Third Party Portals
Because brand is so important, third-party portals may not be the best fit. However, it can be. You need to check out the companies in your marketplace. You may be able to even use your own drivers with some of these services. Here are some of the pros and some of the cons. For one, once they appeared on the scene several years back most of us ignored them, until they hung around for a while and continued to grow. Now we know they’re not going anywhere and not only that, they’re multiplying. Don’t look at them as an enemy but as an ally. Partner up with them, find a representative and sit down with them and see if they’re a good fit for your company. Suggest combined tastings with them. Maybe do lunches for the companies they do a lot of business with. And treat their reps like you treat your clients, which is extremely well. They can bring you a lot of business. Remember, the majority of these portals work off percentages.
- Standard questions would be:
- What is your take?
- Am I able to adjust my prices?
- Are they charging extra for gratuity?
- Are they charging for delivery?
A second set of prices is better than giving the company 20-25%. And remember almost everything in life is negotiable…You may be saying, ”we can’t afford that” ...how about trying to work something out according to a sliding scale. Always remember to GET EVERYTHING IN WRITING! Many moons ago this wasn’t an issue, but it is now so get used to it. While there are services that cross-over throughout the US, many are regional only. So partnering up with them does require a bit of research on your part.
According to SkiftTable.com...
Restaurant delivery is booming, fueled by technology and customer demand. Grubhub recently announced it had completed the integration of Eat 24, which it bought from Yelp, onto its platform.
Grubhub isn’t the only third-party delivery company claiming headlines, either. DoorDash joined the unicorn club after a $535 million series D round led by Softbank valued the company at $1.4 billion.
HOW IT WORKS
Gone are the days when the only option for a restaurant was to hire its own delivery staff. Plenty of third-party companies will handle everything from ordering to marketing to making the physical delivery. Though as these companies race to build connected and competitive networks across the country and around the world, technology is still a huge barrier to entry in some markets. All delivery companies list the phone as their top competitor right now — that is, orders phoned into restaurants. According to Morgan Stanley research, just over half of restaurant delivery orders in 2017 were placed via online channels, with the remaining 48 percent phoned in. That’s a slight, though notable shift from 2016, when the split was an even 50/50.
Third-party delivery companies including Uber Eats, Caviar, DoorDash, and Grubhub provide several services to restaurants: marketing and discovery, order placement, and delivery fulfillment. And often, a restaurant can choose to tap into certain parts of that offering. For example, El Pollo Loco recently expanded its partnership with DoorDash, using the service to handle the delivery. But the chain receives and processes orders through its own website and app; not through DoorDash software.
That’s an important distinction, according to Olo Founder and CEO Noah Glass. “If you’re a restaurant, that’s first prize. You want the consumer to stay on your app or website, ordering directly from you. You retain that customer relationship data on the user and have that one-to-one relationship, rather than have the customer ordering through a third party delivery marketplace.”
Olo, a technology provider for large restaurant chains, provides restaurants — over 250 different brands like Applebee’s, Chili’s and Shake Shack — the ability to integrate ordering software directly into their website and mobile app. Olo was founded in 2005 mainly as a text message-to-order platform for restaurants. Over more than a decade, its evolved with the delivery boom to now include the ability to integrate with third-party couriers, or even to integrate directly with delivery service systems. This means a customer can order via a site like Grubhub, but the order is fed to Olo instead of through Grubhub’s system.
One huge benefit of a system like Olo: orders are fed directly into a restaurant’s point-of-sale system, instead of to a separate tablet that lives in the restaurant. POS integration is a hot topic in delivery, with all the major players working to seamlessly integrate their order placement services into the systems that restaurants use to manage and track food orders. Grubhub already integrated with several of the largest POS systems, including Breadcrumb, Toast, and Micros, and other companies will surely follow suit.
CHOOSING A PARTNER
Large restaurant brands have inked exclusive deals with delivery providers, allowing one company to be the sole delivery partner for the restaurants. These large — and popular — chain restaurants are big gets for third party delivery companies that benefit from increased visibility in new markets and the name recognition that comes from aligning with a notable brand. While McDonald’s is already well into its exclusive partnership with Uber Eats after starting slowly in late 2016. White Castle signed on with Grubhub exclusively in January. And, in perhaps the largest delivery deal to date, in February, Yum Brands chose Grubhub as its official delivery partner for Taco Bell and KFC restaurants, sinking $200 million into the partnership.
