The 3rd-Party SOLUTION

A veteran pizza restaurateur explains how to make third-party delivery work for you in any market.

BY MICHAEL ANDROW

When PMQ first profiled Michael Androw, owner of E&D Pizza Company in Avon, Connecticut, in October 2019, he was offering both dine-in and delivery/carryout to his customers. In late 2020, Androw closed his dining room and converted entirely to a DELCO model using a locally owned third-party delivery service. “I don’t regret making the move, because business is bonkers,” Androw recently told PMQ. “I still have a hard time swallowing the fact that I have a restaurant with no seating, but then the tidal wave of orders starts, and I quickly forget.” Here, Androw offers his candid—and business-savvy— perspective on the benefits of third-party ordering.

By now, pizzeria owners are well aware of the existence of third-party restaurant delivery services. The marketing reach of the big national players in this field grows daily. We now see their ads in print, on TV, and popping up on our mobile devices. The giant question now looms: “Will it work for me?”

This has been quite a hot-button topic. Rival factions on both sides of the debate have gotten very heated and passionate about their arguments, almost to the point of the Hatfields and McCoys. And you know what? They are right! Those who argue both sides of this issue are absolutely correct. Unfortunately, that puts you right back at square one, trying to make sense of all the facts and figures in an effort to determine if third-party delivery is right for your business.

We can spend an eternity discussing the pros and cons of third-party delivery, but you’re already well aware of those facts: You don’t have to pay drivers, insurance, liability, blah blah blah. You know all of that by now. Let’s scratch a bit deeper below the surface and see what may or may not work for you.

Sharing Your Database

Many third-party companies will ask for access to your customer database. This is a slippery slope. The company will use that database to create a beautiful marketing campaign for their delivery service to all of your customers. At the same time, your customers will also see the offerings of your competitors that use the same third-party service. You will need to carefully consider whether you are willing to share that database and if the risk is worth it to you.

Counting the Costs

Next comes the cold hard cash! This is where the discussion can turn contentious. Third-party delivery services will often seek a commission from the restaurant of 20% to 30% of the check’s value. Is it worth it? I once sat in on a presentation where the speaker laid out cost percentages in an attempt to show operators that working with third parties might not be profitable. The speaker gave this example:

Food cost: 30%

Labor cost: 30%

Fixed costs (rent, utilities, etc.): 30%

Now add on a third-party delivery service cost of 30%. Even if you could tighten up costs elsewhere, it would still be difficult to turn a profit, the speaker said. And would that small profit margin, if any, really be worth the marketing value gained from the service?

As the speaker made his case against third-party delivery, more than 100 people in that room nodded their heads “yes,” like churchgoers listening to the pastor’s sermon on Sunday. They had all just been talked out of using third-party delivery services.

But that speaker was 100% right and 100% wrong. How can that be? He was right because that is how we teach our managers to operate and think: Be analytical. Meet the cost benchmarks that are projected. Manage labor, manage food, hit those numbers! Yet he was wrong because, as owners, we know that those numbers can begin to differ quite a bit in our favor when volume increases.

Say you usually make about 50 large pizzas every Tuesday night. Then, for some reason, on one particular Tuesday, everyone in the neighborhood has a hankering for your delicious pies. You end up making 60 large pizzas that night—10 more than usual, a 20% increase! Congratulations! Are you now huddled on the floor in a teary heap next to the oven, crying about how difficult it was to make 10 more pies? Are you complaining about how you needed three more pizza makers on the line that night to handle the crazy volume? Of course not!

And therein lies the point: If a third-party delivery service increases your sales by 20% in one night, it only costs you the 20% to 30% commission and the cost of the food. You did not add more staffing costs. Your rent did not increase that night. Your cost of electricity did not go up that night. You were already paying those costs on a Tuesday. It did not cost you more to add that 20% spike in sales.

And how about those credit card fees that make us all cringe? The third-party service handles the payments, and they are eating that cost for you as well. It certainly is food for thought when we look at it this way.

Choosing the Right Partner

None of us are perfect, and the same holds true when it comes to third-party delivery services. Everyone faces challenges. The big players—national companies like DoorDash and Grubhub—have a marketing budget and reach that is second to none. These companies are becoming household names. Partnering with them and taking advantage of their reach can result in massive exposure for your business—exposure that you would never be able to afford on your own.

