During the final session of Food On Demand’s Building Your Off-Premises Tech Stack event in March, Grubhub Senior Director Liz Bosone joined OrderB4 CEO Randy Murphy and Leah Willis, digital systems and technology manager at Boston’s Flour Bakery + Cafe, to discuss whether restaurants should go it alone or outsource their delivery programs—or pick one of the many options between those two extremes.
In her job as director of enterprise accounts at Grubhub, Bosone works directly with the Chicago-based delivery provider’s largest restaurant accounts, however, she and her team are familiar with the concerns faced by restaurants of all sizes. OrderB4 is a technology brand helping restaurants integrate ghost-kitchen and virtual-restaurant operations, and Murphy also has a background as a multi-concept restaurant operator, and therefore is familiar with the everyday concerns of running a traditional operation, including those with a heavy focus on delivery.
Joining the panel from Boston, Willis joined Flour Bakery + Cafe in January of 2020, just before the pandemic hit North America. She and her team have spent the last 14 months helping the nine-unit bakery and restaurant transition to a more delivery- and takeout-focused operation, which continues at present.
Asked how restaurants should decide how much of their off-premises programs to outsource versus doing it themselves, Bosone said the answer comes down to three fundamental questions restaurants should answer in advance. The first, she said, is whether they want to play in the delivery space at all.
Restaurants need to determine which channels they want to play in, she said, whether that’s their own website or mobile app, or whether they also want to branch out and include third-party delivery providers like Grubhub and DoorDash. Once those decisions have been made, she said restaurant owners should decide how to handle the actual delivery, whether they want to hire and staff their own delivery drivers or whether they want to outsource last-mile delivery to local courier fleets or third-party delivery providers.
While they sound like easy, possibly obvious questions, Bosone added that there are now so many more options and combinations of solutions in the restaurant space than existed 12 months ago, let alone several years ago when this side of the industry was in its infancy.
“Depending on which option the restaurant decides to go with, there’s a number of benefits for each, so for self-delivery, of course, there are lower commission rates,” Bosone said. “If the restaurant is delivering their own food, they also get to own that diner’s experience from start to finish, which is incredibly important, especially on the catering side. There’s also the opportunity to streamline communication with drivers and diners, but then if you were to opt for the third-party delivery provider, there’s also that increased research, expanded delivery boundaries to what the restaurant themselves could facilitate. You’re capturing new dayparts, generating those incremental orders, we could manage the care process for you, which is pretty amazing, and then also marketing and technology tools that would be at your disposal, as well, through the third party.”
From OrderB4’s perspective, Murphy said a lot of these decisions have to do with the restaurant operation’s maturity and volume, since it can make sense to do more of the process themselves if they already have significant delivery volumes and, therefore, better economies of scale. Brand-new restaurants or delivery-focused operations might want to outsource their entire operations to delivery-service providers, he said, to avoid having to build those capabilities in terms of staffing, technology and logistics within their own four walls before reaching critical mass.
“”If they have existing traffic on their branded URLs , even better, so they can take advantage of that traffic already coming there and they might not have to necessarily pay for that front-end lead generation,” he said. “What we see is it’s actually best to have a really good mix, so allowing in DSPs, allowing in DIY or performing DIY and then also [using] last-mile fleets.”
Citing her own first-hand experience transitioning Flour Bakery + Cafe to a more delivery-focused business over the last year, Willis said the nine-unit system went from 10 to 15 percent of its orders being digital to 100 percent almost overnight. Now, more than a year later, that number has settled to about 50 percent, depending on the location.
After working exclusively with Caviar for delivery-order generation and fulfillment, Flour transitioned to working exclusively with Grubhub and its LevelUp subsidiary. The company decided to continue working with just one delivery-service provider—which is relatively unusual these days—because it helped make things easier for its front-of-the-house managers to reduce manual order entry, which also helped improve consistency, reduce errors and improve hospitality.
“Part of that has to do with our menu,” she added. “We have a very large menu that changes depending on the time of day, and having to, say, update four different menus all the time is way too much work for potentially not any benefit, and it’s definitely beneficial for us to only work with … Grubhub and really push that relationship further and be able to work off of each other.”
Because virtual restaurants and delivery-only ghost-kitchen locations are so different from traditional restaurants—and introduce such unique challenges to existing restaurants bringing such locations into their operations—Bosone said Grubhub is continuing to bring in new functionality and technology, including point-of-sale integrations so restaurants can add additional concepts without hampering financial or other reporting.
“For ghost kitchens, specifically, it’s really an entirely different ballgame,” she said, noting that restaurants that are really busy would tend to explore ghost kitchens, while restaurants that are hunting for additional volume would tend to explore the virtual restaurant option. “The complexities that I mentioned during the VR portion still exist, but in that ghost kitchen, you don’t have to worry about the other complexities of being a restaurant—diners in stores, diners going through a drive-thru, etc. You can really focus on just the four walls of that kitchen.”
Click here to watch the register and check out the rest of this conversation, as well as additional panels that are part of the Building Your Off-Premises Tech Stack event.