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Restaurant Delivery in the On-Demand Economy: What Are Your Options?

Headshot of a woman with an office in the background By Alexis Reed October 24, 2017

Categories: Industry Trends Mobile Workforce Vehicle Reimbursement

We’re living in an on-demand world. Today’s consumers can replenish their refrigerators, order dinner, request a ride and even cue up a new movie to immediately watch with just a few clicks. But those goods and services must get from A to Z, forcing companies to decide whether to build out a delivery service, or outsource to an established third-party provider. Each type of solution has its own benefits and potential complications that should be reviewed before you decide which path is correct for your business.

Outsourcing Your Delivery

Outsourcing delivery means that a restaurant or store contracts with a third party on-demand delivery services provider to pick up a dinner order, or groceries, or a new stove and deliver it over what is commonly referred to as “the last mile” – i.e., to the doorstep of the purchasing consumer.

For some businesses, outsourcing delivery is an easy decision – you get the benefits of having goods delivered directly to your customers, without the hassle of either creating your own delivery operation or empowering employees to use their own vehicles to bring goods to customers. In addition to that, you’re able to grow your delivery radius and business presence, keep overhead costs down, reduce talent acquisition costs by plugging into an on-demand network, and manage the ebbs and flows of business (i.e. peak times of delivery vs. slow times). In addition, you don’t have to worry about reimbursing these 1099 workers for all the business expenses they incur on the job.

If you choose to outsource delivery, there are also some potential risks that you’ll have to recognize. Outsourcing to a third party puts your products – and your company’s reputation – in the hands of someone else. When a customer receives goods that are damaged, gets the wrong food order, or has a negative experience with a grumpy delivery driver, those negatives will be attached to your brand – regardless of whether you had anything to do with it or not. You lose control and have to place trust in your outsourcing partner to care about your brand as much as you do. With outsourcers often handling several brands at once, it’s hard to guarantee that they will. It’s important to keep this in mind as you evaluate your options.

There will always be instances where late deliveries occur, and with outsourced delivery, you lose the insight and control to make changes and improvements if there are late deliveries. The only way to guarantee on-time delivery is to write certain requirements into a contract. This is another consideration to factor into your search for an outsourced delivery provider.

Employing Delivery Drivers

The other option for companies is to own their delivery services operation. This could take two forms: if your company requires specialty vehicles and must uphold brand standards, you could set up your own fleet of delivery vehicles; or you could have your employees use their own personal vehicles to deliver goods, offering up the IRS Safe Harbor rate or a personalized rate specific to each employee.

The expense and workforce needed to create and manage a fleet of company-owned vehicles and employees makes this option only sensible for companies that require specialty vehicles. Most companies find themselves leaning toward personal use of vehicles to make deliveries.

It’s important for companies in this situation, however, to remember that delivery drivers are required by state and federal labor laws to be accurately reimbursed for the business use of their personal vehicles. This means gas and general maintenance of the vehicle. Several companies that have not accurately reimbursed employees have found themselves involved in expensive class-action lawsuits.

The benefit of this approach is that you retain control over how your company is perceived. You also set the standard for customer service and how delivery workers interact with customers, keeping the entire process true to your brand. An issue that has been raised for companies using this model has been ensuring that workers are reimbursed fairly and accurately.

Today’s technology solutions, however, have made it easier than ever to reimburse accurately.

Which Option is Right For You?

If your business is a fit for the outsourced delivery model, there are third-party providers available to help you achieve your delivery goals without having to employ drivers. For companies with multiple store locations who want to keep their delivery operations in-house, there’s technology to help you accurately reimburse your drivers, which is becoming increasingly important.

The growing market demand for delivery services has increased awareness around how delivery drivers are being reimbursed for their business mileage. The previous method of reimbursement – giving drivers a few extra dollars to pay for expenses – was considered “better than nothing,” but still falls far short in terms of fair and accurate reimbursement. As a result, there’s more pressure on store owners to implement a labor-compliant, cost-effective mileage reimbursement solution for their delivery drivers.

Businesses that decide to keep delivery in-house need a solution that tracks the true costs and expenses that employees incur and reimburses them that actual amount.

With the Motus Delivery Rates solution, store owners get custom mileage reimbursement rates that cater to the unique needs of the delivery industry. Motus incorporates both fixed costs – constant costs each month, including insurance premiums, license and registration fees, taxes and depreciation; and variable costs – which vary month over month and include gas, oil, vehicle maintenance and tire wear. The rates calculated by Motus reflect real-time costs customized to each store location, giving companies an automated, labor-compliant mileage reimbursement program.

Want to find out how the Motus Delivery Rates solution can help your organization?

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