Tips for Dealing with Third-Party Partners
Posted by estiator at 11 April, at 09 : 30 AM Print
DELIVERY
By CONSTANTINE N. KOLITSAS
Maybe you’ve been on the fence about signing up with delivery partners, and maybe you’ve been dealing with them for years. In either case, the game has changed in the last year or so, and restaurants are not always getting the short end of the stick in the way they were when these companies first came on the scene. As such, Estiator put together some critical tips that will help you to navigate the lay of the land and optimize your impact and your profits when partnering with these third-party providers.
TIP #1 Fees are not written in stone. Pre-pandemic, most companies were demanding 25-30% commission on orders that they delivered on your behalf. Legal challenges and legislative pressure by restaurant advocacy law firms (very notably Koutsoudakis & Iakovou in New York) on behalf of scores of businesses began to derail the hegemony that the delivery companies had in the relationship, and today most of the companies have significant flexibility in the rates that they will charge you. Some (GrubHub, in my experience) will offer a scaled commission that is tied to your placement on their site. The higher the rate you pay, the more visible your menu on their platform. I took the lowest-cost option to see how much business it would bring, and I’m happy there. My rate is 10% delivery commission, 5% marketing commission, and then 3% for the credit card fees that are passed along. As soon as one service sees you on a competitor’s platform, they all come calling, of course. DoorDash tried to convince me that they bring more business and, as such, a higher rate is understandable. I held my line, and they eventually met the rates GrubHub had given me. UberEats refused to meet the rates and I refused to pay a penny more than I am paying with the other two providers. Postmates is owned by UberEats these days, so I haven’t bothered taking their calls.
TIP #2 You can pass the fees along to customers. In the early days, most of the delivery platforms insisted that the prices charged to delivery customers be the same as the prices on your menu. Today, that’s changed. “You control your menu on our platform” I was told, and it has indeed been the case. I have increased every single item by 10% over restaurant menu price so that I recoup all but 5% of the commissions I’m being charged (excluding the credit card fee, which would be relatively the same whether I pay it directly to the credit card company or to the delivery company).
TIP #3 Don’t trust their web developers to get your menu right. The services will take your menu and create an online version on their platform. But boy, do they botch it. DoorDash in particular did a butcher job of it, even after insisting that they would just copy the menu from the GrubHub platform. Every main dish suddenly had the word “Plate” after it; descriptions were completely wrong, and the Vegetarian label was misused in a few places. What was most surprising about this is that I do not have a Vegetarian designation for any of my items, although I do identify the items that are Vegan. Maybe DoorDash doesn’t understand the difference between the two?
TIP #4 They will offer a free photo shoot, but… Getting the use of the images for your own social media is just about impossible. I tried cutting a side deal with one of the photographers and the other plain out told me he couldn’t. The platforms use photographers from services for these jobs. They’re not the best-paying photography gigs, but they fill in the holes, I suppose. In any case, they follow strict guidelines on how to frame the food. There’s no creativity here. Don’t expect to get anything more than photos to go next to your food items on the delivery platform versions of your menus.
TIP #5 Mistakes, real and imagined. It’s important to bulletproof your takeout model before going live with these companies. Forget a ketchup packet and it’s very likely the end customer will ask for a refund. Sometimes the mistakes have nothing to do with you, but with the delivery drivers. I review every refund carefully and use the ones where fault lies with us as a learning lesson. The others I challenge. So far, the companies have eaten the refunds that I’ve challenged.
TIP #6 They steal your customers. Like it or not, your customers will become GrubHub customers, and they will order from other restaurants on the platform. Just accept it. It’s likely that most of your customers will go that route on their own anyway.
