Brian Moroney is the CEO of Drivosity, a last-mile delivery solutions provider focused on the importance of driver data and visibility.
The food delivery landscape is a complex ecosystem, with restaurants, drivers and hungry customers all vying for a piece of the pie. At the heart of it all lies the question of delivery: Who gets the food from point A to B, and how can it be done in a way that benefits everyone involved?
There are two main approaches: first-party delivery, where restaurants manage their own drivers, and third-party delivery services, such as DoorDash and Uber Eats. Being the CEO of a company that provides last-mile delivery solutions to restaurant businesses, let’s examine both approaches, the driver-centric strategies that are key to success and, ultimately, the impact on customer experience and the bottom line.
First-Party Evolution: A Double-Edged Sword
First-party delivery offers restaurant operators control over the entire customer journey. It can allow them to build brand loyalty directly with customers, strengthen customer satisfaction and protect margins. However, the path is not without challenges. Attracting and retaining reliable drivers requires investment in recruitment, training and compensation. Driver scheduling, route optimization, efficiency and securing affordable insurance add other layers of complexity.
Who gets it right? Some large franchise chains have successfully built a strong delivery culture and operations. From my observations, their investment in technology and training and their commitment to owning the customer experience end-to-end sets them apart.
When can it go wrong? Restaurants that don’t prioritize the customer experience, driver recruitment and proper training will likely struggle to get it right. Inconsistent order volume, limited driver availability and unpredictable insurance costs can quickly erode profitability.
Third-Party Services: Convenience With Caveats
Third-party delivery platforms offer a seemingly easy solution. They connect restaurants with a vast pool of independent drivers, handle logistics and provide a familiar interface for customers. But this convenience can come at a cost. These platforms often charge restaurants a commission for each order, which can affect profitability.
This isn’t the only potential downside to consider. A significant portion of restaurants’ revenue comes from repeat customer orders. Handing over delivery control to third-party services can affect these vital relationships. Their ability to impose pricing constraints and control the ordering process can lead to a lack of transparency and flexibility for both the restaurant and the customer. This lack of control could potentially lead to discrepancies in order fulfillment, longer delivery times and higher prices for customers, all of which can impact a restaurant’s reputation and long-term success. Without direct interaction with the customer during delivery, restaurants might also lose some of their ability to build brand loyalty and encourage repeat business.
What attracts customers? As I see it, the answer is sheer convenience and quality. Third-party apps offer a vast selection of restaurants, real-time order tracking and multiple payment options, which cater to today’s on-demand culture.
What draws drivers? These services offer flexibility. Drivers can choose their hours, work for multiple platforms and potentially maximize their earnings. However, competition for deliveries can be fierce.
Impact On Your Business: Weighing The Options
The choice between first-party and third-party delivery depends on your specific needs. Here’s how each option may impact your bottom line and customer experience:
First-party:
• Pros: Directly managing ordering, pricing and delivery can help restaurants ensure consistency and quality, foster stronger customer relationships and potentially improve margins.
• Cons: Significant investment is required. There’s also operational complexity, and some restaurants may have limited reach. I believe the success of this model heavily depends on drivers, as poor delivery performance can undermine the customer experience and diminish confidence.
Third-party:
• Pros: This option is easy to implement, has wider customer reach and less operational burden.
• Cons: There’s potential for lower margins and loss of brand control. Restaurants also need to rely on the platform for customer data. Poor experiences can damage trust with the consumer.
The Key: Taking A Driver-Centric Approach
Some brands might decide the ideal scenario lies in a hybrid approach, where restaurants use first-party delivery for core customers and high-value orders and third-party platforms for wider reach. However, the key lies in a driver-centric strategy.
To invest in driver satisfaction, I recommend:
• Offering competitive wages and benefits: This can help you attract and retain a reliable workforce.
• Being transparent about earnings: This fosters trust and motivation.
• Optimizing delivery routes: This ensures efficient use of driver time and fair compensation.
By prioritizing driver satisfaction, restaurants—regardless of their chosen delivery method—can better ensure a positive experience. In my experience, happy drivers deliver more efficiently, provide better service and ultimately lead to higher customer retention and repeat business.
The delivery dance requires careful steps. Understanding the evolution of first-party and third-party services, addressing their strengths and weaknesses, and focusing on driver-centric strategies are the keys to a successful delivery operation. By finding the right footing, restaurants can ensure a win-win situation for themselves, their drivers and, most importantly, their hungry customers.
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