Third-party partnerships offer opportunities, challengesThird-party partnerships offer opportunities, challenges

Restaurant operators tackling the fast-growing off-premise food and beverage market face a crucial decision: Whether to operate their own delivery program or partner with a third-party delivery specialist.

Joining up with a partner can greatly expand a restaurant brand’s off-premise reach, but it also may bring contentious issues about the control of consumer data, brand messaging and the beverage sales and profits.

The pros and cons of third-party partnerships made for lively discussion at the Beverage Roundtable during the NRA Show in Chicago in May. Taking part were executives of leading restaurant brands that have third-party delivery partners as well as those that deliver their own off-premise orders. The sponsor of the roundtable was Whirley-DrinkWorks!, a designer and manufacturer of custom LTO drinkware, cause marketing programs and off-premise drink bag solutions.

Going all-in
“We’re all-in on third-party delivery,” says Brian Farris, vice president of operations at Austin, Texas-based Schlotzsky’s, where off-premise orders account for about 15 percent of business. The chain has relationships primarily with Uber Eats, Grubhub, DoorDash and some smaller regional delivery providers.

“We see that as an emerging marketplace and an opportunity for us to not only protect those occasions that may be moving to the home, but also to acquire new customers,” says Farris.

Roundtable participant Ed Keller explains that he assumed his new position of director of off-premise business development at Dallas-based Corner Bakery Cafe this year to develop third-party options. Prior to his arrival the brand had done little with third-party delivery.

“We've already got several third-party DSPs [delivery service providers] in place; we're negotiating more agreements, and we're also going to test internal delivery to see if that makes more sense to try to run that ourselves,” says Keller.

Dickey’s Barbecue Restaurants is extending its off-premise efforts with third-party delivery providers, reports Chief Executive Laura Rea Dickey. The Dallas-based chain is partnering with 61 third-party vendors, both major players and regional providers, spread out across more than 560 units. In addition, it is piloting direct delivery in some units.

However, some operators prefer to handle it themselves. Beaumont, Texas-based Jason’s Deli, which does 30 percent of sales off-premise, has tested third-party services in the past couple of years but is maintaining a self-operated approach. “We’ve decided it’s best for us to keep it in-house and continue delivering ourselves,” says Director of Sales Gracie Prasanson.

The need to negotiate
A common concern around the table was the tendency of some third-party delivery companies to control customer data and beverage sales rather than share it with restaurant partners. Thus participants recommended that a restaurant brand negotiate favorable partnership terms.

For example, at Dickey’s, data sharing has become a key piece of the relationship with category-leading third-party providers like Uber Eats, DoorDash and Amazon. “I want to be able to track the life cycle of that guest once they’ve touched that app,” says Dickey. “I want to know who they are and their ordering patterns and are they going to be a heavy user for us.”

At Jason’s Deli, having its own mobile app allows the brand to capture and own all consumer data, Prasanson notes.

Sharing beverage sales and profits is another important point of negotiation with third-party partners. As Prasanson puts it, “Those are big margins. You don’t want to give those away.”

Communicating with customers
Operators must also deal with loss of brand identity and consumer satisfaction touchpoints when they send food and beverage beyond the restaurant’s four walls. At Dickey’s Barbecue there is a large emphasis on “vibe” in the dining room, Dickey says. “The experience of interacting with the pit master, seeing your barbecue being cut, enjoying the aroma of the pit --- all of that is lost to the delivery customer,” says Dickey.

Dickey’s simulates that communication by placing messaging on its packaging, such as its iconic yellow beverage cup, and by using an in-house order tracking platform which keeps customers informed on the progress of their delivery orders.

“The way I look at it, the packaging becomes the brand,” says Dickey. “It takes the place of the dining room. That's why we put emphasis on communication and branding everything we can.”

As with branded drink cups, volume packaging solutions such as gallon to go drink bags for iced tea and carbonated beverages and hot beverage drink bags can carry a restaurant’s brand message to off-premise customers.

Driving good scores
Also discussed around the table is the fact that restaurant brands are evaluated by their third-party partners on the quality and timeliness of the orders they pack up to go.

“Within the third-party delivery space, it's all about staying on the front page of the app,” says Farris. “We try to drive really, really good scores with Uber Eats and Grubhub and so forth, so we're always getting escalated to the top of the list.”