Restaurant Delivery Pros and Cons
The continued demand for restaurant delivery means that operators who want to cash in on this industry trend must choose between creating an in-house system or relying on third-party services. Timothy Joseph has offered delivery at his fast-casual Asian concept, Wok Chow, since it opened in Knoxville, Tenn., in 2011. We spoke with Joseph to learn more about how his in-house delivery service has grown over the years, why he stopped using third-party companies, and what advice he has for other operators who want to set up a delivery service of their own.
Third Party or DIY?
Although delivery has been on Wok Chow’s menu since the beginning, the restaurant’s methods have changed and evolved over the years. At one time, Joseph worked with a third-party company to offer delivery to all of Knoxville, but ended the partnership because of concerns about the final product customers received.
“The issue with the third-party vendors is that often times they’re not very quick,” says Joseph. “We’ll prepare the food and it’ll sit on the counter, and then we’re put in a situation where we’re thinking, ‘Golly, this is not going to be very hot and fresh by the time the customer gets it. Should we remake it?’ We’re concerned about controlling the quality of the food, and we’re better at that than these third-party people.”
Cost was another factor. In addition to no longer wanting to give a third-party company a percentage of the restaurant’s delivery sales, Joseph felt that the price customers paid for delivery from those third-party services was too high.
“Some of them inflate menu prices [and] some of them add service fees and credit card charges at the end,” says Joseph. “It’s important that we offer our guests a good value, and if they order from these services, we’re finding that they’re paying so much more for the same product that they may not appreciate the value when they get their food.”
Delivery now makes up 25 percent of Wok Chow’s sales, but building a quick and efficient delivery service wasn’t easy, and Joseph cautions other operators against doing so unless they’re confident it’s ultimately going to be a profitable endeavor.
“If [operators] just want to increase sales a little bit, or they just think it’s a good idea, then I would tell them to think twice, because it is by far the most difficult thing that we do,” says Joseph. “It requires the most management for probably the least bang. If they don’t think it’s going to be a real big thing for them, then I would steer them away from it 100 percent. Pay whatever fees any third party company wants to charge you and go that route, because it’s a headache.”
If you’re still considering in-house delivery for your restaurant, check out Joseph’s tips for restaurant delivery below.
Restaurant Delivery Tips
Invest in your own vehicles (and use them for marketing, too). In addition to moving from a $2 delivery fee to a $15 minimum order requirement, Joseph decided to improve Wok Chow’s delivery service by investing in company cars. This helped with operational costs as well as employee satisfaction.
“I figured that I could pay for the car, the insurance, and the gas, and wrap it all into that, plus have a little bit extra left for me,” says Joseph. “Our first delivery car turned out to not be profitable, but I wasn’t losing money. What we found was a lot of delivery drivers liked working for us because they didn’t have to drive their own car.”
After winning a local competition in 2013, Wok Chow’s first vehicle was wrapped in a distinctive design that helped spread the word about the restaurant’s delivery. The mobile marketing paid off so much that Joseph has had additional delivery vehicles wrapped, too.
“I realized that the wrap is great marketing and advertising, so even if the cars just broke even, I was more than happy to do it just for the added advertisement driving around town,” says Joseph.
Start with insurance. Whether you choose to provide delivery vehicles or have drivers use their personal cars, you’ll need to carry the proper insurance. Since some insurances come with specific stipulations, you’ll need to know which insurance your business will carry before hiring any delivery drivers.
“The first step was finding insurance and understanding that you have to carry non-owned auto insurance, plus insuring your own delivery vehicles,” says Joseph. “Then it was just finding people. For our insurance, they have to be at least 21 and they have to have a clean record; otherwise they can’t drive for us.”
Determine your restaurant delivery area by time, not distance. Customers’ experiences with delivery from your restaurant can be negatively impacted by long wait times, so you may benefit from determining your delivery area based on the time it takes to get to certain areas from your restaurant, rather than by mileage.
“There was a website that I used where you enter a central location, which in our case would be the restaurant, and it uses Google statistics on traffic and things like that to help determine how far you can deliver during that time of day,” says Joseph. “We [want to] get to our destination, on average, within 12 minutes at most, so the longest delivery would take 25 minutes, there and back.”
If any of your delivery areas are impacted by local events, you may also wish to limit your delivery area to avoid lengthy traffic delays. In Knoxville, for example, traffic generated by University of Tennessee football games make the delivery route to the city’s downtown too congested to navigate, so delivery to that area is “shut off” during games.
“We used to have a limited delivery area during that time,” says Joseph. “But we had one guy get stuck out there for 3 hours one day and we said, ‘We’re never doing this again.'”
Integrate your website with an online ordering platform. Offering online ordering is an important part of creating an efficient restaurant delivery system, especially when that platform can be integrated into your website to create a seamless process for customers as well as employees.
“It was very important that whatever company we chose to go with integrated completely with our [point-of-sale] system,” says Joseph. “One of the benefits of online ordering is that you don’t have to pay a cashier to answer a telephone and enter in an order. Plus, there are zero errors when you enter in an order online. It’s the customer that does it, not us, so there’s no communication breakdown or anything like that. [Ordering online is] actually probably even quicker than calling in your order, and it was just so important to make sure it’s integrated and easy for us.”
Be patient. As with many aspects of the restaurant industry, it can be a long road to profitability, but taking the time to build an efficient restaurant delivery system can pay off in the end. Wok Chow’s delivery has actually become such an integral part of the restaurant’s success that Joseph hasn’t been able to figure out a way to stop offering it.
“I have sat down many times and looked at the numbers and tried to come up with a way to remove delivery from my services, because it’s that much of a pain in the butt, and I just can’t do it,” says Joseph. “It’s just too much money in the long run, but starting out, it was a miserable experience. You have to have a lot of patience and you have to be willing to spend money with no return at first.”