In addition to providing online ordering and delivery for two of the country’s best-known fast food restaurants, Grubhub benefits from years of delivery knowledge acquired by Yum’s third brand, Pizza Hut.
“Pizza Hut is a stalwart in the business,” said Chia in February. “Pizza hut is a leading delivery company. The ability for us to collaborate and tap into the knowledge of decades of delivery experience, from Pizza Hut especially, is going to be fantastic. We’re excited to learn from them as well and take those learnings and build really innovative tech and processes in the marketplace.”
Of course, these partnerships work best because of scale. For an independent restaurant, accepting orders via multiple delivery services is still good business because of visibility — but, of course, doesn’t yet solve the four-iPads-at-the-counter conundrum.
Chia says services like Grubhub are only scratching the surface of a $200 billion industry with its $4 billion in gross sales, though the Yum partnership is a good first step. “The part of this deal where it’s very beneficial for both is going out into markets where online marketplaces, delivery, hasn’t been offered in a sustainable and technologically efficient way before.”
Sure, expansion is a great deal for delivery companies, but for many restaurants, the availability and popularity of delivery is a double-edged sword. On one hand, customers now expect to be able to place orders digitally for delivery. On the other, the companies that power the delivery take a cut of each order, eating into a restaurant’s profit. A recent New Yorker article profiled this issue in Manhattan, where one restaurateur said her overall profit margin had shrunk by a third, attributable to, she believes, delivery companies.
One way to look to the future of what delivery companies are planning for is to listen to what restaurants are asking for, and many restaurants are asking for lower fees from delivery services, which can total between 20 and 40 percent.
“Scale drives efficiency,” Grubhub CEO Matt Maloney recently told the Wall Street Journal, as he explained that as Grubhub gets bigger, it will have the ability to lower — or even eliminate — the fees restaurants pay for delivery orders placed and fulfilled via the service.
But restaurants — especially larger groups — know that they still have bargaining power when it comes to working with these companies. “We are a coveted delivery partner for delivery companies,” Shake Shack CEO, Randy Garutti, said on his company’s most recent earnings call. Shake Shack is testing delivery with all the major players in the space. “We want to make sure all the things that can drive sales are there for the long term before we pursue partnerships. We want to make sure we meet the demand that’s out there in a good way,” he said.
About a fifth of U.S. Wendy’s locations offer delivery through DoorDash, and the company plans to expand what it’s calling a test of delivery to include other providers, too. But so far, according to CEO Todd Penegor, Wendy’s is focused on high guest satisfaction in delivery. “We track overall satisfaction metrics, not only in the restaurant but delivery. The overall satisfaction for our delivery is even higher than the satisfaction in the restaurant,” he said last month. Part of this, he says, is the way DoorDash delivers — one courrier per order. Part of this is also the speed at which orders are delivered, and the company aims for 30 minutes or less.
Still, the fact that Wendy’s, which hasn’t committed to an official nationwide partner, is planning to test delivery with other partners could represent DoorDash’s relatively limited coverage. Until the recent funding announcement, it served just 600 cities. Now though, that influx of cash and rapid growth to 1,600 cities this year will likely help its case with Wendy’s, and others.
When it comes to delivery services and third-party ordering (or as we refer to them as third-party portals), you must recognize that this is a new and steadily growing sub-juncture of the online catering industry. The take-out industry is a $70 billion industry. With third-party portals on the scene, caterers can maximize profits without the inherent liability of an delivery drivers navigating around town. Statistics show that in-house delivery takes a lot more time and effort to manage, which could be better spent in other ways. There are definite positives to working with third-party portals, which we will explore below, the least of which is not having to worry about the liability involved in directly employing delivery drivers. Additionally, GrubHub claims that caterers who partner with them grow their business by 30 percent (on average) over the first year.
