- Even with a commission fee, third-party delivery platforms can drive additional business to your pizzeria and boost your exposure.
- Mountain Mike’s Pizza reached nearly 10,000 additional customers through third-party services from January to March 2021 alone.
By Tracy Morin
Since their emergence on the foodservice scene, there has been no shortage of gripes about third-party delivery providers. But for many pizzerias, they’ve moved from a “no way” to a necessary evil to a solid partner that legitimately helps boost business. And the impact of COVID-19—from dine-in restrictions to keeping more customers at home—has only fueled their growth.
“We have used DoorDash, Uber Eats and other third-party delivery services at all of our locations for several years, which has broadened our customer base and enabled our patrons to reach us at their leisure, especially during the pandemic,” notes Zach Hempen, senior digital marketing manager of Your Pie Pizza, based in Alpharetta, Georgia, with 75 locations. “Despite the commission fee with any service, our system benefits from these delivery platforms by driving additional business to our restaurants from existing and new consumers and allowing us the chance to gain exposure in different markets.”
Leah Arp, off-premise marketing manager for Your Pie Pizza, manages its delivery service relationships, and she notes some impressive stats surrounding third-party sales. “Our third-party delivery business overall has grown by more than 400% when comparing Period 4 in 2020 to Period 4 in 2021—a 439% increase,” she says. “We have reached close to 10,000 additional consumers through third-party delivery services from January to March alone. And we gain a lot of insights from the reviews through third-party delivery, which can then be applied to the product, the packaging or the process. It gives us additional data from a particular subset of consumers.”
However, at Mountain Mike’s Pizza, based in Newport Beach, California, with 236 locations and growing, educating individual franchise owners about the benefits of third-party delivery took some time. “Some of the negative is perception over reality—because a lot of folks are so focused on the third-party marketing fee, and they’re also concerned over cannibalization,” explains Mountain Mike’s president and COO Jim Metevier. “But third-party sales are incremental business. Loyal Mountain Mike’s guests, who are going online, picking up the phone or coming in to order, are going to continue to do that, but DoorDash, Grubhub and Uber Eats orders are coming from those consumers. And if you’re not part of that list, you’re not going to get the order. We feel like third-party really complemented our in-house delivery.”
“Families and moms gravitate toward Grubhub or DoorDash, and we didn’t want to miss out on the opportunity to be in that digital space. We did negotiate on their fees, but the way I see it, it’s marketing dollars.”
— Anthony Russo, Russo’s New York Pizzeria
Mountain Mike’s even did a test in California’s Bay Area, looking at its restaurants that joined DoorDash and those who offered only in-house delivery. It showed that the third-party sales were more than 80% incremental. They also showed reluctant franchisees the dollar profits of the sales. “Your margins on those incremental orders might be lower, but you don’t take margins to the bank—you take dollars,” Metevier says. “We showed them you’re still making more money by leveraging these services.” And, needless to say, they became more crucial when COVID hit—at Mountain Mike’s, third-party jumped from 6% of sales, pre-pandemic, to 13% by 2021. The company currently works with four third-party providers and integrated these orders into its POS system to streamline operations.
Anthony Russo, CEO and founder of Houston-based Russo’s New York Pizzeria, with 42 locations, also decided to embrace third-party providers, despite already employing his own delivery drivers. “Families and moms gravitate toward Grubhub or DoorDash, and we didn’t want to miss out on the opportunity to be in that digital space,” Russo explains. “We did negotiate on their fees, but the way I see it, it’s marketing dollars. We see additional sales coming in, and customers are more aware of us now, too.”
Working the System
Operators who are utilizing third-party delivery services to their best advantage have found that certain tips and tricks can maximize the relationship:
Engage in open communication. Arp has found success by utilizing third-party delivery providers as business partners. “We have biweekly calls with each partner to discuss opportunities for operational improvement on both the side of the restaurants and the side of the drivers,” she explains. “We also discuss what marketing promotions work best for our specific needs on a brand level, as well as for individual markets. Keep in mind that they’re there to help you—if you’re doing good business, they are, too.”
In addition, Your Pie takes advantage of as many of the brand-wide promotions offered by the partners as possible to harness the strength of their marketing budgets and bring attention to Your Pie locations. “For example, Uber Eats does a great job of having different promotions throughout the year, depending on what is top of mind for consumers, that our stores are allowed to opt in to,” Arp notes.
“Your margins on those incremental orders might be lower, but you don’t take margins to the bank—you take dollars.”
— Jim Metevier, Mountain Mike’s Pizza
Explore separate storefronts. Russo uses third-party apps to present a wider range of offerings available through his business. He has played around with creating separate virtual storefronts to highlight aspects of the menu, like catering, gluten-free, vegan or New York deli sandwiches—without the need for additional rent or labor costs. “Some customers have no idea that I have gluten-free items or catering trays and pizza packages, but online I can put myself in that category,” Russo says. “Adding two additional storefronts, virtually, helps offset the expenses of working with third parties.”
Follow up. There are several “aftercare” recommendations operators advocate to help make the most of third-party deliveries. Arp uses the menu trends and customer feedback from within those platforms, combined with the data from its own online ordering and loyalty platform, to help prioritize what items should be featured more prominently online. The company can also evaluate the areas of the pizzeria in which consumers are seeking improvements, as well as areas where Your Pie is excelling in the digital customers’ eyes. Finally, the company tries to track where each customer comes from—and a full 40% of third-party customers have never before ordered from the pizzeria.
“We have biweekly calls with each partner to discuss opportunities for operational improvement on both the side of the restaurants and the side of the drivers….Keep in mind that they’re there to help you—if you’re doing good business, they are, too.”
— Leah Arp, Your Pie Pizza
Here to Stay
Then there are ways to promote your business alongside the orders themselves. Mountain Mike’s uses box toppers with the phone number and website of the local store, as well as promotions that can point consumers to its own delivery services. Your Pie places inserts in bags to convey other ways to reach the business directly (and more cheaply). Russo, too, includes bounce-back offers and online deals. “One day, they might order delivery, but the next time, they’ll come for dine-in,” Russo says. “We just want to win them over.”
Ultimately, Metevier sees these deliveries as a complement to the overall business, and he notes that these providers are here to stay—though he predicts some shifts in the third-party industry in the months or years ahead as regulations change, consolidations occur and new players emerge. “I don’t see any reason not to work with them—they continue to make our brand bigger and increase our reach,” Metevier says. “I’m all in. When our franchisees see that it’s driving their top line and, from a dollar perspective, adding to their bottom line, they realize there’s a big opportunity there.”
And, as Arp points out, “If you’re not there, your competitors will be.”
Tracy Morin is PMQ’s senior copy editor.