This article is part of a larger series on POS Systems.
Over the past two years, demand for online ordering and delivery has reshaped the restaurant and retail industries—prompting restaurants to rely on popular third-party ordering and delivery platforms, like DoorDash, Uber Eats, and Grubhub.
In the News: In 2022, DoorDash aggressively expanded into retail delivery, adding partnerships with grocers like Sprouts Market and Dick’s Sporting Goods.
- Sprouts Farmers Market to Arrive on DoorDash
- Raley’s Enlists Doordash Grocery Delivery
- DoorDash Signs Partnerships with More Grocers and Retailers
These services can come at a high cost (in the form of delivery fees and commissions), but depending on your business model, the costs may be worth it. Let’s take a closer look at third-party delivery and these top platforms to help determine if they’re right for your small business.
|Convenience: You post a menu, then let the platform handle the logistics of sending orders and handling drivers.||Lack of control: The platforms handle customer dispute resolution and may refund large orders without your consent.|
|Growth: With more than 60 Million active users, third-party platforms showcase your business to new customers.||Weekly payments: Credit card payments are deposited once per week rather than 1–2 business days.|
|Authority: User reviews on third-party sites show new users that your products are worth the price.||High commissions: Independent restaurants may pay as much as 30% on each order.|
|Labor savings: Using third-party drivers saves you the costs of wages and insurance for an in-house team.||Unreliable drivers: You can train and coach on-staff drivers but have no ability to influence the quality of third-party drivers.|
|Meet customer demands: Customers love the convenience of online ordering and local delivery and have come to expect the convenience.||No customer data: The platforms do not share customer data. So, you can’t contact customer directly to drive marketing or loyalty campaigns.|
Surveys continue to show that two-thirds of customers prefer to order directly from small businesses. If you want tools for building an in-house strategy, check out our guides to the best delivery POS systems, best delivery software for restaurants and the leading online ordering systems for restaurants.
Pros of Third-party Platforms
There are three major benefits of expanding your business through third-party platforms. First, you expand your customer base by introducing your brand to the platform’s users. Considering that every month more than 20 million consumers place orders on DoorDash alone, the exposure for your brand could be huge.
If you are a small mom-and-pop operation selling popular items like pizza or burgers, you’re pretty much guaranteed to see an immediate uptick in business volume. Additionally, user reviews make it easier for prospective customers to decide whether your products are worth the price.
The second advantage of using third-party platforms is that they handle all the staffing and liability issues. You don’t have to worry about whether the drivers have the right insurance, or add the administrative work of holding and distributing their tips. You also don’t have the added cost of wages and gas reimbursements.
By outsourcing delivery, you also free up your attention and resources to concentrate on your in-house operations. If you prefer to spend your time training staff, developing new recipes, or working to make a memorable customer experience for your in-restaurant diners, then working with third-party apps for delivery can be a good fit for you.
Third-party platforms also help you meet consumer expectations for convenience. Customer demand for online ordering has only continued to grow since 2019. In the US, ecommerce purchases grew 14.2% in 2021, and grew by another 6.7% in the first quarter of 2022. Working with a third-party platform is a convenient way to meet your customers where they like to shop.
Cons of using Third-party Platforms
The third-party delivery picture is not all rosy. Third-party platforms can add serious challenges for your business. The first one that springs to mind is the cost. Third-party platforms can charge as much as 30% on every order they send to your restaurant. You can raise prices to offset this cost, but that 30% can really add up. And, you can only raise prices so high before customers balk at paying them.
It will also take longer to access your money. Your credit card processor generally deposits funds in your account every one to two business days. Third-party platforms process payments on their site and take out their commissions before depositing in your account once per week. If cash flow is an issue for your business, this lengthy turnaround time can add stress.
The platforms also control customer disputes and refunds. So, if a customer calls Uber Eats to complain about a missing side order, and Uber Eats decides to refund the entire check, you have no say in the matter. And, you are still out all the costs of the food and the labor it took to prepare the order in the first place.
You’ll also lack the ability to control the quality of delivery drivers and how they treat your food once it leaves your restaurant. According to an NPR study, one in four delivery drivers eats food they are supposed to deliver. Considering the lack of control you have over refunds and customer complaints, this can literally eat into your profits.
Speaking of lack of control, third-party platforms may decide to run promotions without advance notice. In one recent case, Grubhub offered a free lunch promotion in New York City that ended with a lot of dissatisfied customers. When you use third-party platforms, you won’t have access to customer data that would enable you to contact those customers directly to smooth over disappointments. You also won’t have the information to feed your own marketing and loyalty campaigns, which can be a huge business driver.
In August of 2022, DoorDash added a Customer Insights tab to its Merchant Portal. This tab shows customer types and locations, which can help you decide if you need to run a promotion.
How Third-party Delivery Platforms Work
Third-party delivery services like Grubhub, Uber Eats, and DoorDash all operate in a very similar way. They provide an app that allows customers to order food from your restaurant or shop. The app sends these orders to you via a mobile device or a direct integration with your point-of-sale (POS), then it connects you with local delivery drivers to deliver the orders.
The platforms make money by charging businesses a commission on each order. The commission can vary from 6% to 30+% depending on the order type and your marketing preferences. Typically, they also charge delivery fees to customers. So, both businesses and customers pay for the service.