This may or may not be true, but it is true that a third-party delivery portals allow caterers to function more efficiently because phone orders are not diverting the staff. Instead, they can focus on their responsibilities on-site (marketing, branding, creating fantastic food, etc.), and the takeout orders can be processed from a computer screen, rather than a noisy old-school phone. This use of technology has made it possible to expedite customer service by making it easy to browse, locate and complete an order in just a few simple clicks. Clients are looking for convenience, and this is where they’ll find it. Your clients will be immediately attracted to and intrigued by this concept. For you personally, you may not see the appeal in these companies, but remember that your clients are not professional caterers, they just see the end result. Whether you recognize it or not, finding a balance between your operation and these third-party portals is beneficial to your company. Perhaps they don’t appeal to you, or maybe you just don’t see them as the right fit. You must understand however, that being aware of their presence and educated on their infrastructure is crucial to your survival in today’s market. In this section, we have taken the time to dive deeper into these “so-called” third-party portals. As you continue through this road stop you will learn the basics of these platforms, along with the pros and cons of partnering with them. We have also compiled some facts, figures and pricing structures for your review, which perhaps unbeknownst to you, are virtually impossible to get. These organizations are extremely tight-lipped about the daily operations of their businesses, so consider this chapter weeks worth of work that you don’t have to do yourself. If, in the end, you choose to partner-up with some of these third-party portals; GrubHub, UberEats, Postmates, Munchery, Sprig, Caviar, Maple...even Amazon and Apple when they jump on the train in the very near future, here is the information you need to be armed and ready for negotiations. In the end, it doesn’t take much to see that partnering up with these third-party portals is a tempting prospect, you just need to be sure you’re partnering up with the right one.
If you truly are considering working with a third party portal, there are pros and cons, however, one thing is for certain, THEY know how to deliver what customers want. Do you?
Creates the opportunity to reach new customer and gives you the ability to reach a larger customer base.
Creates an opportunity for delivery and drop off division for your business.
Marketing and advertising opportunities.
Ability to increase productivity.
Takes customer loyalty away from your business and places it in the online marketplace, meaning you will always pay for your returning customers.
Most online marketplace vendors will not provide you with your customer data, without this data, there’s no way for caterers and restaurants to tell who their regular customers are. You will also have to surrender your need to customize your experience, leaving no way to reach out to them directly in the future.
When using a third-party delivery service, you have less control over the quality and delivery of your food. If you’re able to work out an arrangement where your staff would be responsible for delivery then you would have a better handle on the situation since you know which driver/team is best for each individual circumstance.
AT A GLANCE:
Servicing Area: Nationwide
Facts and Figures:
Founded in 2007 in Boston Massachusetts, EZcater is the only nationwide marketplace for corporate catering.
Free to sign up. Commission based program, they get paid when you get paid.
Unofficially, but taken from caterers that have worked with EZ Caterer, it is said EZ Cater typically takes a commission around 12.5% of all sales placed through the app.
Offers ezOrdering for your website making it easy for customers to orders online from your website and at a lower commission rate.
GrubHub & Seamless
Website: www.grubhub.com - www.seamless.com
Phone: 1-877-805-5081 (GrubHub) 1-800-256-1020 (Seamless)
Servicing Area: Currently serving over 150 cities in the US in states such as Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Texas, Utah, Virginia and Washington
Facts and Figures:
GrubHub and Seamless recently merged. It's a commission based program and it has been agreed that by most that GrubHub takes anywhere from 13.5%-15% of all net sales serviced through them plus a 10% commission for delivery
Restaurants can choose their level of commission rate, at or above the Company's base rates, restaurants paying higher commission rates appear higher in the search order
Phone: Unlisted, Uber Eats encourages users to use their app for all help and questions.
Servicing Areas: 150 Cities across the U.S
Facts and Figures: Collects service fee which is calculated as a percentage of sales by Uber Eats, usually 25%-35% depending on the region. That percentage includes a 10% delivery charge.
Phone: Unlisted, Initial email required for support
Servicing Area: Currently in 50 Cities across the US including large parts of Northern California, Southern California, Minneapolis and Seattle
Facts and Figures: Commission of 15% of all net sales
As caterers, we are building relationships, providing more than just a delivery service and serving every need of our customers. We connect with those we cater for. It’s more than just food. We...
• Consult about menu choices.
• Advise on proper food quantities.
• Prepare food in a controlled environment within a licensed facility.
• Employ professional drivers.
• Inspect and clean our delivery vehicles.
• Ensure proper food temperature at all times.
• Pay our employees a living wage.
Can EZ Cater, GrubHub, Uber and the rest claim the same? How are they going to handle a 50-person delivery? Do these middlemen really care if the food is late? Have any of these drivers passed a ServSafe course?
These are the questions we need to delve into as we make a decision to partner with one (or more) of these online marketplaces. With that said, here are some Tips and Strategies to consider before making the plunge.
