it from the rooftops via your social ratings and review pages.

Restaurants can put systems in place to double-check order accuracy and revisit product packaging to ensure it’s suited for typical delivery wait times. Most importantly, they should experience the third-party delivery process themselves to get a better understanding of what it looks like to customers.


Is your brand ready for this impact?

It’s clear that third-party delivery is becoming a major market disruptor—and for your brand to come out on top, you have to know absolutely everything you can about what your customers are experiencing. Watch our 30-minute webinar for valuable consumer insights and potential “gotchas” that will help you shape your third-party delivery strategy.


Michele Vance | Chief Sales Officer