Panera is one of those increasingly rare restaurant chains that’s not a pizza company and has still managed to successfully keep its delivery program an entirely in-house operation — until now, that is. Yesterday, the St. Louis, MO-based bakery and sandwich chain announced its first-ever partnerships with third-party delivery services.
Customers will now be able to order Panera goods from DoorDash, Grubhub, and Uber Eats along with the company’s own website and apps. However, these third-party delivery service partnerships are for online ordering only; Panera will still use its own fleet of drivers to handle the actual delivering of the food from restaurant to doorstep.
Panera has dubbed this the “bring your own courier” model, and the approach appears to be about maintaining quality and brand integrity throughout the whole of the delivery process — an issue more and more restaurants, large chains in particular, are now addressing.
Setting aside the ongoing concerns around commission fees a moment, one of the biggest benefits of working with third-party delivery services is that restaurants get easy access to a highly streamlined online ordering platform. Developing an in-house system that holds menus, processes orders and payments, and gives users status updates on their orders is an expensive, time-consuming undertaking. Third-party delivery services handle this work for the restaurant, and also offer the increasingly popular option of direct-to-POS integration with restaurant systems, where an order from, say, Grubhub, goes directly to the main POS system.
But restaurants get little in the way of branding when they’re listed on Grubhub et al. or, for that matter, where they show up in terms of users’ searches. And they get pretty much zero control over the quality of food and customer service once a meal leaves the restaurant in the hands of a third-party driver. For example, they can’t control that one out of four drivers apparently sample your food en route to your home. Sure, the risk of that or of an order being late/cold/incorrect doesn’t disappear when you bring delivery in house, but at least Panera has more control over who to hold accountable in those situations.
Continuing to use its own drivers as well as maintain an in-house ordering program also lets Panera exercise more control over branding and customer service while still giving the company access to a wider user base via Grubhub, Uber Eats, and DoorDash.
The nature of this new partnership also makes Panera an early adopter to what could become a major trend among national restaurant chains. Just yesterday, we looked at Toast’s “Restaurant Success in 2019” report, which suggests that having both a robust in-house online order system and a presence with all major third-party delivery platforms “could be a boon to your business” when it comes to major multi-unit chains.
Most brands, however, can’t or don’t want to incur the economic burden of maintaining a driver fleet, which is one reason we’re also seeing reverse versions of this hybrid strategy. Denver, CO fast-casual chain Teriyaki Madness is a good example: the company still works with third-party delivery services, using their drivers, but is trying to originate more orders through its own in-house app. A company called Shift-Pixy, meanwhile, acts as a middleman between restaurant and delivery service and provides its own drivers to drop the food.
Those approaches may help restaurants with brand credibility, but Panera’s approach is so far the only major one to both take advantage of the continued popularity of third-party delivery while still owning that last mile. “We believe this partnership model helps differentiate us from our competitors and will take our already successful delivery business to new heights,” Dan Wegiel, Panera’s EVP Chief Growth and Strategy Officer said in a statement.
This hybrid approach could indeed prove fruitful for Panera, though it would have to be yielding some pretty big returns to influence other chains to go as far as investing in their own drivers in order to adopt similar strategies.
Regardless of whether that happens, the industry will see plenty more of these hybrid approaches to delivery along with many more questions who should really own that last mile.
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