To Outsource or Not? Restaurants Face Tough Decisions for Delivery

The growth of third-party delivery services is proving to be both an opportunity and challenge for restaurants.

Opportunities

Given the increased willingness of consumers to leverage food delivery services, third-party delivery services provide restaurant operators with the ability to increase unit sales without incurring the capital investment involved in building new units, and to continue to grow sales when seat count capacity constraints might otherwise limit sales.

Challenges

Third-party delivery services can be expensive (thereby compromising a brand’s low-price image), and introduce the opportunity for quality and service concerns. (My wife recently witnessed a Starbucks bicycle delivery arrive 45 minutes late with a spilled latte). Perhaps of greatest concern, however, is the fact that the restaurant operator no longer has direct control over direct interaction with customers – that is relegated to a third-party delivery service.

Some larger restaurant operators, such as Panera, have the capital and customer base to develop their own catering delivery services. Smaller chains don’t have that luxury – they will need to continuing fine-tuning their current delivery options to best serve their customers.