Why aren’t there more local delivery guys? Restaurants discover the challenges of making it work in-house.
Customers and restaurants have to fork over more money to third-party apps. So why isn't in-house delivery more popular?
Think back to ordering in on a Friday night circa 1998: You rifled through the junk drawer, pushing aside catalogs, bills, and birthday candles. You plucked out your local pizza shop’s trifold menu. An hour and a half later, a familiar delivery guy — the one you saw every Friday — showed up, raggedy insulated bag in hand.
Seems forever ago, but Harry Kauffman remembers it well. He was a driver for Frank’s Pizza in Elkins Park from 1995 to 2003, making 70 or so deliveries a day for the mom-and-pop shop. He went through five cars.
“I would work doubles,” said Kauffman, “so I’d just hustle.” He’d arrive at 10 a.m. and fold pizza boxes, clean the fryer, and stock sodas until the lunch rush. After it ended, he’d make dough until dinnertime hit. From 4 to 10 p.m., it was “nonstop action.”
All the mechanisms were old-school: Orders were taken over the phone, tickets were handwritten, and Kauffman planned out his route on a “big-ass map” tacked up in the back.
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Technology has transformed delivery since then. Customers need not consult a paper menu, dial a number, or speak to another human to summon food to their doorsteps. Sleek ordering systems, databases, and tracking ease the burden on restaurants. And the rise of third-party delivery services means the hassle can be outsourced entirely.
The pandemic has made delivery more popular than ever, spreading it to eateries of all stripes: corner bars and delis, neighborhood bistros, even fine-dining destinations. But as the service expands, more restaurants are discovering it’s not so simple to make delivery work.
The local delivery guy persists
Third-party delivery services have been gaining ground around Philadelphia since 2014, when Postmates and Caviar launched here. Grubhub came in 2016. DoorDash and UberEats showed up in 2017. And Philly’s homegrown third-party service, Black and Mobile, started in 2019.
Despite all that, the local pizza delivery guy has never gone extinct. Take Josiah Schlatter, one of five active drivers for Rustica, a pizza shop in Northern Liberties. He’s driven for various restaurants — Berwyn’s Neopolitan Deli, Kensington’s Four Sons Pizzeria, Pete’s Famous Pizza in Center City — as well as Uber.
At Rustica, where he’s been for three years, Schlatter knows coworkers and customers. He characterizes his workplace as caring and democratic. “We have a good time. We love each other,” he said.
When you’re working for what essentially feels like an app, he said, that camaraderie vanishes. “You’re a lone soldier.”
Rustica runs all deliveries in-house. In Schlatter’s view, third-party services hurt him, the business, and the customer: “I think it’s so overpriced. It’s really ripping off the customer when they could be calling the restaurant straight up and cutting out the middleman, saving a whole bunch of money on both ends.”
The New York Times found customers can pay 7% to 91% more for delivery through an app versus what they’d pay in-store. Why? Some third-party services allow restaurants to mark up prices on their platforms. If customers want to pay the regular rate, they can call the restaurant directly.
But the apps themselves tack on service fees to customers, even as they collect commissions from their restaurant partners. One Chicago restaurant consultant made headlines in May when he posted a client’s monthly invoice from Grubhub: Out of $1,042.63 customers had paid, the restaurateur received $376.54 after various fees and discounts were collected.
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The delivery apps prevail
Some restaurants, however, would not offer delivery if they had to run it in-house.
Pica’s Restaurant, the celebrated Delco pizzeria, has been eat-in and takeout only for most of its nearly 80 years in business. Frank Pica III remembers that his late father, Frank Pica Jr., “always feared the liability reasons and really just wanted to grow the restaurant and banquet business. ... So we always just had pickup.”
But a year ago, the Pica’s sibling-owners — Frank, Lori Pica-Rosario, and Angela Oandasan — decided to partner with DoorDash at their West Chester location. Outsourcing delivery spared them the headache of liability. (Drivers have their own insurance, but delivery-centric restaurants often have umbrella insurance policies.) There was no need to hire drivers, determine a delivery radius, or get a point-of-sale system to collect addresses and phone numbers. There were no worries about its effect on their high-volume output.
In-house delivery “would be a different shift in our business,” said Pica-Rosario. “This was a great way to try it with that third-party assistance. And it’s definitely growing with each month.”
It’s gone well enough that Pica’s plans to implement third-party delivery at its Upper Darby outpost soon.
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Finding a balance
Other mom-and-pop pizza shops have reported net-positive experiences with third-party partnerships in years past, but reception has been mixed among restaurants that are newcomers to takeout, let alone delivery.
