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What is First-Party Delivery and Why You Need it?

Lunchbox Editorial

Today, people want an experience. They want to know that you care about them. Can you trust big-brand third-party services to provide the unique customer experience, as well as the high level of customer service, that you and your restaurant stand for?

The Spotlight is on Takeout and Delivery

In the first week of April, just as a new COVID-19 lifestyle was settling in, 22% of Americans ordered food online. That’s up 19% from the week before! Furthermore, analysts and experts only expect this trend to grow as our lifestyle is tweaked toward whatever a new normal may be. As the popularity of takeout and delivery grows, and restaurants need to rely more and more on this element of their business for revenue, there are two avenues for restaurants to explore: third-party delivery services and first-party delivery services.

Third-Party Services

The availability and use of third-party services has grown at a dramatic rate over the past decade as the online and app-based delivery space has quickly evolved to try and fulfill customer and restaurant needs. Whilst it might sound nice to have someone else handling everything there are significant drawbacks to handing over control of the online portion of your business to someone else. Especially when that portion of your business is probably going to make up a large part of your revenue for the foreseeable future.

Firstly there’s the money: third-party services take as much as 30% off the top of each order! This practice is so well accepted by restaurants that San Fransisco put a 15% cap on third-party delivery service fees. But that’s still 15%! Many establishments can’t consistently afford to give up such a large portion of their taking.

Using a third-party delivery service means that you’re on their app, great! But you’re sharing that space with a huge amount of other brands. All of whom are competing for attention and your customers. Also, within the app the services are regimented and set the same for everyone. Making the user experience the same. You’re forking out up to 30% of your revenue for no love, and no special treatment!

First-Party Services

First-party services are there to help you differentiate yourself from the crowded field. Much like you did when you started your brick and mortar location, wrote your menus, and decorated it just how you wanted it. Lunchbox, Olo, and Chownow are three different companies offering first-party service to help you stand out from the crowd online.

First-party services allow you to take total control of your online offerings and allow you to change them at any time, in an instant! You’ll have your own, dedicated app which will look and interact exactly the way you want it to. And only you will be on it!

A Cost Comparison

The cost of using a first-party service is minimal compared to the 15%+ that delivery services skim from the top of your hard-earned money. Take a look at the image above/below. It shows the charges taken from one restaurant that uses one of the big-time third-party delivery services.

As you can see in the picture, the restaurant had 46 orders that were ordered and paid for through this third-party service. Those orders totaled $1042.63 but the restaurant received just $376.54! That’s a return of 36% from 46 orders! If you know the razor-thin margins that restaurateurs balance to keep their businesses profitable then you’ll know that such a menial return from a third-party supplier should start the alarm bells ringing.

Ok, there are some other services in there, provided by the third-party service, which we should remove as these are services any restaurant is going to use. Specifically, these are the “Promotions” and “Delivery Commission”, which together total $325.99. If we do the math again that’s a 67% return for the restaurant. More reasonable, but having someone else siphon over 30% from your take for providing a simple service is not a norm we should start trying to get used to.

The charges for first-party service providers are a lot less, as you can see in the bottom corner of the image. If this restaurant used the first-party service Lunchbox to help them create their own proprietary app they would have a return of $937.80 from sales of $1042.63. A return of almost 90% and a charge of just 10%! A much healthier working relationship and compared to the original return given by this third-party service provider the first-party provider would give restaurants a return of 240%!

Alongside apps and web ordering services first-party services can also provide built-in loyalty systems -meant for your restaurant and your customers, not some third-party app skimming more from you and your customers- in-store kiosks, and they can facilitate phone-to-table service. All of this gives customers excellent peace of mind as we settle into this new COVID-19 world. If offering a personalized takeout and delivery experience for your customers sounds like it would be the right fit for your business head over to lunchbox.io, to request a demo of their services, and see firsthand how using the first-party service can help your business stand out from the crowd.


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