Do your research
Take the time to visit each website. Pay special attention to customer reviews. Remember that these are YOUR customers too (or potential customers) and they are the ones who will tell it how it truly is. Upon reading their reviews, you will have a clear picture of how much stock each company holds when it comes to customer service.
Download the App
See what your customers are seeing. What is the ease of use? Are caterers easily identified? Can you filter your searches by cuisine, location, etc.? Your work isn’t over there though...download the app and use it yourself, order from a local favorite then document your experience. Was it easy? Fast? Convenient? More importantly was your order delivered in a timely manner? Was the order accurate? Was the hot food hot and the cold food cold? Did you enjoy your interaction with the delivery person? Do they seem like someone that could be tweaked into representing your brand? Your clients are asking all of these questions when they’re choosing the companies they’re going to work with, you should too.
Call and email a company representative directly. Arrange a time to meet with your representative in person. Feed them lunch, grab them a beverage, ask about their families...never forget that these reps are people too, and people do business with people they like, so this is your objective at this moment. Play the customer role and ask the right questions. Let them tell you why partnering with them is your best choice. If you're not convinced by the end of your interaction, they are not the company for you, so move on to the next one.
Ask the questions that matter to you
When we think about questions we want to ask, the biggest problem that comes to every business owner/manager’s mind is...MONEY! How much is this going to cost me? This is a valid question and you should never work with anyone if you don’t have a complete understanding of the pricing structure.
What kind of fees and commissions will I be charged?
How and when do I get paid?
How do I pay for this service?
Unfortunately, there’s a lot of legwork required in order to find answers to these questions. Most of these companies do not openly advertise their pricing structures and require you to sign up first, creating an account with their site before revealing any financial information. You could perhaps go around this by emailing their support team directly. Here are some questions you should ask when reaching out directly...
“Why should I be using one of these services?”
“What makes your company/service different from your competitors?”
“What kind of commission or fees are associated with this service?” (take some time to negotiate these fees)
“Can I adjust my catering menu prices when using your service to offset some of the commission similar to the way other services operate?”
“Can I add more delivery fee to “those” orders to offset some commission?”
Don’t expect it to fix your problems.
Partnering up with a third-party portal will only grow your brand if you put time and energy into this relationship. You will become more visible and accessible, so you must be available to clients who haven’t tried your restaurant before. On the flip-side you are relying on a company who is not associated with your brand to deliver something that represents your company.
There needs to be a delicate balance. Some caterers have a hard time with the loss of control. This makes it all that more important that you’re on point with the quality of your food and every delivery order. Don’t forget that each delivery is money out of your pocket, so you want the drivers representing you to get it right the first time.
It’s important to negotiate your rate with your delivery service.
You don’t want your profit margins to sink the moment you get involved with a third-party portal so you need to take certain important steps. It’s true that this service is a convenience to you (and your clients) but you must make sure you’re not biting off more than you can chew. If you are a mom & pop shop you need to be extra diligent in checking, double checking, and triple checking all outgoing orders. After all, the objective here is repeat business, so let’s get it right..
Carefully examine the percentage amount that the companies you are exploring will be taking from you. Some of these portals take up to 14 percent and require exclusive contracts. This means that your distribution will need to be wide-enough to offset that cost. The bigger fish like GrubHub and Seamless (which recently merged) may not have a low enough rate for you to make it work within your profit margins.
Millennials are the biggest users of takeout delivery services, and they may not be loyal to a particular service.
Keep a particular eye on Millenials. They are among the biggest users of takeout delivery services and typically don’t remain loyal to any single portal.
Competition can work for you.
With so many companies battling against each other for business, there are more opportunities than ever for caterers. As customers get used to the ease of ordering online and on their mobile devices they know full-well that these companies aren’t going anywhere anytime soon. Do your research, which portal works for you, how can the competition between these companies operate in your favor?
How-To Steps & Guidelines
Do your research
Download and test the app
Consult about menu choices
Advise on proper food quantities
Questions, questions, questions. If you want to know, ASK!
Prepare food in a controlled environment within a licensed facility
Remember that competition can work for you
Employ professional drivers and ask to meet with theirs
Never forget that Millennials are the biggest users of takeout delivery services, target them!
This is not a quick fix; plan to dedicate blood, sweat and tears
Always negotiate your rates
Stay in touch with your representatives and your clients,
Inspect and clean our delivery vehicles
Ensure proper food temperature at all times
Pay your employees a living wage