That was the case for Standard Tap, which had casually used Caviar pre-pandemic. “It always was a little bit of extra,” said William Reed, who co-owns the Northern Liberties gastropub with Paul Kimport. “We almost considered it advertising.”
Cue coronavirus. Takeout and delivery became Standard Tap’s only revenue stream. “When we started looking at the numbers — they’re terrible,” Reed said. “The cut that they take for delivery, it would be our profit, the whole thing.”
Reed and Kimport learned other bars in their area, Martha and Bottle Bar East, had launched in-house delivery. They bought insulated bags, hired drivers, and did the same.
“I gotta admit,” Reed said, “it hasn’t worked. Trying to get some traction on it with customers is brutal.”
Having Standard Tap employees handle the food from start to finish made for a smoother process, but “the amount of downtime our delivery guy had, and still has, is crazy.” And orders still come in off the apps — even for takeout — despite the surcharge to customers.
“How do you let people know?” Reed asked. “Maybe we should act like pizza shops and start flyering people’s doors.” He added that bombarding social media with promotional posts didn’t always sit right during the pandemic and the Black Lives Matter protests.
“If I had a message for anybody that is looking for delivery, I’d love them to always check with restaurants to see if they have a delivery person,” he said. “And we still do, but it is a labor of love almost at this point.”
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Tiffin owner Munish Narula doesn’t have Reed’s exact problem — Tiffin’s business was about 80% takeout and delivery even pre-pandemic — but he understands it well. In fact, his 10 restaurants run an internal “education campaign,” using postcards and emails to remind customers they can order directly on Tiffin’s app, its site, or by phone.
In 2006, when Narula opened the first Tiffin on Girard Avenue as a web-only, delivery-only restaurant, the Wharton grad and former investment banker calculated that delivering a single order would cost $5.75 at the low end. Volume and efficiency would make it more cost-effective.
Whenever possible, Tiffin drivers (about six per store) work on a hub-and-spoke system: Drivers take four or five orders at a time, all destined for the same geographic area or along the way, “which makes it worthwhile for them and economical for us,” Narula said. It’s modeled after Mumbai’s dabbawala network, which ferries lunch boxes from homes to offices and back again with astounding accuracy.
Narula is one of the area’s most vocal critics of third-party services — Tiffin has class-action lawsuits against Grubhub and Caviar — but his restaurants accept orders from all of them. Once you reach a break-even point in your business, he explains, “margins expand substantially. But if you’re using the service to sustain your business, that’s not possible.”
When Narula heard about Philadelphia’s recent move to cap fees levied by third-party delivery sites to 15% during public health emergencies, he said, “Thank God. About time.”
How to coexist
Like Tiffin, many restaurants work with third-party sites while maintaining their own drivers. If possible, they make deliveries themselves, reducing the commissions they fork over.
Del Rossi’s Cheesesteak Co. is one of those businesses. Owner Nish Patel said that 75% of the Northern Liberties shop’s orders come from third-party sites.
“It’s been a savior, to be honest,” Patel said. “We’re recognized in this area, but if you were to go a little bit south, or a little bit toward Center City, [customers] wouldn’t know who we are.”
Patel took over Del Rossi’s from its original owners in March, but much of the staff has remained, including manager Jen Rhein, a former Del Rossi’s delivery driver herself. Rhein expedites the pace of service on busy nights, when Del Rossi’s gets up to 175 orders. “It is like controlled chaos,” she said.
Rhein orchestrates the flow between the kitchen and as many as nine drivers. The Philly native determines which orders will go with whom, grouping them together not by zip code, but with her knowledge of city streets. “She’s like Google Maps,” Patel said.
When Rhein started working as a driver for Del Rossi’s three years ago, she was intimidated by third-party services. She worried they’d jeopardize her job. But now she thinks they enhance service, especially because many will deliver outside Del Rossi’s 2.5-mile range.
“I think there’s a way to have in-house delivery drivers and third-party, and it can all exist peacefully,” she said.
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Patel agrees. He also owns Saladworks franchises in Newtown, Bucks County, and Mount Laurel. While their business was never delivery-centric, he maintained branded cars for both shops even as he partnered with DoorDash and UberEats. “I’ve always believed in handling our own,” he said.
Rather than hire a dedicated driver, he’d send out one of his existing employees to make deliveries, which had to meet a $30 minimum and be scheduled somewhat in advance.
It’s a potential path forward for small-scale operators considering in-house delivery.
“If you have your regular crew members working there that could potentially benefit from some extra tips — and you could get some extra,” Patel said, “then why not? Why not take advantage of it?”