Food delivery has become an essential service for both restaurants and customers—and today, new hybrid business models for pizza delivery are emerging. Restaurants no longer have to choose between partnering with third-party apps or doing everything on their own. Now, they can get the best of both worlds.
In a recent webinar, A New Way to Work With Third-Party Partners, industry leaders from Alfredo’s Pizza, DoorDash, and Pizza Marketplace sat down (virtually) to discuss today’s restaurant delivery landscape and where it’s headed. Listen and learn from Rob Tarsio (Owner, Alfredo’s Pizza), Zach Heerwagen (Director & GM for New Products, DoorDash), and Cherryh Cansler (VP of Editorial, Pizza Marketplace) in the full session here while you read through the recap below.
A changing delivery landscape
Today, food delivery is becoming the norm. Customers are getting used to staying home and ordering in, and most restaurants see food delivery as a volume driver for their business. 73% of restaurants believe that third-party delivery is good for the restaurant industry, and 3 out of 4 restaurants agree that DoorDash has allowed them to reach new customers. This has even made an impact on dine-in customers, with more than 2 out of 3 restaurants saying they have acquired new dine-in customers through DoorDash.
Reaching customers beyond your radius
However, relying just on third-party partnerships for delivery isn’t the right fit for all businesses. Rob Tarsio, owner of Alfredo’s Pizza in New York City, has been delivering orders using his own fleet since the first day the restaurant opened 22 years ago. He likes using his existing fleet because he has full control over every aspect of the delivery.
“My strategy is to retain a small radius to give the best efficient service and quality of product,” he explains.
Rob keeps deliveries with his own fleet within a two-mile radius, but recently partnered with DoorDash to use Self-Delivery to reach additional customers outside that radius. Rob said of the experience, “We took a chance on DoorDash, and after two weeks we said, ‘Wow.’ We saw a bump in sales and we haven’t looked back since.”
Exploring the benefits of Self-Delivery
What is DoorDash Self-Delivery and why did it have such a positive impact for Alfredo’s Pizza?
“With Self-Delivery, we wanted something that would work for businesses that already had fleets,” Zach explained. A new product for merchants, DoorDash Self-Delivery allows businesses to reach new customers while fulfilling deliveries using their own delivery staff. Restaurants are featured on DoorDash Marketplace, where they’re visible to thousands of hungry customers. In exchange for fulfilling their own deliveries, restaurants get a reduced commission rate and receive all taxes, tips, and delivery fees. Merchants can also set a delivery fee that makes sense for their off-premise operations. The entire process – from order to front door – is easy to manage using a tablet or your current DoorDash-friendly POS system.
Increasing profit margin with hybrid models
In addition to Self-Delivery, Rob takes advantage of distance-based Flexible Fulfillment and partners with Dashers for deliveries outside of his fleet’s radius. Merchants are also able to opt into time-based Flexible Fulfillment, scheduling time outside of peak hours to use Dashers and saving their own staff for the lunch rush (for example). Based on feedback from Rob and his team, the DoorDash team plans to launch a true “toggle” option later this year, which would enable merchants to toggle Self-Delivery on and off as needed, especially since order rushes and staffing needs can be unpredictable.
“Profit margins were tight for our business with traditional third-party partnerships and we were losing customers,” Rob explained. “Self-Delivery offers us the best of both worlds.”
By expanding his delivery radius, Rob is seeing higher profitability margins. His customer base is growing, too, and his order volume is increasing. Curious how a smaller commission rate could work for your business? Calculate your restaurant profit margin.
Creating products for — and with — merchants
According to Zach, Self-Delivery is just one of the ways DoorDash is working to support restaurants.
“The heart of our strategy is to think about how to help the merchant,” he said.
With the launch of the Main Street Strong initiative in May 2020 as a response to the COVID-19 pandemic and its impact on restaurants, DoorDash has looked for innovative ways to unbundle products into the à la carte components that merchants need most.
In addition to Self-Delivery, this initiative led to the launch of DoorDash Storefront, a commission-free ordering platform that helps restaurants drive online sales. Main Street Strong recently expanded with a COVID-19 Restaurant Relief grant program, now totaling $10M in relief for restaurant owners.
For programs like these, getting merchant input is important every step of the way. Zach regularly talks with business owners like Rob and the Restaurant Advisory Council to get feedback on DoorDash products and learn insights on how DoorDash can best support business owners through the “new normal” — and wherever things are headed next.
Looking forward to delivering more sales
Asking Rob what’s next for Alfredo’s Pizza, he responds, “For now, just stay the course and continue to be efficient.” He sees a promising future with these new hybrid delivery models, explaining, “Delivery is here to stay.” It’s safe to say he’s ready for it.
Watch the full discussion
Interested in hearing more from Rob and Zach? Access the full version of the talk here, A New Way to Work With Third-Party Partners to learn more about building your off-premise strategy and explore new hybrid delivery models.
Interested in signing up for Self-Delivery? Get started here.