If the last year was was all about restaurants realizing they must do delivery, the next 12 months will be about how they’re doing it, and this question in particular: Do you go with a third-party service à la Uber Eats, or go it alone?
Those in favor of third-party delivery cite increased visibility, lower costs (you don’t have to hire your own driver fleet), and fewer technical responsibilities. Others say they will never use it because of the lack of control over service and brand integrity that happens when one signs on with a third-party service.
Over the phone last week, ShiftPixy cofounder and CEO Scott Absher seemed to agree with the latter argument: “How could a brand that has spent maybe billions of dollars over decades or generations to curate their brand suddenly surrender that brand and their customer experience and data to a kid in a red golf shirt and cap?” he asks.
He went into detail with me about how a restaurant’s choices no longer have to be the kid in the golf shirt or no delivery program at all. There’s a new middle ground afoot, and ShiftPixy is helping to establish it.
The Irvine, CA-based company makes a software stack for restaurants that was originally designed to help businesses combat high employee turnover. According to demos shared by ShiftPixy, when a restaurant signs up with the company, they are given access to a network of workers, called “Shifters.” The ShiftPixy app uses AI to rigorously onboard these Shifters, who undergo the same vetting any job candidate would, including background checks and providing proof of citizenship, driving records, and other details. Once approved, these Shifters become W-2 employees not of the restaurant but of ShiftPixy. When the restaurant needs to fill a shift, they can notify their network of nearby Shifters, who pick up work in much the same way Uber drivers pick up people to drive to the airport.
But Absher, who helped found the company in 2015, says ShiftPixy quickly became acquainted with what he calls the “dark side” of third-party food delivery: incorrect food orders, cold or poor-quality food, orders never arriving, and angry customers galore, to name a few. More importantly, users were getting frustrated with the brands themselves, though none of the ordering or fulfillment took place within a restaurant chain’s ecosystem.
“All of that anger was rolling back on those multi-unit operators,” he says, referring largely to national chains. But, he adds, these chains, “didn’t even know when a customer [was] angry so they could fix it.”
So ShiftPixy built a delivery component for its technology. For restaurants that use it, the ShiftPixy architecture works behind the scenes of a restaurant’s consumer-facing app to notify drivers of potential orders. This isn’t terribly different from the way any other third party operates the last mile of food delivery. It’s still a kid in a golf shirt picking your food up and dropping it at the door.
What is different is the slew of potential benefits restaurants — larger chains and their franchisees in particular — could reap from this arrangement. Through the deal they set with ShiftPixy, they’re not paying a fee on each and every delivery transaction made on a given day the way they would with Grubhub or Uber Eats. Most big-brand franchisees are locked into certain pricing structures and policies — having to choose a specific food distributor, for example — they can’t just dump to offset the cost of those fees. So a system that does away with them entirely could mean these restaurant operators reap the benefits of delivery without incurring the financial setbacks of working with traditional third-party services.
And while restaurants still can’t control what happens to the food when the driver picks it up, they can at least control the brand, and be aware of potential issues. When a restaurant uses ShiftPixy, customers don’t leave the brand ecosystem to order and pay for their meal, or to leave feedback or contact customer service. It all happens within the restaurant’s own mobile app, with ShiftPixy in the background, powering the last-mile logistics aspect. This, Absher reasons, could go a long way towards helping brands with their image. “The issue is brand integrity and the customer experience. As soon as that order goes out the door you’ve surrendered your customer experience,” he says.
This is a larger trend we’ll start to hear more about as delivery becomes, pardon the pun, baked into daily restaurant operations and more companies come to market with solutions aimed at national brands and their franchisees. Olo, whom Absher references during our talk, is another such company looking to help restaurants drive more delivery orders through their own in-house ecosystems and maintain more brand integrity in the process.
Absher can’t yet name these larger brands ShiftPixy is currently in talks with, though Denny’s and Carl’s Junior come up in conversation. He also says the company is “getting a lot of viral introductions” as franchisees jump onboard and encourage other nearby franchisees from the same brand to do likewise.
“When you talk to the operators, that’s where it really gets interesting,” he says. “There are a lot of mixed opinions about third party [delivery]. It’s a very confusing landscape. It looks to me like we’re entering the market at the right time in the midst of confusion. We’re hopefully being a source of help and clarity.”
Very Confusing landscape indeed. every owner and or manager i know is marking up their menu prices as they list them on these services. although the services are great and provide good cash flow, the margins are way too slim and so tight that we are considering moving our online operation to some type of commissary environment. ironically i just received a contract addendum from UBER eats… how do such companies think we can stay in business without making any money?
3.
Payment.
Pricing. You agree that you will not make a Non-Delivery Meal available under this Addendum at a price higher than the amount you are charging in-restaurant for similar meals. You agree that you will not make a Non-Delivery Meal available under this Addendum at a price higher than the amount you are charging for similar meals through any comparable platform for food delivery services (including, but not limited to, GrubHub, Caviar, etc.).