THIRD-PARTY SERVICES: FRIEND OR FOE?: Stepping up to feed an on-demand culture with third-party services.

Author:Jackson, Steven

Whether you are currently in the delivery game or believe that offering delivery is a source of incremental income, you might want to take a closer look at the pitfalls of using services such as Grubhub, Uber Eats, Postmates or Door Dash. The current business model used by these third-party services might be detrimental to your own franchise.

For the past 60 years, pizza has been the undisputed leader in the food delivery game. The industry worked hard to figure out internal processes and invested in building a business model around it. Now, third-party delivery services are building off a model of personal transportation and promoting restaurant delivery services. It seems that the going rate for this promise of incremental sales increases range from 20 percent to 35 percent of gross sales revenue. Before engaging in one of these services, franchises should consider the following.

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Customer Experience

Operationally, third-party delivery services can pose significant challenges. Services not integrated with POS systems can cause order tracking problems and reporting issues. When you rely on a third party, the person delivering your product likely has little exposure to your brand. They have no loyalty to your brand and no knowledge of your operational procedures or customer service standards. They are hoping to make a quick buck in the gig economy by fulfilling as many orders as possible. There's no guarantee that this person will deliver your product in line with your standards, or that it isn't going to be sitting on the floor of a car with three other orders.

Customers may not have the benefit of your coupons or discount codes, which could harm your brand's perceived value, especially combined with delivery fees. The consumer has finite resources, and value is often the top consideration when choosing a meal option. As much as people want their food to be conveniently delivered, they are also looking to spend within their budget.

Often the pricing or item descriptions on these third-party sites are not accurate. Inaccurate product descriptions along with incorrect or outdated pricing are sore spots with customers, who may blame you, not the third-party company, for these mistakes.

Loss of Data

In today's digital age, connecting with your customer on a regular basis is closely related to how much consumer data you can gather and analyze. When someone places an online order directly through...

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