Considerations for Restaurant Delivery Service

Posted on: July 8, 2020 by RMS Hospitality

Restaurant delivery isn’t a new concept. For decades, people have been phoning their favorite greasy spoon spot for delivery, letting them stay home and gather up the family while their food is prepared and sent to them. No hassle, no problems. But with the spread of COVID-19 throughout the United States, dine-in options have been mostly shut down or only partially available.

However, the response from restaurants in the United States has been to implement or expand delivery and takeout services. Even large chain restaurants, like Applebees, and fast food choices, like Wendy’s, are offering restaurant delivery today, and plan to even after the pandemic slows.

But even without the pandemic fueling the movement to offer delivery, restaurants would have been right to set out plans to offer delivery. The rising trend of restaurant delivery service is here to stay, meaning that restaurant clients should review their strategy around this option and consider liability risks. To make the process easier, and to help determine the right plan of action, here are some important things to consider.

Food Delivery Demand

The delivery model is rising fast. During a March 2020 survey of consumers in the United States, 41.7 percent of respondents stated that if confined to their homes during the coronavirus, they were likely to purchase restaurant food delivery online. What’s more, according to the National Restaurant Association, off-premise dining, including takeout, delivery, and curbside pickup makes up 60% of all restaurant traffic in the U.S.

Demand from Millennials and Gen Z’ers mixed with lockdown measures causing people to stay home is fueling the increase in takeout and delivery options. On top of that, technology has made delivery more accessible and approachable, especially with companies like Postmates and Uber Eats which team with local restaurants to offer delivery.

With this in mind, all signs point to the age we’re living in to be an opportune moment to add this service to a restaurant’s options.

Should Restaurants Use Third-Party Delivery?

As noted above, tech companies like Postmates, GrubHub, and Uber Eats are partnering with local restaurants to offer delivery for a small charge. These companies sell themselves as marketing for a restaurant, but in the end, their clients are not a restaurant’s clients and can even end up placing restaurants in competition with each other.

If a restaurant caters to a specific niche, such as vegetarian, vegan, kosher, gluten, and dairy-free, they can end up creating a loyal customer base that orders from them multiple times. In this case, it would make more sense to have delivery in-house, especially since third-party options do charge fees.

Should Restaurants Hire 1099 Contract Drivers?

This is a question that should be worked out between a restaurant and its restaurant insurance company. Understanding the risks of hiring out contract drivers can create a number of legal issues, especially when it comes to who’s responsible for claims related to accidents or customer complaints.

If a restaurant wants to train its own delivery staff, they should wear a uniform, have company signage on their car and be available moving forward at the restaurant. In this case, the Department of Labor will consider them employees instead of 1099 contractors and will lay taxes against a restaurant. If, however, a restaurant uses a third-party service to assign delivery drops, they may be able to hire them as 1099. The best way to pay them is by delivery drop instead of per hour. Restaurants should ensure they have updated liability coverage that protects them from potential risks.

When a restaurant adds food delivery to its services, they’ve added a new revenue stream but also a new level of risk to manage. The right technology and attention to strategy will help restaurants keep control of their delivery operation and make it profitable long after the pandemic slows.

About RMS Hospitality Group

At RMS Hospitality Group, our expertly crafted policies are written specifically for the hospitality industry. We offer custom-tailored solutions to meet any venue’s specific needs. For more information, contact our knowledgeable experts today at (888) 359-8390.

Posted in: Restaurant Insurance

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