Technology
Battling, instead of biting the bullet, on QSR delivery costs
March 26, 2021 by Hope Neiman — cmo, tillster
In the pre-pandemic restaurant industry landscape, off-premise dining was a growing segment for QSRs. But when the shelter-in-place orders forced dining rooms to close last year, then later restrictions limited America's restaurants into an indefinite limbo of partial capacity, many thousands of brands looked to third-party delivery platforms to help keep thosebusinesses afloat.
It was a decade of advance for third-party delivery as an industry, achieved effectively overnight. Consumers flocked to the apps and acclimated themselves with the brands available. They used the platforms more regularly than ever before to order food in a socially distant economy. The mass transition made Uber Eats, Grubhub, DoorDash, Postmates and even Instacart — all household names by summer of last year.
With unmitigated expansion came predictable growing pains. The same restaurants around the country that relied on the platforms cried foul at the scope of the fees cutting into already razor-thin profit margins. In response, tech trendsetter communities like New York and San Francisco instituted caps on restaurants' fees to delivery providers, usually at or below 15%. At the same time, other U.S. markets carried on without restrictions, but with fees approaching 30%.
The economics have created a delicate balance. Among QSRs, a clear best practice has emerged: The use of third-party delivery platforms as a secondary and complimentary awareness generation tool to support a primary-focus native mobile ordering, payment and delivery program.
In short, today's QSR brand needs the best of both worlds: third-party channels driving awareness for the brand, but with a heavy investment in native ordering platforms first. By using third-party delivery as a complementary channel in concert with your brand app and mobile ordering systems, you'll capture several critical benefits.
First among these is that this strategy increases a QSR's access to a broader customer base. Today's customer base is spread wide. There are "prefer-in-person" diners, "only-outside" seaters, "pick-up people" and "to-goers." There are also delivery customers, app-users, website orderers, phone-callers and third-party platformers. About the only type of customers you won't find in 2021 is the fax-my-food folks.
As a result of all this proliferation and diversification, QSRs need to be everywhere from your own website with mobile ordering and your own app to having your own delivery capabilities (white-labeled via third-party, as needed) and your own leverage in the partnership with the third-party platforms. In practice, this means that your restaurant brand will have a lot of technical questions to sort through. Here's just a smattering of some of the points QSR leaders need to consider in relation to this subject:
- Are you going to operate on one or all of the delivery platforms?
- Will you employ a dedicated specialist to manage orders coming in from the various online sources?
- Or will you integrate your third-party applications with your native app and web orders to inject every order directly into POS systems?
- What about quantity and weight-based customizations that your customers love in-store?
- How do you take the things that are different about your menu on one third-party system to another, homogenize them across order sources and get that information processed?
- What will you do with the order data you're generating and is there a way to merge all sales data into a single view automatically?
- Will an order from one third-party system look the same as an order from another system? How will you gain uniformity across platforms and what will you do with your data?
- Can you translate a third-party delivery order into an email signup or a social media follow and what's the value of doing so?
- Will you manage the multitude of systems and sales data via spreadsheets and how complex does that approach actually get?
Opting to integrate third-party ordering directly into your existing native systems is the "how" that answers all of these questions, at once.
It may sound like a lot, and it is. But beyond the food itself, little is more important to the long-term viability of your restaurant brand than your approach to technology. The right tech deployed in the right manner is how your QSR wins the battle for customer acquisition. It's how you drive incremental visits, foster add-on sales and build repeat-business from one-time-only third-party delivery customers.
Your stack is how you succeed in today's restaurant landscape, and better yet, in the future. When the marketplace returns to full dining rooms and "business as usual," the tools and third-party integrations you build today will continue to bolster your bottom lines and support your goals indefinitely.
About Hope Neiman
Hope Neiman is the Chief Marketing Officer of Tillster, a leading global player in the burgeoning restaurant technology space. Hope and her team drive outcomes by combining data and technology to expand sales and increase consumer engagement in a measurable way. Through Hope’s marketing expertise and brand vision, Tillster grew from a kiosk company into a best-in-class, metric rich engagement and ordering solutions provider for multi-unit national and international restaurant brands.
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