When DoorDash, Uber Eats, and others were first introduced, small businesses were obligated to enroll in the full service including online ordering and delivery with the platform’s drivers. Nowadays, however, platforms allow you to choose which services you need.
DoorDash, for example, offers an online-ordering-only product called DoorDash Storefront that you can use to accept online orders for takeout or for delivery with your own drivers. There is also a delivery-only package called DoorDash Drive that allows you to route in-house delivery orders to DoorDash drivers on-demand.
Third-party Delivery Platform Alternatives
Online ordering and delivery can be a big opportunity for small businesses. However, using third-party online ordering and delivery services are not the only way to meet customer demand.
Most modern restaurant POS systems and retail POS systems include online ordering modules that send online orders directly to your POS orderstream. Some—like Revel Systems—even offer built-in options for managing a team of in-house drivers with maps-based dispatch and driver smartphone apps.
If you don’t use a POS and don’t have a business website, you can still add online ordering via free sites like Square Online or GloriaFood. You can even avoid the risk of accepting online payments by setting up your online ordering site to only accept pickup orders with in-person payments.
Retailers interested in expanding into third-party delivery can take some tips from the restaurant industry. Many independent restaurants use third-party platforms alongside in-house online ordering systems. They then add coupons or flyers to their third-party orders, offering customers discounts or freebies for placing future orders directly with the restaurant. Third-party platforms frown on this behavior, but if you place the coupons in sealed delivery bags (and 85% of consumers prefer sealed delivery bags that show if their order has been tampered with), the third-party drivers will never know.
Alternatively, some restaurants use third-party platforms during slow days and turn off the third-party orders during days—like weekend services—that are already busy.
Use a Third-party Platform When:
Use an Alternative When:
You need to expand your marketing reach.
You have a long list of loyal customers.
You are short-staffed or need to save on labor costs.
Staffing is not a challenge for you.
You can afford commission fees of 5%–30% per order.
You operate on a tight budget.
You trust non-staff drivers to provide good service.
Your products require sensitive handling.
You don’t track customer data.
You use customer data to drive marketing and loyalty campaigns.
Recent studies have shown that delivery isn’t even a necessary part of the package—55% of digital orders are actually for takeout. So, you reap the benefits of online ordering without adding the cost of delivery. Studies also show that nearly 60% of consumers prefer to order directly from local restaurants rather than through third parties.
What Users Say About Third-party Delivery Platforms
Most online DoorDash reviews and Uber Eats reviews are written by drivers and consumers. It can be difficult to find merchant reviews of these services listed publicly.
On major online review sites, DoorDash, Grubhub, and Uber Eats reviews are mixed:
- DoorDash: Reviewers give this platform 3.2 out of 5 stars on G2. All of the 80+ reviews are from consumers or drivers, with most positive reviews mentioning convenience and most negative reviews citing difficulty getting refunds for missed deliveries.
- Grubhub: Reviewers on G2 award this platform 3.9 stars out of 5 based on 40+ reviews. Like DoorDash, all current reviews are from customers and drivers. Reviewers like the variety of restaurants available on the platform, but dislike the number of fees on orders.
- Uber Eats: is rated 4.1 out of 5 on G2, based on 160+ reviews. One 2-star review from a restaurant user notes negative experiences with rude drivers and a tedious menu update process, but also notes that the platform helps their restaurant stay busy. Other restaurant users echo menu update criticism; many menu changes require contacting Uber Eats directly.
Typically, small business users talk about their experiences with third-party platforms in private industry groups. The general consensus among restaurant owners seems to be that third-party platforms are pricey, and are only really worth it to expand your restaurant’s visibility. These restaurant user comments below come from a popular restaurant-owner discussion board.
The pros mentioned include:
- “…they do drive in new customers since a lot of ppl (sic) use their platform.”
- “What we found is 90% of the orders are their customers. It’s people browsing their app looking for what they are eating for lunch/dinner. So it’s new business they are driving.”
- “Third-party apps also play a role in helping bring the restaurant to the top of the user’s mind. Ratings on these platforms reinforce the trust and confidence of the users.”
On the other hand, these comments reflect some commonly cited cons:
- “…we spent close to $93,000 in delivery service fees paid out to Uber Eats, DoorDash, Grubhub, and Postmates in 2020 and we paid ~$21,000 in January and February 2021.”
- “[many] of these “customers” tend to wait for deals and discounts before another purchase.”
- “…customers are loyal to apps, not to the restaurant.”
The best delivery service for a restaurant is one that helps you affordably grow your business. Third-party platforms for online ordering and delivery are a surefire way to introduce your restaurant to the millions of users who place online orders every month.
You should, however, be prepared to pay a hefty commission for this privilege and wait up to a week to receive your portion of the credit card payments. If high commissions are not in your budget, you can opt to route in-house orders to third-party drivers for a flat fee or develop an in-house online ordering strategy to keep customers ordering directly from your business.
You may also like …
- If you are looking for a free online ordering site, check out our Square Online Review
- If you don’t have a restaurant website, see how to build a restaurant website to increase sales.
- If you need recommendations for a DIY website builder, see our ranking of the five absolute best restaurant website builders.
- If you want to drive online orders for your retail business, learn how to set up click and collect.
- If you want to learn more about POS systems, read the best ones for small businesses