In-House Delivery versus Third-Party Services? Which Is Better for Restaurants

For restaurants looking to remain competitive in their industry, it has become nearly impossible to operate without offering some sort of delivery service. In fact, one report by L.E.K. Consulting predicts that restaurant delivery sales will grow at more than three times the rate of dine-in revenue between now and 2023 — and that was a pre-Covid estimate. Now, as use of food delivery apps has more than doubled, the projected increase in food delivery sales is even higher.

As restaurants scramble to meet customer demand for quick and convenient meal delivery, the debate surrounding the best methods for delivery implementation has grown. While many restauranteurs swear by third-party delivery systems, others prefer the control that comes with growing delivery services through a small, in-house team. So, which method is best? The answer typically depends on what a restaurant is looking for in terms of delivery services. 

Pros of Third-Party Delivery Services

Third-party delivery services are often lauded for the fact that they can instantly provide even the smallest of restaurants with “experts” on delivery logistics without the hassle of hiring and training a delivery team. This option is especially appealing for businesses that lack the resources needed to develop their own in-house delivery program. 

By enabling restaurants to reach delivery service customers who may not have otherwise heard of their business, third-party delivery services also serve as a great way for restaurants to grow their customer base and improve brand recognition. Because of this, some restaurants have even chosen to implement third-party delivery services alongside their personal in-house delivery operations. For example, Just Salad, a New York City salad bar chain, chooses to tailor their in-house delivery to existing customers while attempting to reach new guests via GrubHub.

Cons of Third-Party Delivery Services

Unfortunately, the benefits of third-party delivery come at a cost — the service fees and commissions charged by each service provider can eat up a sizable portion of the profit for each order that is delivered. However, many restaurants have found a way to maintain their usual levels of profit even while utilizing third-party services. Some have begun to include a surcharge, typically a delivery fee, on orders processed through third-party delivery systems. Others have implemented a separate delivery menu with higher prices to offset additional costs.

Third-party delivery services also have the drawback of a loss of control once an order leaves the restaurant. While the final, delivered product will ultimately reflect either positively or negatively upon the restaurant in which it was prepared, there is no way for managers to monitor delivery quality and ensure that third-party staff are bringing only high-quality dishes to customers. Thankfully, a strong restaurant-delivery-partner relationship can ease some of these concerns. Opportunities for customer feedback can also alert restaurants to potential issues.

Pros and Cons for In-House Delivery

While there are many ways to manage the risks associated with third-party delivery platforms, some restaurants choose to focus instead on in-house delivery methods. Take, for example, Jimmy Johns, a sandwich chain known for its “freaky fast” delivery. Not only has the company spent upwards of three decades ensuring that their personal delivery team is as efficient as possible, they’ve also made it clear that they do not intend to work with third-party delivery platforms — ever.

Other restaurants, such as New York-based Dig Inn, are beginning to invest more resources into developing stronger in-house delivery systems. One way that Dig Inn has done this is by developing its own in-house delivery platform, Room Service, which is designed with an emphasis on accuracy and timeliness. The restaurant chain has also taken the concept of a delivery menu to the next level, offering only dishes that can be prepared quickly and that are created with the intention of them tasting the best upon delivery.

While maintaining an in-house delivery staff does allow a restaurant more control over their delivery system, it too comes at a price. In the case of Dig Inn, for example, Room Service required multiple years of research and development work. For restaurants that have the finances, staff, and additional resources needed, however, an in-house delivery platform is a great way to maintain control and ensure that guests have consistent experiences with the brand.

While offering delivery is non-negotiable for restaurants hoping to remain competitive in this day andd age, it is important that restaurants carefully consider the different options available to them before implementing such services. Many restaurants have found a convenient solution in third-party delivery systems, while others swear by a smaller, in-house team.

In order to select the approach to delivery that is the best fit for their restaurant, restauranteurs must carefully consider their business’s needs and resources, as well as the sacrifices (i.e., control or convenience) that they are willing to make as part of implementing a delivery system.