In large metropolitan areas, these companies are fantastic. Walk into any busy city in the U.S., and you will see delivery people everywhere bringing hot food to happy customers. It is an absentee management model. The call centers for these third-party providers are not local to every restaurant. That’s fine. They don’t need to be. With so many delivery people and so many consumers, it runs seamlessly. It is a perfect synergy. Everybody wins!

It can be more challenging in suburban or rural areas. This is where the little third-party guys come into play. Geographic distance between restaurants and consumers can be much greater in suburban areas. Naturally, the available workforce of delivery people decreases dramatically as well. As a result, food orders can’t always be delivered in the same expeditious manner as in the bigger cities with a lot more delivery people. For these areas, smaller, locally owned delivery services can have greater success. They know exactly how many drivers they employ and how many restaurants they can adequately service at one time. Their call centers are local, and they can easily handle any issues directly with a restaurant or a customer, thus providing immediate resolution.

But these smaller delivery providers want their pound of flesh, too—and that’s where many restaurateurs balk. The smaller local delivery companies don’t have Grubhub’s huge marketing budget. They are not advertising during the Super Bowl or American Idol. So why should a restaurant give them a commission of 20% to 30%?

This is where you need to come up with a creative solution: Give them the commission. Now partner with them and make them work for you. They’ve got a local, privately owned business just like you. Meet with the owner, hash out a plan and grow your businesses together. Think twice about giving them your customer database. Instead, try contacting everyone in your customer database yourself and let them know about the exciting partnership you’ve formed with XYZ Delivery and how to place an order with them.

The little-guy delivery services may not advertise on prime-time TV, but they will have “boots on the ground”— local salespeople marketing their services. Meet with those salespeople. Find out what their goals are and how you can help them reach those goals. Local salespeople for a delivery company will walk into businesses and offices in your market all day to promote their service. Try incentivizing those people to make sure they are promoting you as well. Consider putting together lunch catering packages that they can sell to local offices and companies. Then make sure you are adequately staffed and prepared to fulfill those catering orders on time.

Doing so will make that salesperson look like gold to the customer. He or she will come back to you again and again. You will become the reliable restaurant for the salesperson, who will continue to promote you and not others.

When you are helping these delivery salespeople to easily make commission dollars, watch how fast your sales will grow at the same time. There is nothing nicer than having $300, $500 or $1,000 in lunch catering sales already on your board before you even open for the day. Both you and the thirdparty delivery salespeople have a common goal. Make that your inspiration to work together, and they will, in effect, be working for you. The results will follow!

There really is no right or wrong answer here. You need to determine exactly what the goals are for your business and which third-party service may or may not fit your objectives. Know your numbers and keep realistic expectations of what the service can provide for you. Then, with careful planning and implementation, you will be able to make third-party delivery service work for you.

Daniel Estrada, CEO and co-founder of 86 Repairs, answers your burning questions on the pros, cons and costs behind maintaining conveyor and deck ovens.

BY TRACY MORIN

Choosing the right oven is one of the biggest decisions a pizzeria owner will make. And there’s no one right answer— it’s a highly personal decision determined by everything from the desired pizza style to the area’s potential labor pool. “It’s important to consider your restaurant’s concept, volume, staffing and business needs to determine which oven will produce the best results for your establishment and maximize profits,” advises Daniel Estrada, CEO and co-founder of Chicagobased 86 Repairs. “But, generally, we see two primary types of ovens among our customers’ assets: conveyor ovens and deck ovens.” Here, Estrada breaks down the operation—and evaluates the possible breakdowns—of these two common types.

PMQ: How do you choose the right oven for a pizzeria operation?

ESTRADA: Conveyor ovens are great for fast-casual restaurants, including takeout, delivery and chains, since they’re consistent and ideal for high volumes. Using convection heat, conveyor ovens can produce about 80 pizzas per hour. While they take up more physical space than a deck oven, they offer a shorter cooking time and require less operating skill than a deck oven. Conveyor ovens can make great New York-style pizzas with light or medium amounts of toppings and thinner crusts.

Deck ovens are well-suited for Chicago- and Sicilian-style pizzas and can handle more toppings and thicker crusts. Deck ovens are more commonly found in full-service restaurants and gourmet pizzerias with longer menus and various topping options.

A conveyor oven has consistent temperature within the oven and is set to cook for a certain amount of time. Deck ovens are hotter in the back than the front—so the pizza maker has to manage where the pizza sits and the cooking time.

