May 22, 2019 | Publications

Third-Party Delivery Services: Navigating the Ever Changing Waters

Recent estimates place the total value of the food delivery industry in the range of $210 billion – an opportunity that has not gone unnoticed by entrepreneurs and investors, resulting in a tremendous amount of growth for companies that offer food delivery services.  But in a sea of investment and development, the question remains – how does changing market for food delivery affect restaurants?

The benefits may include greater visibility to consumers, incremental sales, new customers, available tracking and analytic data, and reduced stress on restaurant resources.  The challenges may include a high cost to participate, the loss of control over how the food is handled, and the loss of direct interaction between the restaurant and consumers.  For franchise systems there may be additional challenges, such as difficulties in calculating royalties when using multiple POS systems, ensuring standardized service across the system, and delivery territories that do not align with the protected territory afforded a franchisee by its franchise agreement.

Cheng Cohen recently published a paper with the Food on Demand about some of the benefits, struggles, challenges and costs for restaurants of all sizes, and franchise systems in particular, when working with third-party food delivery services.  Click here to download the paper.

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