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Restaurateurs dish on 3rd-party delivery (Hint: The news isn't good)

From late, cold and just plain old missing orders, to less-than-professional and poorly trained delivery drivers, restaurateurs had plenty to say about third-party delivery in an upcoming TDn2K survey on the subject.

September 4, 2019 by S.A. Whitehead — Food Editor, Net World Media Group

Rude or non-communicative delivery drivers. Hot food turned cold and vice versa. And perhaps above all, orders that never make it or make it much later than promised. 

These are among the top beefs restaurateurs are voicing right now concerning third-party delivery, according to responses from a soon-to-be-released TDn2K survey of 125 distinct restaurant organizations, including nearly 70 limited service concepts.

But the problems reported with this increasingly critical component of the QSR business did not stop there, but overflowed from a seemingly more than anxious-to-answer audience at the receiving end of the survey. The poll of more than 1,200 restaurant leaders and staff, along with another 1,000-plus customers was mainly geared at gauging the current state and revenue-generating potential in restaurant third-party delivery alliances. But the research company also included a handful of questions around third-party delivery customer service contributed by this website to shed some light on that aspect of the services.  

The results, being released later this month by TDn2K, show that just in the last 12 months alone, restaurant sales on third-party delivery apps grew an eye-popping 76%. As TDn2K Vice President of Insights Victor Fernandez put it, third-party delivery "is definitely one of the hottest topics in the industry right now." He said industry leaders now bring this particular subject up as one of the primary things they need to know more about to develop restaurant business strategy going forward. 

"Adoption of third-party delivery has been quick," Fernandez told this website. "If a restaurant has to-go business, it is likely to be doing 3PD (third-party delivery) as well. 

"From the survey participants, 92% said they had to-go offerings (including drive-thru); almost all of them (86%) also reported offering 3PD as a channel. Of those that don't have 3PD currently, 81% said they plan to implement within the next 12 months."

The reason of course is revenue. Survey participants estimated that on average, 6.4% of their total sales came through third-party delivery providers in the last 12 months, Fernandez said. Further, leaders expect that share to grow phenomenally — by about 50% by the end of next year, with an expectation that by the end of 2020, sales through third-party delivery providers will grow to approximately 9.7% of total restaurant sales. 

The sticking point: 3PD customer service 

Fernandez said the most salient finding from the four questions TDn2K included from this site (please see inset for question details) included restaurateurs' greatest expressed frustration around issues with missing items in 3PD delivered orders and drivers who failed to follow delivery instructions. He said late or completely absent deliveries were also cited by many respondents. 

But in Fernandez's view, one of the biggest takeaways from responses to these customer service questions is the impression that restaurant brands are failing to track these problems as much as the situation demands. 

"First of all, there is a need for restaurant companies to track guest sentiment around their 3PD experiences closer," he said about the customer service inquiries related to third-party delivery. "Out of all survey respondents, 30% said guest satisfaction with 3PD orders was lower than compared to their usual orders through other channels. Ten percent said satisfaction was higher, but a surprising 56% said they did not know or track sentiment related to their 3PD orders."

When 3PD is as large and soon-to-be larger part of a business's overall operations, Fernandez said that's an area that restaurateurs need to get a much clearer picture of, particularly with the kinds of frequency that problems were reported. 

For instance, 17% of respondents said 3PD problems involving missing items or instructions that weren't followed were extremely common, while another 53% viewed them as "common." Additionally, 6% of those polled said late or no-show deliveries were "extremely common," while a disconcerting 56% said such issues were common at their restaurants.  

For restaurant leaders, Fernandez said the survey results provide some truly valuable business insights, beginning with the importance of consistent execution around 3PD. 

"Success will be measured by those restaurant experiences that are able to move guests from trial to recurring users," he said. "According to our 3PD survey, for limited service brands the primary driver currently for their guests using 3PD is having a coupon or free trial. For that, they will definitely need the experience to deliver on the value proposition intended, and their 3PD service partners will be required to execute on their part for each experience to be a success. 

"Not surprisingly many restaurant companies are considering partnering with just one exclusive 3PD service provider to streamline the relationship and communication and improve on the customer service experience. Twenty-nine percent of limited service brands participating said they are considering an exclusive provider, compared with just 16% of those in full service."

On that front, Fernandez cautioned restaurant leaders to keep a couple of the industry's top concerns in mind when dealing with, or even just considering third-party delivery. First, he said that the costs associated with this service currently are too high, given the comparatively "very small" margins restaurants have.  

Secondly, he said brand executives should give good healthy respect to the idea that the brand's overall reputation "may be hurt by a bad delivery experience."

As he put it, "3PD providers also need to be mindful that restaurants are already making big investments in packaging, technology and restaurant-level training related to implementing their service, so restaurants are understandably cautious when it comes to the question of profitability."

Photo: iStock

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.