Our pizzeria customers are 3.1 times more likely to have a conveyor oven in their kitchen than a deck oven. QSR operations, such as Little Caesars and Papa John’s, are double- or even triple-stacking their conveyor ovens to maximize efficiency and physical space, and to fulfill high-volume orders.

PMQ: What are the most common repair issues for these oven types?

ESTRADA: The most common issue we see with a conveyor oven is no power, which accounts for 19.77% of service requests on the asset. The most common issue we see with a deck oven is not holding temperature, which accounts for 28.57% of service requests.

PMQ: When needed, what are the frequency and average costs for these repairs?

ESTRADA: On average, it costs 40% more to repair a conveyor oven. The average repair cost for a conveyor oven is $775, while the average repair cost for a deck oven is $552. Additionally, parts and service for deck ovens historically cost less than conveyor ovens, because conveyor ovens have many costly parts and more intricate repairs. However, the average mean time to resolution (MTTR) for a deck oven is three times longer than the average MTTR for conveyor oven incidents.

PMQ: Do you have any maintenance tips to help prevent needing more repairs?

ESTRADA: Regular cleaning is the best preventative measure an operator can take for his pizza ovens. Conveyor ovens are designed to be as self-maintained as possible, but operators can extend the lifespan of their equipment and reduce operating costs by keeping them clean. Meanwhile, deck pizza ovens may use stone or stainless steel to help crisp the pizza crust, so they require some special cleaning. Take the following steps for each type.

For conveyor ovens:

Daily Cleaning

1. Remove and wipe down trays, baffles and other removable parts and guards with a soft cloth and noncaustic cleanser. Rinse with warm water and air dry.

2. Clean the conveyor belt with a wire brush.

3. Clear the inside of the oven of all crumbs, clean with a mild detergent, and rinse all areas with warm water afterward.

4. Check to make sure all air intake vents remain clear, clean and free of all debris.

Weekly Cleaning

1. Remove and wipe down trays, baffles and other removable parts and guards with a soft cloth and noncaustic cleanser. Rinse with warm water and air dry.

2. Remove the conveyor belt and impinger fingers. Using a soft cloth, wipe down the revealed surface areas.

3. Apply cleanser to the belt/fingers and let it sit for about 20 minutes. Then brush them down with a soft-bristle brush.

For deck ovens:

1. Burn off food remnants by turning on the oven and raising the heat; do not use water and cleanser.

2. Wipe down the interior chamber with a soft cloth with warm water and a mild dish detergent. (Oven cleaner or caustic materials can damage the interior.)

3. Scrape or brush the deck(s) to remove stuck-on remnants. You can find special long-handle scraping tools or stiff wired brushes to remove burned food. Do not remove the food particles by hand.

Depending on the oven setup, ventilation inspection can be essential. One surprising item to check is specifically for spring-loaded doors. These springs often fail over time and cause the door to drop hard or not stay closed, causing safety and performance issues.

Checking gaskets prevents hot air from escaping and uneven baking. We recommend the “dollar bill” test on all ovens to make sure they have a good seal. Do this by trying to slide a dollar bill between the gasket and the door—if it slides through, replace the gasket.

A solid, well-executed preventative maintenance plan can yield up to 20% lower operating costs over the life of a longterm asset like these ovens. And an oven being down one night might mean missing weekend sales by 50% or more.

PMQ: Has COVID-19 impacted the availability of oven parts or slowed down the repair process at all?

ESTRADA: We are still seeing the effects of parts shortages across every industry segment and every market we operate in. Parts that used to take days now take weeks, because suppliers can’t provide materials to manufacturers, and manufacturers can’t provide equipment to customers.

The lack of labor exacerbates this supply shortage. Not only a big issue with distribution. Without enough drivers, logistics are a nightmare.

As with any larger piece of equipment, there are many structural components of pizza ovens and, therefore, many things that can go wrong. And, to avoid voiding the warranty, parts must be replaced by manufacturer-authorized vendors with the correct part for the unit, which can extend wait times and force customers to refuse alternate readily available vendors or parts. This can be especially challenging when a full-service operation has only one pizza oven to work with.

PMQ: Do you have any final thoughts on ovens that pizzeria owners might find useful?

ESTRADA: Conveyor ovens have more parts, which is why they are generally more expensive to fix. On the other hand, deck ovens require someone experienced to monitor and operate them in order to achieve consistent quality, whereas conveyor ovens require less skill and less monitoring. Choose your oven wisely!