Economics of Delivery & The Value of a High Percentage of Direct Orders | Andrew Nakkache

Restaurant Rocket Fuel

Summary
Andrew Nikash, co-founder and CEO of FIRST, discusses the challenges and opportunities of third-party delivery for restaurants. He highlights the importance of restaurants maintaining a direct relationship with their customers and offers strategies to reduce the cost of delivery while maximizing profits. Andrew emphasizes the need for restaurants to understand their unit economics and create a separate delivery profit and loss statement. He also suggests using branded tracking links and personalized direct mail to convert third-party orders into first-party orders. Andrew concludes by emphasizing the value of having a high percentage of direct orders and protecting long-term risks.
Keywords
third-party delivery, restaurants, direct relationship, cost of delivery, profits, unit economics, delivery profit and loss statement, branded tracking links, personalized direct mail, first-party orders, direct orders
Takeaways
Restaurants should strive to maintain a direct relationship with their customers and have access to their contact information.
Understanding the unit economics of delivery is crucial for restaurants to reduce costs and maximize profits.
Strategies such as using branded tracking links and personalized direct mail can help convert third-party orders into first-party orders.
Having a high percentage of direct orders is an important metric for restaurants in the long term.
Sound Bites
"How is this even a question? I couldn't imagine running a business where I would say, okay, well, my revenue is up, but I don't even know who my customers are."
"You have to be thinking about how do I make my marketing profitable? How do I increase the money in the bank account, even without having to increase the volume that you do as a restaurant?"
"They use that tracking link as a way to say to the customers, hey, look, give us feedback and we'll give you $5 off your next order."
Chapters
00:00 - Introduction and Background
03:00 - The Role of Third-Party Delivery in Restaurant Marketing
08:35 - The Challenges of Order Cannibalization
12:08 - Striking a Balance Between Third-Party and First-Party Orders
22:42 - Transitioning Third-Party Orders into First-Party Orders
25:46 - The Importance of Direct Orders