In-house vs. third party delivery

Finance to Table Education for Operating Your Restaurant

As third party delivery options have grown over the last few years, restaurant owners and operators may be contemplating the pros and cons between using in-house delivery and third party platforms. Here are key distinctions between the two as well as the largest pros and cons of each.

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In-house Delivery

In-house delivery is the original delivery model where restaurants will hire delivery drivers and maintain the logistical process of the orders from placement to delivery. Until the app-based third-party delivery companies emerged, in-house was the only option for restaurant delivery in most places. Operating your own delivery service can grow your business, but it can also provide logistical challenges that you don’t experience with dine-in restaurant service.

Pros:

  • Complete control over the quality of the food and overall delivery experience
  • Customers pay lower prices without the service fees associated with third party delivery
  • You do not have to pay a commission to another company

Cons:

  • High cost of setting up and running a delivery service
  • You cannot scale the daily operation based on demand
  • High maintenance costs associated with vehicles and employee management

Third Party Delivery

Third party delivery services, such as Postmates, UberEats and DoorDash, are app-based platforms that partner with restaurants to provide delivery services for a commission. Using a third-party delivery allows you to conveniently outsource your delivery needs by connecting you and your customers using a technology platform. Customers order on the app, the order is sent to the restaurant to be prepared, and then the order is picked up and delivered by a driver contracted through the app. Though the third-party model can be easier to start you are no longer in control of your customer’s experience.

Pros:

  • Your restaurant can benefit from the additional marketing on the apps by exposure to new customers
  • Quick and inexpensive to set up delivery using a third party
  • You can easily fulfill more orders at busy times

Cons:

  • The commission fees charged by third parties can be higher than your profit margins
  • No control over delivery time or drivers
  • Complicated operations with orders coming from different platforms

At the end of the day, the decision of which model to use will need to be the best fit for your business, but hopefully this gives you insight into the alternative. If you have any questions, please contact your Henry+Horne advisor.

Jessica Cassavant, CPA