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Third-Party Delivery Will Grow; Is Your Restaurant Ready?

Third-Party Delivery Will Grow; Is Your Restaurant Ready?

by Sean Kashanchi

Story Highlights

  • Third-party delivery (3PD) services are growing
  • Restaurants need to ensure consistent experiences despite 3PD variables
  • The best strategy is to engage customers in-house before they use 3PD

This article first appeared on Fast

Gallup's recent study of third-party delivery services (3PD) -- think Grubhub, DoorDash and Uber Eats -- revealed discoveries about guest behavior that restaurant leaders need to know now and use for future planning.

The first, most important thing to remember is that engaged customers spend more than customers who aren't engaged. The second is that you have more control over the customer's experience in your restaurant than you do if they take your food home.

Make it worth the trip and customers will keep coming back.

That's not to say you should forgo delivery -- 34% of diners had food delivered in the last 30 days. It's just that customers know you, and they might prefer that you do the delivering -- not a 3PD service.

And for perfectly good reasons. Gallup's research shows that customers rate 3PD service as highest on cost, lowest on speed, and second-lowest on accuracy and quality when compared with dining in, restaurant delivery, and drive-thru service.

This suggests that guests prefer delivery service from individual restaurants more than they do 3PD services.

Your company has worked hard to communicate and deliver a brand promise, whereas 3PD services are still establishing their brands.

And they're making headway -- 3PDs are racking up investment funding, their tech keeps getting better and their service areas are growing.

Despite being ranked lower in cost and speed than the more traditional means of dining out, 3PDs don't seem to be going anywhere. This means restaurants have to make the best of this disruption while still meeting their brand promise, regardless of how it's delivered to customers.

How can you use 3PDs to your restaurant's advantage?

First, be accessible.

How's this for a blow to your brand's ego: 81% of 3PD customers are not looking for your restaurant. The first thing they do when they use 3PD is scroll through browsing the available food options, not brands.

Even your beautifully photographed food gets less attention than consumer reviews do (42% vs. 50%).

Given this knowledge, Gallup's advice is to expand your brand to every available 3PD service so consumers can find your food anywhere they look. Focus on creating an ecosystem that allows your customers to find you when and how they want.

Second, be fast and $5 (and eventually, free).

Though most consumers tend to stick with the first app they use, they're sensitive to price and speed -- Gallup data show consumers are unlikely to wait more than 30 to 45 minutes or pay more than $5 for delivery.

Consumers don't use third-party delivery services to find you, they use them to find options.

While customers are always going to want fast delivery, Gallup experts conclude delivery fees may become obsolete.

Either 3PD services will fold them into the cost of the product, making the fees invisible to customers, or they'll move to a subscription model -- think Amazon Prime but for food delivery.

However, speed and cost of delivery are just the basics.

The last, crucial mile is how you show up for your customers regardless of which channel they use to purchase from you.

Remember, disappointed customers don't blame their 3PD service -- they blame you.

Create a 3PD marketing strategy that keeps your brand promise.

Customers who do use 3PD services say it's because they don't want to leave their house (72%), they can continue with their activities (50%), and to avoid bad weather (41%).

Understanding why your customers use 3PD in the first place is key to your 3PD marketing strategy. Here's what that might look like:

  1. Blitz customers with ads when the weather is bad in their area.

  2. Push your loyalty program when people least want to quit what they're doing, like on holiday weekends.

  3. Build social media ads around how convenient it is to enjoy your food no matter where customers are or what they're doing.

To keep your brand promise, however, don't solely focus on the last mile. Focus on the last inch -- the space between the fork and the food.

To keep your brand promise, however, don't solely focus on the last mile. Focus on the last inch -- the space between the fork and the food.

That's complicated. From the container that keeps calamari crispy to the ramekins of dressing that stave off soggy salads, everything counts.

You can (and should) map the customer journey to understand how your brand shows up through delivery -- and find out if your packaging adds or removes value from their purchase.

The B2B relationships you have with suppliers and vendors will be your saving grace for this.

A great relationship with a vendor can provide priceless advice on packaging from an expert partner, especially if you explain what you want to accomplish in the 3PD environment.

Still, the best intelligence comes from customers.

Find out what customers really value in your brand, how they connect to your purpose, how they respond to your brand promise and what engages them emotionally.

Analytics that capture customers' feelings about your brand are well worth getting because ultimately people's emotions dictate their choices.

As noted, restaurants have the most control over the guest's experience in-house. Gallup analytics tell leaders how to Exceed those expectations during a dine-in experience. Do that, and you increase the likelihood that a guest will choose your brand for 3PD or catering.

And those engaged customers are far more likely to be brand ambassadors when reviewing a meal online or sharing their experience with friends, no matter where they ate it.

And those ambassadors influence the purchase decisions of other customers -- this is especially important in the 3PD space.

True, consumers prefer to use 3PD when they don't want to go out, but they still want a great dining experience. The basics still count, but they're just that -- basics.

Become more popular on 3PD from the get-go.

Growing your business via 3PD depends on creating desirability before the consumer opens the app.

Engagement is crucial, and brands have to maintain their brand promise no matter where the guest is.

How a 3PD service consumer experiences your food will influence her every time she thinks about your brand thereafter. And it may be at your place, not hers, the next time she wants to eat out.

So make sure the 3PD experience aligns with your promise and purpose.

If it doesn't -- if your 3PD service takes too long or cost too much, if the last mile is disappointing and the last inch is depressing -- don't do 3PD at all.

It's not worth tarnishing the brand you've worked so hard to build.

Gallup can help you deliver an exceptional customer experience every time:


Sean Kashanchi is a Senior Managing Consultant at Gallup within our Retail, Restaurant and Hospitality Practice.

Jennifer Robison contributed to this article.

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