For restaurants doing takeaways, third-party delivery platforms are a popular option – that’s brands like Deliveroo, Uber Eats, or Just Eat. They do the delivery for you, in return for a commission of around up to 30% per order.
That commission means that taking delivery in-house is often an attractive option for restaurants. And the COVID-19 pandemic has accelerated the growth of cheaper alternatives – online ordering software, which lets customers order food online, whilst keeping operations in-house – like StoreKit Takeaway, or Wix Restaurant, which are about 90% less expensive. These can also work with third-party last-mile courier services, and some softwares, such as ours, now have a premiumised delivery experience built into the software so you can have the same experience as Deliveroo.
So, which is best? Should you leave your takeaway to a third party like Uber Eats, Just Eat, or Deliveroo? Or should you do it in-house with a DIY-marketing platform like Wix or StoreKit? This article is designed to unpack those questions.
Just Eat, Deliveroo, and Uber Eats: the pros
More exposure, more sales
Increased exposure for your business is a major benefit of using a third-party delivery platform.
Just Eat alone had 26.3 million users and processed 221.2m orders in 2018. Deliveroo was expected to hit 6 million customers in the UK by 2019. That means new customers, and best of all, customers who don’t know your business. This means more opportunities to sell, especially if you’re a smaller business that might not yet have a large number of customers. But bear in mind, these will be customers whose information you don’t know, and to whom you won’t be able to market.
Focus on the core of your business
Convenience is another reason to outsource delivery to a third party. It means you don’t have to deal with a lot of the logistics of your takeaway business yourself – like hiring drivers, sourcing packaging, or marketing.
And, whilst third-party platforms are well-known for their high fees, those fees are clearly defined operational expenditures which you can plan for. With in-house deliveries, you’ll have to shoulder the costs of hiring drivers, maintaining vehicles, and keeping them insured. (Note that last mile delivery services can be procured without using a delivery platforms, by services like Orkestro and Stuart.)
A third-party platform takes care of these operations for you. That way, you can focus on the core of your business – your food.
Deliveroo, Uber, Just Eat: The cons
More sales… less profit?
Third-party delivery platforms are expensive. They charge in the region of 30% commission in an industry with already-narrow margins. They also charge customers extra. Just Eat’s commission is cheaper than Deliveroo or Uber Eats, but you’ll have to pay extra upfront. Some restaurants do sell at a loss because of this, but it’s easy to raise your prices
Although you’re “paying” for the marketing, most of your customers will be repeat customers, who come back again and again and just use Deliveroo for convenience. Why pay 30% on those? Over 2020, we’ve seen a rising cognition among customers that Deliveroo is charging restaurants, and many customers now begin to hunt on restaurant websites for cheaper pricing.
How loyal are your customers?
80% of customers will stay with the first delivery platform they sign up to, according to a McKinsey study.
Delivery platform users tend to narrow restaurants down using factors like location, cuisine type, or price. Pitted side-by-side against your competitors, it could be that repeat customers are distracted on their journeys to your checkout — and loyal customers spend 67% more than new ones. Some of the custom you would have captured through a cheap online menu will come through Deliveroo, and will come at a higher cost, even if you have both systems available for customers.
Using a third-party delivery platform means losing control over certain aspects of the customer experience, like how your goods are delivered.
And yet a Technomic study shows that, even when ordering through a third-party platform, 76% of customers will consider restaurants to be at least partially accountable for any errors. You risk shouldering the responsibility for elements out of your control, like order mix-ups or non-appearances and cold or damaged food due to poor delivery.
So less of the loyalty but a lot of the blame. It feels a bit like a lose-lose situation for restaurants.
In-house delivery: pros and cons
The alternative is connecting with your customers directly with in-house marketing and delivery. In-house delivery gives you complete control over the entire cooking-to-delivery process. You’ll be able to regulate the timings and quality of deliveries and the food that your customers receive. That means you’ll have to organise delivery yourself as well.
You’ll also have to take on the costs of delivery, this time including capital expenditure, making it harder to work out how profitable your menu price points are. If you’re achieving higher margins per order with your in-house delivery, this can be more profitable in the long run. Not having to pay expensive fees to third-party platforms might also mean you can lower your prices, making you attractive to more customers.
Your business won’t have access to the boosted visibility that a third-party delivery platform can offer. But you’ll have a much more close-knit relationship with your customers, and that means a much lower risk of losing them to competitors. And it’s possible to increase your online presence through other marketing channels.
Using online ordering software for in-house delivery
“But I can’t build my own takeaway platform!”
No need. Online ordering software can help. It lets you keep your operations in-house, without requiring the technological capabilities to build a takeaway platform yourself.
Online ordering software is also usually a cheaper alternative to third-party delivery platforms. But online ordering software isn’t all equally cheap. Some will charge a recurrent software fee, and you’ll also have to pay for payment processing separately – whereas with our free software, StoreKit Takeaway, you’ll only be charged for payment processing.
Using an online ordering software, you’ll maintain a direct relationship with your customers without third-party intervention, so you’ll “know” them better. StoreKit Takeaway comes equipped with marketing dashboard that lets you see what channels – like Facebook, Instagram, or your website – your traffic and sales are coming from, so you know what works best to build your relationship with your customers.
Advantages of doing both
When it comes to choosing a takeaway platform, it’s often not an either-or situation.
Many restaurants will have a hybrid model, combining the wider reach of a third-party delivery platform and the more direct customer-restaurant relationship of an in-house solution. It’s really difficult to ignore how great Just Eat, Deliveroo, and Uber Eats are for new business.
But the takeaway dining experience starts with a menu, and it’s a shame to deny your customers a flavour of your brand — an effect the homogenising interface of a restaurant marketplace might struggle to deliver. But an online ordering platform can provide this more immersive experience, and so is suited to your loyal customers, who will find you directly without third-party mediation. Persuading your regular customers to transfer to direct ordering can help you cut costs. And it’s a better option for your customers too, if it’s the cheaper choice for them.
The other argument against over-reliance on a third-party platform is customer data. Having these platforms stand between your restaurant and your customers means that you lose this information. But the wealth of possibilities that this data offers will become increasingly central to the success of your brand. It will be the difference between building up customer relationships — through celebrating special occasions, personalised promotions, tailored recommendations, and targeted marketing — and becoming “just another restaurant”.
But restaurants’ ability to own their customer relationships is already in a precarious position. Third-party delivery platforms have large user bases, and businesses like GrubHub have started introducing their own loyalty programmes to increase stickiness. The hotel industry — where the expansion of third-party booking platforms has meant hotels no longer directly own the relationships with their guests, at least online — offers a potent forecast of what lies ahead for the takeaway industry.
Brushing off third-party platforms is perhaps unrealistic and ill-advised for most restaurants currently. But it is crucial that restaurants look to alternatives like an online ordering system so they can continue to nurture their direct relationships with customers.