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Tips for Evaluating Third-Party Delivery Services


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Discussing the new-age problem of how to successfully partner with a third-party delivery service, the “Tackling Food Delivery Phenomenon” panel at the Foodservice News Restaurant Business Summit included two independent restaurant operators and Max Runke, general manager of Minneapolis-based Bite Squad, one of the leading national restaurant delivery providers.

The panel was moderated by Laura Michaels, and included Amol Dixit, founder of Hot Indian Foods, and Molly Broder, president of Broders’ Cucina Italiana, Broders’ Pasta Bar and Terzo.

Setting the tone, Michaels said the inherent challenge for restaurant operators is “you’re essentially handing a portion of your brand to this delivery service” when going with a third-party operator.

Broder agreed with the sentiment, and said she was “very hesitant” about first using a delivery service, and was specifically concerned about that loss of control.

“We did it with Terzo because it was so new,” she said. “We wanted to get the brand out there, get extra revenue in another way, so that’s why we dipped our toes into it.”

After experimenting with her newest concept, Broder later added DoorDash delivery service to the rest of her restaurants. Through her experience, she said using a delivery service didn’t work out for building a brand as she initially thought, but that it was a legitimate new source of additional revenue.

Dixit, who now owns a food truck, quick-serve restaurant and a stall at Target Field, home of the Minnesota Twins, said his Hot Indian Foods brand waded into third-party delivery with the same intent as Broder—building brand awareness—and came to the same conclusion.

“The original intent was the same reason Molly did it with Terzo, to get the food into as many people's’ mouths as possible,” he said. “What we’re seeing is, it really is more about the additional revenue and less so about the branding.”

Dixit added that he’s learned his customers, who he described as “urban millennial foodies,” are not loyal to a specific delivery platform and will go to whichever site has the best deal. Both operators agreed that integrating the various services into their restaurants has been seamless, and a vast improvement over fax- or email-based ordering systems.

Broder stressed to the audience the importance of negotiating the rate with any delivery service partners, adding that she felt the rates in general are too high, and that it’s important to feel a true partnership with any delivery service, to make sure that menu offerings listed on the site don’t make for any challenges when the orders start streaming in.

Reassuring both clients and prospects in attendance, Bite Squad’s Runke said nearly immediate customer response times and working closely with restaurants to avoid (or handle) mistakes with an order is part of the reason his company has grown so quickly.

“It costs us more than the restaurant when it comes to a missed order, because our driver will have to go back,” he said. “We need repeat business; we’re a tiny margin business … if there’s an error Bite Squad will lose money on every one of those orders.”

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Tom KaiserTom Kaiser is associate editor of Franchise Times. He can be reached at 612.767.3209, or send story ideas to tkaiser@franchisetimes.com.
 
Beth EwenBeth Ewen is editor-in-chief of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is staff writer at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonLaura Michaels is managing editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 
Nancy WeingartnerNancy Weingartner is editor-at-large of Franchise Times magazine and the editor of the Food On Demand media project. You can reach her at 612-767-3200 or at nancyw@franchisetimes.com.
Follow her on Twitter at http://twitter.com/nanweingartner.
 

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