Even though their existence is still relatively new, the chances are good that you, as a consumer, have already used a third-party delivery service at some point. Whether you’re quarantined during a global pandemic, a busy parent needing a fast meal sent right to your door or, like me, a parent who’s not so busy but occasionally wants to combine his two favorite things, eating Panda Express and not moving from my couch, these companies can be lifesavers. (Or in my case, just enablers of bad behavior.) As a restaurant owner, pairing with one ore more of these companies can potentially bring in a boon of new revenue. However, with so many choices, are certain services better than others? Let’s take a look at what separates some of the more popular third-party delivery services in the industry, and hopefully, you can decide which one, if any, makes the most sense for your company.
Why Use A Third-Party Delivery Service?
The most obvious answer to this question is simple. Opening your business up for delivery can theoretically give thousands of new customers access to your products. If your kitchen can handle the uptick in orders, the ability to ring up sales without taking up space in your restaurant might be too much to pass up. Also, having your site appear on delivery apps can dramatically increase your visibility to customers in your area who may have otherwise not known you existed. Also, in times of an unprecedented event such as the COVID-19 outbreak, being able to still make delivery sales during a time when your restaurant is otherwise shut down could make the difference between staying afloat and going under.
How Delivery Services Work For Small Businesses
Some POS providers can set up delivery options through their own in-house service. If your POS has that functionality, it’s usually offered as an add-on, and you can run your orders through your website. However, if this isn’t an option for you, or if you simply want to be included with other third-party companies as well to maximize your potential sales, the setup process is equally simple. First, check to see that your POS integrates with popular delivery services. That will help ensure the app functions seamlessly with your software. If the service you want to use doesn’t directly integrate with your POS, the process is still pretty painless. You can simply download the app, upload the menu of dishes you want to make available, and watch the orders roll in. Orders will come into your restaurant directly or, if you have it configured to do so, can be automatically sent to a Kitchen Display System for even shorter wait times.
Third-Party Delivery For Restaurants
Now we’ll give you an overview of some of the most widely-used third-party delivery apps, so you can compare and choose the best one for your individual needs. Keep in mind that many of these companies have reduced or even eliminated fees during the COVID-19 crisis, so the fees listed here are their normal rates.
Grubhub Â Â
Grubhub is one of the largest third-party delivery services in the US and is offered in most major cities across the country, although you’ll want to check the company website to make sure yours is included. The fees are 3.05% + $0.30 for processing, plus a 10%Â delivery fee, and a 20% marketing commission fee for prepaid orders. You will also have to factor in the applicable sales tax. You can also adjust your marketing fee to increase your visibility on the app.
Grubhub integrates with a few major POS companies, including NCR, Toast, and Upserve, which is convenient because it means one fewer device to keep track of. Everything is integrated directly into your existing hardware. You can also easily update your menu and track your inventory, including your delivery orders. More than 300,000 restaurants worldwide currently use Grubhub in some form.
DoorDash is another major player in the delivery game, operating in most major cities and partnering with many of the largest chain restaurants in the company, along with small businesses. DoorDash’s fees vary from state to state, but the general commission that it takes per restaurant order comes in aroundÂ 20-25%.Â Like Grubhub, the company also charges a premium to improve your restaurant’s visibility on its site.
One of the more unique aspects of DoorDash is its rating system for drivers. The company hires its own unique delivery drivers who can be rated and are incentivized to return to DoorDash restaurants. It also offers a “Delight” score for customers that factors in delivery satisfaction and restaurant popularity, along with customer ratings to help customers narrow down their choices. Like most apps, DoorDash offers the ability to track orders and give customers an estimate for delivery.
Postmates was one of the early entrants to the delivery game and currently partners with more than 500,000 restaurants and convenience stores. Like DoorDash, its commission fees are a little hard to pin down, but they will set restaurants back betweenÂ 15-30% on orders. There is also a sales tax, which varies from state to state. Postmates also partners with Stripe for online payment processing, so restaurants are on the hook for the 0.8% direct deposit fee. However, that fee is capped at no more than $5 per deposit. One benefit of Postmates is that it’s able to bypass credit card processing fees and pass those savings on to restaurants.
Postmates comes with some unique features and integrations directly to POS systems, including live event ordering and promotions that can boost your visibility. Postmates makes a point to cater to businesses of all sizes. If you’re tech-savvy, Postmates also has an open and adaptable API to help you make specific changes for your restaurant.
The popular ride-share app was quick to cash in on the online delivery boom as well, using its trademark convenience and brand identity to attract a broad base of customers. Uber Eats has a one-time activation fee of $350Â and then charges betweenÂ 20% and 30% as a commission, varying by state and by order size.
Uber Eats benefits from an extensive fleet of drivers and has a friendly and familiar interface for customers. While affordable for individual customers, Uber Eats’ fees are on the high side for restaurants, primarily appealing to higher-volume establishments whose margins may not be as thin as a lower-volume business. It does integrate with several established POS systems, and you can create your own integration within your system.
Third-Party Delivery For Retailers
Online delivery doesn’t just apply to restaurants. Many groceries, liquor stores, and other retail establishments have partnered with apps to provide this option to customers. Here are a couple of the more popular choices.
Instacart primarily focuses on grocery delivery while also delving into alcohol delivery. For customers, the cost is $7.99 for one-hour delivery and $5.99 for two-hour-plus delivery, and there is an option to sign up for a year-long subscription. Unlike restaurants, there really isn’t much for retail business owners to think about when partnering with Instacart. It has personal shoppers who will gather the products themselves and, often, your business may find itself on Instacart’s platform even without you knowing it.
Shipt, which is owned by the Target Corporation, is a similar service to Instacart. It has a slightly larger base in terms of the products it delivers, including pet supplies, office supplies, and pharmacies. Shipt provides real-time updates on deliveries and claims that no pick-up is too small. Shipt is a subscription service, charging $14.99 a month for same-day deliveries and offers a free two-week trial. There may also be a slightly increased cost to consumers, but the fee is listed plainly on the app for customers. Like Instacart, there is little to think about for the individual retailer.
Should I Really Rely On A Third-Party Delivery Service?
Now that you’ve seen what your options are, including their similarities and differences, you have to decide if this is something that’s right for your business. Without question, opening yourself up to the world of eCommerce has the potential to increase your sales significantly. Given the current state of restaurants with COVID-19, delivery apps, especially those that have been waiving fees, may turn out to be a saving grace.
Otherwise, you’ll want to do some quick math. Generally speaking, once you factor in commissions, the margins on online orders with these systems are razor-thin, making it not worth the added burden to your kitchen. You also need to factor in if the increased visibility of your restaurant makes up for the negligible profit margin. And, if you’ve done your research and can still turn a tidy profit with each order, then there’s no reason not to reap the benefits.
Also, if you’re just starting out, and you’re looking for a POS system that integrates with delivery apps, you may want to put one with a built-in delivery system high on your list of priorities.
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