As the VP of a technology solutions provider for restaurants of all sizes, with more than 20,000 restaurants using our company’s technology, there are common misconceptions surrounding how digital can be fully leveraged and maximized to drive profitability. When looking at the data from the most successful of these restaurants, there are a few trends that rise to the top.
First party vs third party
This is by far the biggest misconception (and opportunity) that is proliferated across today’s restaurant landscape.
As the Grubhubs, UberEats and DoorDashes of the world have proliferated, so too has the false narrative that third party delivery is the “bane of small restaurant’s existence,” a necessary, but frustrating, pillar that sucks up all of the profits.
At the heart of this narrative is fees. Without question, third party platforms charge a hefty premium to facilitate the delivery. What’s required here is a re-orientation of the role and purpose of third party within the greater landscape of a restaurant’s outreach activities.
From a strategic standpoint, the restaurant should not view third party ordering providers as food deliver services — at least, not as far as the small restaurant owner is concerned. Its real roles are reach and visibility, which, for the line-item minded of the world, makes it a marketing expense.
Bringing mass visibility to smaller businesses while enabling them to have their food delivered without the infrastructure of employing drivers is not a bane. It’s the cost of marketing — and marketing is not cheap. It gets you more customers, but it costs you money.
No one I talk with ever says they don’t want to acquire new customers that they can then serve over and over again. Because that would mean the end of their business. Strategically, first party can fulfill this objective.
The analogy I like to cite is that of a sign spinner near a physical location. Their job is to stand outside and point customers inside. For every customer that comes in and dines, this person gets a commission. Of course, once you’ve got these new customers in your restaurant, you can push them further down the funnel by letting them know that there’s a side gate where regulars can walk in of their own will. This open gate is the first party, and the sign spinner outside advertising your restaurant is the third party. Both of them working together is what creates a great flywheel.
Soggy fries are the price of third party
Nope. They’re not.
Nobody likes soggy french fries or a lukewarm entree. But the problem lies not with the driver, but the timing of the order. If a driver is 20 minutes away when the order is received, and instantly sent to the kitchen, you are likely going to have that order sitting around waiting. Matching the arrival of the driver to the timing of the order is crucial, but easily done. The order can be held until the driver is within a distance proximate enough to ensure the food is handed off with as much product integrity as possible. Protecting food quality protects the guest experience. Faster delivery times, better delivery handoffs and optimal food quality are foundational to happy customers, good reviews, and repeat business.
Multiple vendors makes true accounting impossible
One thing that’s not a myth: the financial inconsistencies between a restaurant’s POS and third-party delivery reports. That is 100% real. So are the accounting headaches that small business owners incur in trying to reconcile what their bank is telling them has been paid and what the third party delivery invoice is claiming. The good news is there are solves for this and they’re as efficient as they are financially expedient. Regardless of the mechanism for reconciling accounting issues, ask your technology solutions provider to give you an automated way to identify inconsistencies.
Guest sentiment is unmanageable
We know that when third-party delivery goes offline, it is the restaurant that takes the guest sentiment hit, whether on a review site like Yelp or via word of mouth. In fact, Tattle, which measures guest sentiment and is integrated with ItsaCheckmate, recently uncovered that during a three-hour window when a major third-party delivery player went down, guest sentiment of restaurants dropped 30%. Regardless of who or what the culprit is, when the food experience is not up to expectations, the restaurant is the one that suffers the consequences.
As unpredictable as guest sentiment may be due to forces beyond your control, it is not unmanageable. Be sure your team members must have simple, turnkey access to being able to switch off delivery providers and pull down menus from online ordering platforms if an issue arises. If your team has that plan in place and is ready to activate, by the time the restaurant is informed of a provider being offline, damage has been done with guests unhappy with their experience.
Like the best restaurants, doing the basics exceptionally well is what wins. Times, tools, and technology changes, but setting yourself and your organization up for success by leveraging the resources, digital or analog, around you, does not.
Kevin Jaskolka is VP at ItsaCheckmate. With 20-plus years of experience across all growth and marketing functions at various tech companies, Kevin previously was Vice President at ParTech for more than four year.