Are you confused about whether to use a third-party platform for online deliveries or to build an in-house ordering system? Read this article on third-party vs in-house online food ordering systems to choose the best option for your business.
With the penetration of digitization in the restaurant industry, terms like “online delivery”, “online food ordering”, “on-demand delivery” etc. have become very popular. To keep pace with the growing demand for online food deliveries among customers, restaurant owners have the choice to either rely on third-party platforms or build their in-house food delivery system. However, knowing both sides in detail and how they are going to affect your business is important.
Third-party food delivery platforms like Uber Eats, Lieferando, etc. are well-known names in this industry as they have helped established restaurants drastically improve their sales but what about the local, small, or medium-sized restaurants?
Third-party solutions often eat up a major share of the profits of small and medium-sized restaurants and such platforms have other disadvantages as well.
In this article, you will learn everything about these two popular ways of selling food online in detail which help you make the right decision for your restaurant.
What is an online food ordering system?
An online food ordering system allows restaurant owners to sell their food items online, accept orders for them and initiate door-step deliveries. This not only helps restaurant owners manage orders efficiently but also gives customers the comfort of enjoying the food from their favorite restaurants at their homes.
The online food delivery market is expected to witness an annual growth rate of 9.04% between CAGR 2024-2029 leading to a market volume of US$1.85tn by 2029.
Let us give you a clear idea of the concepts of third-party and native online food ordering systems.
What is a Third-party delivery System?
A third-party food delivery system refers to a method of selling food items through a third-party website or app. Under this method, restaurant owners rely on a third-party website or app to list and sell their food items. Customers can place their orders from these sites and apps.
Such online food delivery platforms usually charge 15 to 30% per order as commission. You may need to pay additional charges for other services.
Example: Wolt, Lieferando, Uber Eats.
Pros and Cons of a Third-party Delivery System
Online delivery systems are very popular nowadays as restaurant owners rely on them to fulfill their customer demand for online ordering and delivery services. However, these platforms have both advantages and disadvantages. Let us find them all in detail:
Pros of a third-party food delivery system
- Minimum upfront cost
You do not have to bear the infrastructural cost with third-party delivery app or websites. It also eliminates the cost of building and maintaining your online food delivery system. - Easy to Setup
It is easy to add third-party delivery services to your restaurant business as it does not take more than a day to start functioning.
Cons of a third-party food delivery system
- High commission fees
The commission fees that third-party delivery apps and websites charge significantly reduce the profit margins of restaurant owners. The fee ranges somewhere between 15% to 30% per order. - Lack of customer data
As the entire process of ordering is conducted through third-party apps or websites, restaurant owners do not get access to their customer data which creates an obstacle in the way of building effective promotional strategies. In also makes it difficult for restaurant owners to offer personalized menus to their customers. - Bad reviews
Sometimes as a restaurant owner, you probably need to deal with customer complaints related to ordering or delivery services that you are not associated with. This ultimately leads to bad reviews for your business which hampers your brand reputation. - Lack of control
Online food ordering and delivery services are one of them most crucial aspects of your restaurant. When you depend on a different platform for that, it adversely affects your business as you do not have any control over it as you can not look after your customer experience or the overall delivery process. - No customer loyalty
It really does not matter how delicious your food is, it becomes difficult to gain customer loyalty when you use a third-party ordering system as you do not have any direct interaction with the customers. So even if they are satisfied with the food and delivery system, their loyalty will remain with the platform they order from. - No staff control
As the ordering and delivery both are initiated by the third-party team restaurant owners do not have control over the staff to discuss any issues that their customers might be facing regarding the delivery.
Who is a third-party delivery solution good for?
Third-party delivery solutions can be a good option for some restaurants but before finalizing your decision you need to check if your restaurant needs it or not.
A food aggregator app or a third-party ordering platform is good for the following restaurants:
- Big restaurants or restaurant chains.
- Restaurants that keep high-profit margins on each order.
- Eateries with a huge order flow per day.
What is an in-house online food delivery system?
An in-house or native online food ordering or delivery system is the platform that enables restaurant owners to accept online orders and initiate deliveries directly from their own brand websites. It offers the entire control of the whole process to the restaurant owner.
Pros and Cons of an in-house food delivery system
When it comes to an in-house food delivery system, a restaurant owner enjoys multiple benefits. However, it also has a few disadvantages. Lets find them out.
Pros of an in-house food delivery system
- Better brand exposure
When customers visit your website to place order for your restaurant’s food, they get automatically exposed to your brand. This ultimately increases your brand exposure. - Complete control over staff
When you have your own online delivery system, it becomes easier for you to fully utilize your staff in the most efficient way. For example during the festive season and rush hours, you can discuss with your delivery staff how to plan and manage the deliveries without affecting or delaying orders. - Direct interaction with the customer
When customers place orders through your restaurant website, you get a direct opportunity to interact with them which helps you get closer to them by knowing their tastes and preferences. You also get access to the items they purchase regularly and other crucial facts that are necessary to offer a personalized dining experience to them. - Zero commission fees
An in-house ordering system eliminates the need for third-party food delivery platforms which means zero commission fees. This is one of the biggest advantages of having an in-house food delivery system. It ensures that your profit will be completely yours. - Better customer service
Offering customers the convenience of accessing your menu easily and placing orders improves user experience to a great extent. In addition to that, you can also serve your customers better with well-trained staff, quality food, easy payment options, and overall digitization. - Easily accessible digital menu
With a dedicated online ordering system, you can offer your customers a clear display of your food menu with proper details of each item mentioned over there. - Complete control over delivery
In an in-house food delivery system, you get complete control of your food delivery process including staff, timing, delivery status, and more. - Customization
Having a native food ordering system allows you to customize it as per your business requirements which is a significant advantage of the system.
