Which is better in-house delivery or outsourcing?

Which is better, In-house food delivery or Outsourcing?

We live in a world where we are used to instant gratification. From one day delivery offered by Amazon to lightning fast shipment, and it has spoiled us. So, it’s no surprise that we crave for Online Food delivery right at our doorsteps. So, Restaurants and cafes are also joining the fray, which was once reserved for pizza and burger chains.

One word “Convenience”. It’s the reason why food delivery is growing in demand and is popular with not only millennial’s but older generation as well. In other words, food delivery improves the customer experience. Therefore, you should ensure that your food delivery is flawless. Also, you should avoid making the experience unpleasant. In a research, it was found 66% of customers ordered from the same place because of good delivery. Also, in the same research, 51% didn’t order due to poor delivery choices.

Restaurants are turning towards dedicated logistics providers, to ensure the best delivery experience. Or they are taking upon themselves and creating their own in-house delivery system.

In-House Delivery

In-House delivery means having your own dedicated delivering staff and vehicles. Also, having a POS that supports your online ordering from an App or Website.

Pros

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  • Keeping all the profits – The strongest argument of having an In-House delivery system is that you get to keep all the profits. No high Fees to be paid, which sometimes can reach 30% of your order. You don’t need to share your profits or take part in vicious bidding wars. Third party delivery apps usually auction their prime spots on their apps to the highest bidder. So, you can avoid all the fees and hidden costs by having In-House delivery. It is also 45% to 50% cheaper if you have a dedicated stream of orders flowing in
  • Branding – Some studies suggest that 70% of customers prefer ordering directly from the restaurant as opposed to ordering through a Third Party. Also, In-house delivery solves one of the major problems. That customers think about your restaurant before the third party. So the customers will be loyal followers of your restaurant rather than of the third party delivery provider. You can keep your brand in the centre and focus on the customer. While having total control over how your customers are treated and how soon their order delivered.
  • You’re in the driver seat – Plain and simple if you have an In-house delivery system, you’re in control of everything. From A to Z you have total control and say on the process. This will help in eliminating communication issues. Because there are only two parties involved. Furthermore, you can customize the order depending on the customer and situation. You can also ensure the food stays hot and it doesn’t lose structure or integrity during the delivery process.

Cons

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  • Total Liability – Being In charge has its advantages and disadvantages too. You bear 100% of the liability and blame if something goes wrong in the delivery process. Your staff will have the pleasure of bearing the wrath of a disgruntled customer. It might hurt your brand if a customer gives a negative review. Because 90% of customers read an online review before ordering. Now, if you streamline your In-house delivery. Take proper precautions and use an inclusive POS, you can avoid an unpleasant delivery experience.
  • Training, Staffing and Overheads – For some of out there this will be the point that discourages you to go forward with an In-house delivery. That is OKAY! You will have to dedicate a lot of resources when building your own delivery system. Time, Money and Manpower. First off you will have to hire a dedicated delivery staff and buy a fleet of vehicles. You need to provide proper training for your delivery staff. Which takes up the time to come up with a proper training module. After that comes the overheads costs, such as Fuel, Maintenance cost, Salaries and Incentives. You will also be responsible for monitoring the performance and firing of the staff. Third-party delivery services usually take care of all these nitty-gritty stuff.
  • Complexity and Inexperience – There will be a lot of complexity from setting up the delivery radius limit. To have a custom POS for managing your orders and integrating it with your App OR Website. When it’s you’re first time, it’s better to go with a third party. Always consult an advisor and weight out your option before going with In-house or Outsourcing.

Third-Party Solution.

A Third-party delivery solution means you will be outsourcing your entire delivery process. Third-party delivery companies specialize in logistics and delivery solutions.

Some prominent Third-party food delivery companies in Kuwait are, Talabat, Try Carriage and Cravez.

Pros

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  • More Visibility – When partnering up with Third-party delivery companies, you get access to their much wider pool of customer base. Third-party food delivery apps have loyal customers who just order from them. So your restaurant gets more exposure due to their loyal customer base. Also, people who come out of town usually depend on the recommendation of these apps. your ability to get more exposure increases as some people filter restaurants according to categories and cuisines. So, you can cast a much wider net and attract more customers.
  • Increasing Your Bottom line – Now it’s not rocket science to see the clear impact that Third-part food delivery companies have on your revenue. Because of more visibility and exposure you get more orders which in turn means boosting your sales and profits. By outsourcing your entire delivery process, you can focus on your food. Yes! delivery experience matters but so does your food.
  • Cost Cutting – you can save a lot of money by outsourcing your delivery. you can avoid all the headaches that comes with hiring, staffing and training. Third-party food delivery apps take care of all these things and you don’t need to invest in Vehicles, Employees and training.

Cons

  • Sharing Of Revenue – Sometimes Third-Party apps charge up to 30% of each order. Now, this can add up and make a huge dent in your profits. If you’re getting Orders of 100 KD every day, you end up only pocketing 70 KD while 30 KD goes to the Third-Party delivery company. As mentioned above Third-party apps also have auctions to showcase your restaurant on the premium space. These bidding wars can get pretty heated and the price to stay and command the top spot can be costly. So for a premium listing, you need to pay more.
  • Less Brand Focus- One big disadvantage going with a third-party food delivery app is, that your brand is no longer in the spotlight. Yes, definitely Customers are ordering from your restaurant, but they won’t think about your restaurant first. They will always think about the Third-party app first when thinking about home delivery. It will be difficult to distinguish yourself from your competition as you have little control over how your brand is displayed.
  • Handing Over The Control – When partnering up with Third-party delivery companies, you don’t have any control over the whole delivery process. So, basically, you’re handing over the most crucial aspect of food delivery to them., which is customer experience. You don’t have any say as soon as the food leaves your restaurant. So, your food can reach late and be cold due to the mistake of the delivery staff. If the delivery staff is rude to the customer, there is a possibility that the negative review will be about your restaurant and the delivery staff. Instead of the Third-party delivery company. Also, communication errors might arise due to there being multiple players. Third-party apps will have your menu up, but might forget to update a price change or if a particular dish is sold out.

Conclusion.

Let’s wrap this up, Both In-house and Third-part delivery systems have their own sweet spots. Now, depending upon the type and size of your restaurant, one might be suitable that the other.

There is no doubt that Food delivery is an important part of a restaurants revenue, and every restaurant should offer it. If you’re just starting to offer food delivery and are inexperienced or just a small cafe or a restaurant. Then you should start by partnering up with a Third-party delivery company.

You should slowly start building your own delivery fleet after you have tested the waters. Because in the long run having an In-hose delivery is much more cost effective and cheap then a Third-party delivery solution.

Remember, always consult and to weight you options before going with either of the options.

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