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3 brand leaders on the good, the bad, the ugly of third-party delivery

Love it or hate it, third-party delivery is likely here to stay. At this week's Restaurant Franchising & Innovation Summit in Louisville, three restaurant leaders discussed their views on such services, along with their costs, pitfalls and points for improved restaurant profitability.

Alex Canter of Canter's Deli, Kyle Gordon of Dillas Quesadillas, Kyle Noonan of Mutt's Canine Cantina and Mike Mirkil of Kitchen United discuss third party delivery.

March 15, 2019 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

At this week's Restaurant Franchising & Innovation Summit iin Louisville, a panel of brand executives took on the topic of how technology and other tools is helping to make the restaurant business more approachable to entrepreneurs and customers alike. In the hourlong session, headlined, "Democratizing dining: How the changing restaurant landscape opens doors and cuts costs," executives from Mutt's Canine Cantina, Grilled Cheese Heaven and Dillas Quesadillas took on topics like third-party delivery, technology and the use of commissary kitchens. 

In fact, Canter's Deli  and its delivery-specific brand, Grilled Cheese Heaven, in Los Angeles, are pursuing third-party delivery aggressively. The company's transition from a traditional deli to one that is quickly adopting new technology was described by Alex Canter, the company's fourth-generation owner.

Alex Canter of Canter's Deli, Kyle Gordon of Dillas Quesadillas, Kyle Noonan of Mutt's Canine Cantina and Mike Mirkil of Kitchen United discuss third-party delivery.

Canter said he has used third-party delivery to establish his deli's delivery-specific brand, Grilled Cheese Heaven, which is supported by a pair of off-site kitchen commissaries. Canter has also created his own software solution, Ordermark, which integrates different third-party ordering services (Uber Eats, DoorDash, Postmates, etc.) in one platform which he has made available to other restaurants. 

Commissary kitchens have allowed Canter's company to deliver online orders with minimal overhead, Canter said. There is no association made between Canter's Deli and Grilled Cheese Heaven, which is a delivery-only brand consisting of food that hold up well in transit. 

"You don't need brand recognition today to launch restaurants," Canter said. 

Third-party delivery expected to grow

Canter believes food delivery services will continue to grow, and he sees it as a good thing since it brings an additional customer base, allows a restaurant to be more efficient and operate from a smaller footprint.

"We're now a consideration for people who are using those apps," he said.

In addition, delivery tickets on average are 60 percent higher than in-store tickets.

One of Canter's two commissary kitchens was profitable from the first month, he said, a feat he said is unheard of in the restaurant business, and that has allowed the company to generate an additional $200,000 a year.

Panelist Kyle Gordon, owner of Shreveport, Louisiana-based Dillas Quesadillas, agreed that online ordering has changed the business for the better in some ways, and it accounts for 80 percent of his business. He said a restaurant no longer has to be located on a main thoroughfare to be noticed.

Dillas Quesadillas, for its part, has expanded its business using pop-up food tents selling one food item with chips at special events, which generates an additional $40,000 to $50,000 in annual revenue, according to Gordon.

Challenges remain

The panelists, including Canter, agreed that third-party delivery still has some challenges. Canter said a number of the company's menu items did not maintain the correct temperature in transit.nHe also acknowledged there were problems with driver performance when the company first began offering third-party delivery.

Dallas/Fort Worth-based Mutt's Canine Cantina, an off-leash dog park and restaurant, stopped using third-party delivery for this reason, founder and owner Kyle Noonan said. Cost —which the panelists said typically range from 20 to 30 percent of the order cost for most third-party delivery services — was one of the issues cited. Gordon said the only way to be profitable using third-party delivery is to have low rent.

Customers have never complained about the food quality of third-party orders, said Gordon, who puts a text number on the bag to encourage customer feedback, but they have complained about order accuracy. Canter agreed cost is an issue with third-party delivery, but he nonetheless believes it is preferable to in-house delivery, due to the difficulty of maintaining good quality delivery drivers.

More choices to consider

Looking to the future, Gordon said he is interested in exploring the commissary option, and he is also looking for associates who will be passionate about the brand. Noonan said restaurants today have a choice of focusing on experience or convenience.

"If you're not in one of those two, you're going to lose," he said.

Mutt's Canine Cantina, which charges a monthly $16.95 membership fee, has opted for the latter. His goal is to have 250,000 members.

Feature photo: iStock

Inset photo: Networld Media Group

About Elliot Maras

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Elliot Maras is the editor of Kiosk Marketplace and Vending Times. He brings three decades covering unattended retail and commercial foodservice.