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A New Alternative to 3rd Party Delivery and Labor Force Hassles?

Patience might be a virtue, but for food operators working in the instant gratification era, it’s not very easy to find. In this new economy built on convenience, food delivery is increasingly becoming an integral part of the restaurant industry as time-poor consumers now habitually turn to technology to seek online ordering and quick delivery options.

Not surprisingly, with a growing appetite for having food delivered at home, the food delivery market is booming. Sales at the five largest delivery providers rose a whopping 55% last year and growth of off-premise food sales in the U.S., are projected to increase by 12% a year, to $76 billion in the next four years.

Stemming from this increasing demand for seamless food delivery, many restaurants have partnered with app-based delivery platforms to remain competitive. Operators are choosing to collaborate with third-party partners like Grubhub and Doordash to facilitate their off-premise services. Although third-parties offer operators a new-found sense of flexibility and convenience that directly managing a delivery workforce does not, they come with a unique set of challenges that are increasingly documented such as the impact on profit margins and the risk to the company’s brand and relationship with the end consumer. 80% of consumers blame a restaurant directly for problems with their delivery orders, even if a third-party brought them their food, with 55% of consumers admitting that a previous experience with a restaurant influences where they dine moving forward.

For some of these reasons there’s a strong argument to keep delivery in-house and maintain full control over the process. Jimmy John’s recently waged war against third-party delivery platforms via its new campaign, promising to never allow outside companies to deliver its sandwiches in order to provide the best experience to its customers stating they are faster, fresher and more consistent at delivery than third-party contenders. While that’s all well and good for bigger chains, having your own in-house delivery is not a financially viable solution for smaller or even independent fast casuals and quick serve outlets.

But, there does seem to be a new solution on the horizon that aims to offer restaurants an alternative to margin hurting third-party operators. Companies like ShiftPixy have created a platform that allows operators and shift workers to gain access to a mobilized contingent workforce. The platform syncs work opportunities for part-time employees to operators utilizing ShiftPixy. Restaurants can even use their own team members to self-deliver allowing both to enjoy the benefits of the gig economy.

Steve Holmes co-founder of ShiftPixy says their solution allows operators to focus on turnover. “Turnover is sapping the very profits out of operators, our operators can self-deliver… they get to preserve their brand, they get to preserve their identity and customer experience, keep their revenue instead of giving it up to a third party.  We’re giving them access to this new paradigm where people are engaging opportunity right at their fingertips.

Not only that but the platform can also handle compliance, management and insurance tasks for operators, further alleviating them of the employment-related responsibilities that caused them to leverage the gig economy in the first place. This creates a best of both worlds’ scenario for operators as well as delivery drivers who can enjoy gig economy-like flexibility. “We’re doing all the validation as far as all of their employee paperwork, we’re doing all the MVRs for people that drive, and we’re taking that whole thing away from the employer. For shift workers, it allows them to piece together multiple part-time jobs. It creates that whole flexibility and independence that they’re seeking.” Holmes.

With third-party rates ranging between 20 and 30%, companies like ShiftPixy look to be an attractive, viable alternative food delivery option over margin hurting third-party operators. And don’t just take our word for it, McDonald’s who currently works with Uber Eats is already involved in early phase testing with ShiftPixy and a few of its’ operators.