6 Things Franchises Need To Stay Successful On Delivery Apps

July 2024

It seems like everybody’s using delivery apps these days — but that presents a new slate of challenges for franchise businesses looking to stay ahead. This blog unpacks 6 of those challenges.

There were a lot of heroes in the pandemic. Health care workers, of course, were a huge one, working long hours at a thankless task during a scary time. Our “essential workers” were another, grinding away at the jobs keeping society moving while many of us stayed home.

But one of the most unexpected heroes to emerge in the pandemic was the humble delivery-app driver. Previously considered a luxury for the busy or the lazy, delivery apps like GrubHub, DoorDash, and InstaCart became a lifeline for businesses and consumers alike.

If you’re not in the food industry, that doesn’t mean there’s no third-party delivery for you: Amazon, Chewy, and other apps allow for the ordering of non-food products. And that’s not including the wide variety of courier services, TaskRabbit, and other delivery jobs that can get things to your front door straight from online.

Now that consumers have gotten a taste for delivery, they’re not going back — and many businesses may find themselves working with a third-party app or company to get their goods to their customers.

For franchise operations, these platforms are a great opportunity to reach a broader audience and boost sales. It’s not a magic bullet, though: it brings with it a bunch of new challenges and considerations if you’re going to come out ahead. Read on:

Commission Fees and Profit Margins

Franchise businesses always have to consider the bottom line, and with third-party apps, there’s a lot to consider. One of the key concerns is the commission fees charged by these platforms.

Third-party apps, after all, want their cut, and it can range from 15% all the way up to 30% per order, depending on the apps involved and other factors. If you’re running a business with narrow margins, like food service, these fees can erode your profit margins quickly. Alternatively, they can push locations to increase their prices to compensate, which could depress sales. You can bifurcate your pricing, charging higher prices on delivery items specifically, and you can also limit available items on the delivery menu to avoid creating orders that actually lose money.

You can also focus on streamlining operations and finding ways to cut costs elsewhere in your store, but chances are you were doing that anyway.

Brand Safety & Customer Experience

One of the biggest concerns with third-party apps is that there’s a portion of the pipeline where things are out of your hands. The benefit of franchised operations is ensuring a consistent brand and customer experience across all locations, but when you’re passing things off to a DoorDash driver, that’s not as easy to guarantee.

Some chains that previously had dedicated delivery staff of their own may have found it was more cost-effective to outsource that responsibility. But dedicated delivery drivers were true employees, trained in-house to provide the best customer-service experience possible.

If an order is late, items are missing or damaged or cold, or the driver has an attitude problem, aspects of that will splash back on your store and brand, even if that’s unfair.

Mitigating these risks can be difficult, but one of the keys is focusing on the things within your control. Having solid quality-control standards in-house, packaging orders in a way that keeps them warm and makes it hard to misplace items, and responding quickly to customer complaints (even the ones that aren’t your fault) can help protect your brand.

Data Ownership & Customer Relationships

Franchise businesses often live and die on their customer data, which helps them streamline their operations and focus on a strategy that works for them. But one of the lesser-known challenges for third-party apps is that those apps often keep the bulk of the customer data for themselves.

That can limit a franchise’s ability to build direct relationships with the customers, because there’s a phone-shaped barrier between the two. But, don’t despair: there are still ways around that.

Franchisees do, for starters, still have the wealth of customer data they’re gathering on which products are top sellers, what nights of the week are busiest, and more. Though the data being gathered will be less direct and personalized, there are still actionable insights to be had.

Additionally, franchises can compensate by implementing loyalty programs on their own apps, even if that app ultimately passes off delivery responsibility to another party like DoorDash. Newsletters, too, are a great way to re-establish a first-party data relationship with your customers.

By leveraging as many analytics tools as you have at your disposal, you can continue to build on your business.

Staying Competitive

As delivery apps take up more market share, the apps are becoming… a little more crowded. Increasing numbers of businesses are making themselves available on third-party apps, which means increased competition and greater difficulty vying for customer attention.

Ultimately, the way things shake out on the apps will shake out similarly to how they shake out in the brick-and-mortar world. Customers looking for speedy delivery will end up selecting nearby locations with faster turnaround times. Customers looking for inexpensive meals will tend towards the same sort of fast-food and fast-casual dining experiences they always have. But that’s not to say there aren’t ways to stand out.

Stores looking to differentiate themselves by offering unique promotional items, combos, or menu items for their delivery customers. Developing packaging that will stay stable in a delivery vehicle without spilling or getting cold is also helpful as competitor deliveries show up messy or late. Training employees to pack bags well to keep things clean is key, as is maintaining consistent quality.

Additionally, there are plenty of marketing strategies that will help (more on that further down), including hyperlocal marketing, social media marketing, paid search advertising, and more. Boosting your brand awareness in your area will boost it on the apps, too.

Lastly, ensuring that delivery-app orders are handled without confusion or mix-ups from your end is crucial. All of this can help your brand stand out on a crowded app, where competitors may be falling short.

Regulatory, Legal Concerns

Naturally, a whole new industry interfacing with your franchise introduces a lot of new red tape that you’ll need to be cognizant of if you want to stay out of trouble. The regulatory landscape around delivery apps is changing all the time. Most of those rules and regulations will be the responsibility of the app itself, but you’ll want to be aware of where their responsibilities end and yours begin.

One key component to keep an eye on is tax considerations. In many jurisdictions, delivery fees are exempt from sales taxes, but this can vary from region to region, and double-checking the math and regulations is key to making sure you don’t overcharge a customer or short-change yourself.

There are additional regulatory concerns, of course — delivery apps are an online business and will therefore be subject to all the standard regulations concerning the collection and storage of customer data. Again, most of that will be the responsibility of the app, but it’s important to keep an eye on.

Lastly, though so-called “gig workers” aren’t employed directly by your franchise, keeping abreast of local laws concerning how these workers are paid and treated will help avoid sudden surprises and price shocks if laws in your area change.

Marketing Your Franchise on Third-Party Apps

With intermediaries affecting your business, it can feel difficult to conceive of ways to market your franchise for app success. But it’s not all that different from before.

We’ve already mentioned loyalty programs, and newsletters as ways to re-forge that direct relationship with the customers. But strategies like increased social media engagement and influencer marketing campaigns can also help boost your name recognition just as they did before.

Another key point is review management. Monitoring and responding to customer feedback around the web helps keep your brand name clean in the eyes of the public, and helps you identify potential issues before they get bigger.

Ultimately, if you’re good at what you do, take pains to take care of your customers, and practice good hyperlocal marketing, you’ll be able to succeed on the apps just like you succeeded out in the world.

Final Thoughts

In conclusion, though the rise in third-party apps do create a variety of new challenges, they’re the sort of challenges you can tackle by trusting the process, reinforcing your fundamentals, and emphasizing your local marketing strategies.

If you’re a franchise looking to step up your hyperlocal marketing game, Balihoo has what you need to stay ahead.. You can get started today by reaching out to our team. With a focus on local marketing, reputation management, CTV advertising and more, Balihoo has tailored solutions built specifically for multi-location businesses.