Restaurant consultant Mark Moeller of The Recipe of Success says there are several pieces that play a role in a restaurant’s decision, although cost certainly weighs the heaviest.
“Most of it comes down to the financial piece. When you’re giving away up to 30 percent of your revenue, that’s not sustainable,” he says. “It’s just like the landlords and rents. When you’re factoring in that you have a 10 percent rent factor and all of a sudden your revenue drops by 70 or 80 percent, you can’t sustain paying your rent. How are you going to sustain paying third-party delivery?”
Another factor that plays into the decision to go third-party is the restaurants’ ability to market their brand on the likes of Uber Eats, DoorDash, Grubhub, and others in the space. The breadth and scale of their consumer reach can be a strong pull for many operators.
Among his clients, Moeller has seen a halfway split between his clients partnering with third-party platforms versus developing their own programs. This divide often comes from experience. Newer restaurants may struggle to understand day-to-day operations, while established brands know best practices, especially when taking food off-site. As a result, his veteran operators are more likely to create an internal solution while newer restaurants may lean toward an outside arrangement.
For those sticking to the third-party option, some city governments have also installed laws to relieve costs. Philadelphia signed off on a 15 percent fee cap for third-party delivery, while New York City has implemented a 20 percent cap. However, these caps were signed as a short term response to dining room closures rather long-term solutions for the industry.
In addition, some third-party platforms are fighting against governmental action. When Chicago’s City Council installed a 15 percent cap in November, DoorDash responded with a $1.50 “Chicago Fee” for delivery and takeout orders.
With the threat of possible retaliation from third-party delivery, the solution to excessive fees may not come from the government, but rather through community-based solutions. In the small city of Rockland, Maine, local taxi company Schooner Bay Taxi has been partnering with restaurants in the area as a smaller third-party platform.
The company’s business model works like this: Schooner Bay directly contacts the restaurant to make the order and then pays the restaurant internally. Then, the company charges the customer for the delivery, putting the complete cost of the delivery on the consumer.