Cons of an in-house online ordering system
- Staff training
Staff training is one of the major responsibilities that you need to look after when you have a dedicated food ordering system.
Worried about staff training? Get a detailed guide on the same in our previous article “How to train restaurant staff members”. - Increased workload
With an endless number of advantages of a native delivery system comes a lot of responsibilities like handling bulk orders, initiating deliveries, managing delivery status, customer data and more. - Higher upfront cost
You need to bear the cost of the right software, hardware, and IT professionals to create an in-house ordering system.
However, you can easily avoid this, with affordable restaurant management software like FoodMato.
Who is an in-house delivery app or solution good for?
Having an in-house delivery app is beneficial for restaurants of all sizes. However, it is specifically advantageous for restaurants that want to expand their reach.
An in-house delivery app or delivery system is mostly suitable for:
- Small and medium-sized restaurants are looking to grow.
- Restaurants that want to know and get closer to their customers.
- Small eateries like ghost kitchens, meal delivery businesses and more.
Third-party Vs in-house food ordering system: Everything you need to know
When it comes to third-party Vs in-house food delivery systems, the in-house option definitely wins the battle due to its endless number of benefits including the cost. The following chart shows an unbiased comparison between third-party delivery and native online ordering solutions for restaurants.
Besides the cost and commission part, one of the biggest disadvantages of using a third-party solution for online food delivery services is that the restaurant owner do not get access to the customer data or order history which are crucial to offer a personalized dining experience to customers.
A native online ordering system completely removes the problem as the restaurant owner gets the entire control of his or her online orders along with the customer data.
We hope that the comparison chart will help you understand the advantages of having an in-house ordering system. Now let us share an example with you to help you get a clear picture of the matter. But before that lets find out how to create an in-house food delivery system.
How to create an in-house food ordering system?
With the right restaurant management software, it is easy to create a dedicated food ordering system on your website. We recommend FoodMato for the same. It is a WordPress-based restaurant management solution that covers everything starting from building a website, online ordering, delivery and menu management to restaurant marketing all these services are available at an affordable price. Restaurant owners have the option to choose specific services as per their needs. All that they need to do is to contact the sales team and they will guide them.
Most restaurant owners are afraid of handling technical aspects of managing a restaurant online for which FoodMato has found a complete solution in which restaurant owners don’t need to do anything as the team itself handles all the technicalities of the online restaurant activities.
Why FoodMato is better than third-party food
Here are the reasons that show switching to FoodMato with your own food ordering platform is way better than relying on platforms like Wolt, Uber Eats and Lieferando:
1. Avoid high commission fees: all the above-mentioned platforms take a high amount of commissions from restaurant owners which is zero with FoodMato. With only service charges, you get all the facilities of managing a restaurant online.
Example: FoodMato’s client Hari Moksh, which is a well-known Indian vegetarian restaurant in Berlin has saved a significant amount of its expenditure by removing dependence on popular platforms including Wolt, Lieferando, and Uber Eats.
Here are the details of what Hari Moksh has achieved with the collaboration with FoodMato:
Click here to get all the details.
2. Complete control: Starting from online orders to customer data management, now the overall control of the Hari Moksh restaurant remains on their hands.
3. User-friendly: No technical skills are required with FoodMato because the developer’s team takes care of everything right from building a website to marketing your restaurant.
4. Affordable: No commissions required.
5. Customization: Paid customization can also be availed in case of need.
Using FoodMato is beneficial in every way as it is affordable, gives you overall control of your ordering system, and automates restaurant marketing at the same place.
Frequently asked questions
1. What is the difference between first-party and third-party food ordering systems?
The main difference between first-party and third-party food delivery platforms is that first-party food delivery platforms allow restaurant owners to accept and handle orders directly from their own websites or applications whereas third-party platforms allow restaurant owners to sell their food items on their websites or apps in exchange for commission.
2. Why is it better to have an in-house food delivery system?
In-house or native food delivery systems are beneficial in many ways:
- Boosts restaurant exposure.
- Increases profit level by removing the burden of third-party commission.
- Offers access to customer data.
- Gives full control of the ordering system of the restaurant owners.
- Better online visibility and improved traffic flow with Search Engine Optimization.
3. Describe third-party vs online in-house food ordering system cost.
Third-party plugins charge a big amount as commission from restaurant owners whereas in-house ordering system does not have any such expenses. In simple words, the in-house delivery system is a more cost-effective method of selling food online for restaurant owners than relying on third parties for the same.
Wrapping up
From the detailed comparison between third-party delivery platforms and in-house ordering systems, it is clear that the former is a better option for restaurant owners. Whether your restaurant is small or big, it is always beneficial to have your own food ordering system on your website.
If you want to create your own ordering system then you can always trust a solution like FoodMato that offers an all-in-one solution to your restaurant business online.
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