Delivery Showdown: Comparing Third-Party Delivery Services

According to the National Restaurant Association, 53% of customers have used a third-party delivery app at least once a month and 60% have used a third-party app at least once.¹ With ongoing uncertainty about trajectory of COVID-19, now’s the time to implement takeout and delivery options with your restaurants if you haven’t already.

The first decision you want to make when implementing a new takeout and delivery system, or even upgrading your current one, is whether you want to do it in-house or work with a third-party app. We break down some of the things to ask yourself in this blog post - Should you use a third party delivery service or keep it in-house?. Maybe you’ve already made the decision to work with third-party apps and now you want to decide which one. That’s what this post is all about. There are several things you want to take into consideration.

Note: This is current data as of publication but may change over time. Reach out to these companies directly for their most up-to-date pricing and information.

Third-party delivery app costs and fees
Ultimately what you pay for their services will come down to how you negotiate with the delivery providers. Be prepared with stats about your customer base and brand awareness. If you can show them that you can drive traffic to them on your own, you may be able to negotiate a lower rate. Plus, because of COVID, several cities have capped the commissions delivery companies can charge to 10%-15%, so check to see if your city has a similar regulation in place.

Here’s a quick look at how costs and fees across the leading third-party apps compare.

Grubhub
Set-up cost/fee: No registration fee, free tablet
Commission rate: 15-25%
Additional fees/marketing: GrubHub offers 2 services. You can use them as just an online ordering platform and you take care of the takeout or delivery logistics, or you can use them as a full delivery service. The following fees are for if you are using them as a delivery service:

• Processing/fraud: 3%
• Marketing: 20%+
• Delivery fee: 10%

Average amount spent per customer: $31
Acquisitions: In 2013 they acquired Seamless and in June the European company Just Eat Takeaway announced they’re in the process of acquiring Grubhub.

UberEats
Set-up cost/fee: One-time activation fee with welcome kit, tablet, restaurant software, professional photo shoot
Commission rate: 15-30%
Additional fees/marketing: 15% marketplace fee if you have your own delivery team but up to 30% delivery fee
Average amount spent per customer: $27
Acquisitions: In the process of acquiring Postmates

Postmates
Set-up cost/fee: No registration fee
Commission rate: 15-30%
Additional fees/marketing: Various additional marketing commissions, as well as flat fees for other promotions
Average amount spent per customer: $31
Acquisitions: As of July, they are in the process of being acquired by Uber Eats

DoorDash
Set-up cost/fee: 30-day free trial (current promotion). Free professional photo shoot
Commission rate: around 30%
Additional fees/marketing: Extra marketing (about 10%), tablet subscription $15/week
Average amount spent per customer: $32
Acquisitions: Acquired Caviar in August 2019

Caviar
Set-up cost/fee: Unknown
Commission rate: 15-30%
Additional fees/marketing: Unknown
Average amount spent per customer: $42
Acquisitions: Acquired by DoorDash in August 2019

Market share: Who’s the biggest food delivery company?
The popularity of these apps is still on the rise and it’s important for you as a restaurant operator to know who is dominating the field. In just the last two years, the industry has been consolidating through mergers and acquisitions, reducing the number of players and changing the landscape in local markets overnight. The best thing you can do is to stay up to date as you decide whom to partner with and negotiate contracts.

Graph from: https://secondmeasure.com/datapoints/food-delivery-services-grubhub-uber-eats-doordash-postmates/

Geographic popularity: Who rules your area
Though DoorDash leads in market share nationwide, different apps are more popular in certain cities. When you’re just starting out, make sure you research which apps are the most popular in your local market so that customers will be able to find you.

Graph from: https://secondmeasure.com/datapoints/food-delivery-services-grubhub-uber-eats-doordash-postmates/

Weighing your options for delivery
There is no “one-size-fits-all” app in the marketplace, and it can be daunting to commit to one. As you consider your options, make sure you do your research, including talking with other restaurant owners in your area who may have experience with different apps. Whether you choose one app to test the waters or decide to be on all of them, make sure you’re prepared. It’s tempting to want to get on as many apps as possible as quickly as possible. But staggering implementation gives you valuable time to train staff, get used to each platform, and to ramp up production.

¹ National Restaurant Association and Technomic Inc., Harnessing Technology to Drive Off-Premises Sales, 2019
² https://secondmeasure.com/datapoints/food-delivery-services-grubhub-uber-eats-doordash-postmates/