June 1, 2016 |

From a Very Reliable (Out)source

By Denise Greer

Operators find third-party delivery services can ease some headaches

third-party delivery

Delivery is a necessary service in the pizza business, but there are challenges related to liability, insurance and employee scheduling. Still, delivery is growing. According to Technomic’s Pizza Consumer Trend Report, the percentage of consumers who purchase pizza for delivery at least once a month increased by 27 percent since 2014. Also according to the Chicago-based research firm, among those who order food for delivery, 38 percent of all consumers and 62 percent of millennials use third-party services at least monthly.

Many of these customers are not calling their local pizza place. Instead, tech-savvy consumers are going online, or looking at their smartphones, for services such as GrubHub, ChowNow, DoorDash, Caviar and other sites. Operators are looking to these third-party vendors not only to get the word out about their restaurants, but also to handle difficult details associated with delivery.

In general, these companies combine technology and a courier service. “The customer orders off the app, and the order goes to the restaurant like it has always done,” says Christopher Webb, CEO and co-founder of ChowNow, based in Playa Vista, California. “The system looks into the courier network, sees where a nearby driver is, and assigns the driver who picks up the pizza as it’s coming out of the oven.”

The process helps solve one ongoing problem, Webb says. Restaurants that offer pizza delivery often have the finished pies in boxes stacked on a counter until the delivery driver returns from a run. When the driver goes out again to deliver the new set of pizzas, the customer receiving the pie at the bottom of the pile might get food that has been out of the oven for an hour.

With ChowNow, the driver usually handles one delivery to one address. “Delivery times are vastly improved,” Webb says. “We only occasionally have two drop-offs per delivery. We won’t assign it if it extends the delivery time more than five minutes.” ChowNow charges the restaurant operator anywhere from $2.50 to $4 per mile.

Scheduling the matchup of driver and hot pie is one detail that the third-party vendor can solve with technology. The other scheduling issue is staff. “If you are having a slow day but employing a driver they will be waiting, and you think, ‘Oh my gosh, I called this person in today and they are sitting,’” says Meghan Gage, manager of public relations for Chicago-based GrubHub. “With our service they are coming when they are getting orders.”

GrubHub has been around as an online and mobile food-ordering company for 10 years, Gage says, and about a year and a half ago added contract delivery drivers to the offerings. The drivers are not employees of the restaurants so that eases some of the labor costs and other issues associated with hiring drivers.

Outsourcing can also help with marketing. GrubHub charges a commission on deliveries, and there are different rate packages that vary according to how visible GrubHub’s platform makes the eatery when a consumer searches for restaurants.

Some companies help with other details, too. San Francisco-based Caviar, which is part of the tech company Square, helps the operation get set up. “When a restaurant chooses to partner with Caviar, we’ll send a photographer to photograph every dish on the menu to show customers not just a list of items to order, but full-color photos so they know exactly what to expect,” says Katie Baynes, communications lead for Caviar. “We also provide restaurants with an iPad and software dashboard where they can manage inbound orders, update inventory, and schedule their hours.”

An outsourced system cannot only help operators measure the revenue and other metrics, but also help drivers be more efficient. “The technology from DoorDash is by far superior in the way we route drivers,” says Ryan Broderick, head of merchant operations at San Francisco-based DoorDash. “We control the end to end experience, and we guarantee our service standard.”

Operators also want their food to be delivered hot and fresh, and for the food to represent the eatery well. “Any time product is taken out of the restaurant, variables are introduced that can greatly impact quality,” says Jeff Pond, chef/partner at Area Four Pizza in Boston. “Because of this, trust is paramount.” Also important, he says, is that the outsourcing company vets the drivers. Pond says Caviar has done a “fantastic job” of this vital task.

Another factor in choosing a third-party delivery company is infrastructure, says Luca Varuni, chef and co-owner of Varuni Napoli in Atlanta. “You want to make sure that there is a set plan of action and very solid foundation. It is great to get involved with a new and exciting concept but you do not want your brand or reputation to suffer through another’s growing pains.”

Also, the delivered pizza has to represent the operator’s best work. “Neapolitan pizza is very tough due to the high cooking temperature,” Varuni says. “We do not fire the order until the driver arrives to pick up the order.” Delivery time is about 20 minutes, Varuni says, and the system allows the restaurant to monitor this.

Delivery services are likely to grow. “We empower these local restaurants and help them,” says Broderick, from DoorDash. “It will continue to evolve with the landscape.”

Can You Not Take My Order?

Operators who decide to outsource delivery services should first look to see if anyone is doing unauthorized deliveries of their food. “This is a real challenge for restaurants today,” says Jeff Pond, chef/partner at Area Four Pizza in Boston. “I can’t control the product always with companies out there that just steal your food.”

There have been some lawsuits arguing that vendors such as Postmates put restaurants’ names on their Web site and accept online orders without having an affiliation with the restaurant. A courier picks up the order and then delivers it to the customer for a marked up fee. If the food arrives cold or in poor condition, the customer ends up with an unfavorable perception of the restaurant.

Pond says he has called these types of vendors and asked them to take Area Four Pizza off their Web sites. He can also tell whether they order again by their credit card information. “It’s a long battle,” he says. “I won’t make pizza for them.”

Nora Caley is a freelance writer specializing in food and business topics. She lives in Denver, Colorado.