Delivering Yourself? Good Luck Finding Drivers
The labor situation is difficult, and restaurateurs looking to get into the delivery wave themselves have an especially difficult task.
Five-unit Dickey’s Barbecue Pit operator Dean Blinkewitz said they do a lot of delivery between catering, third-party partners and now in a test of self-delivery of small orders. Catering alone amounts to 30% of sales for Blinkewitz and the infrastructure of that sales channel means small orders is a matter of scaling down and making the economics work for those small orders.
By his and Dickey’s math, it takes six to eight deliveries to break even and be as economical as catering. But getting someone to make those deliveries is tricky.
“Just trying to hire people, that’s the biggest challenge,” said Blinkewitz. “Everyone is hiring, and with the expansion of Doordash or Bitesquad, everyone is working with them.”
Finding someone for any position is tricky, Blinkewitz said even the McDonald’s up the street from his Maple Grove, Minnesota, location is paying $15 an hour without any pressure from living-wage activists.
To help, he has company cars for deliveries so drivers don’t have to provide their own vehicle. He said that’s helped find some drivers, but it’s still the hardest position to fill. When he sat down to chat with the Monitor, he was actually out delivering a catering order himself. That’s not a rarity for a hands-on operator, but he and his managers are doing more deliveries than they’d like.
Why is it so hard? Well, anyone who doesn’t mind driving through traffic with the intoxicating smell of barbecue, pizza or other indulgences has a lot of options.
Domino’s addressed the issue directly at the annual ICR conference, where CFO Jeffrey Lawrence had little love for the third-party delivery firms and will continue raising the stakes.
“Drivers are not stupid, if you do it right, you can make two times these [third-party] upstarts. And that matters, you don’t have to tell a driver how that works,” said Lawrence. “It’s a Grand Canon-size gap in the economics, and I think economics will win the day. And I can promise, we’ll invest like hell to maintain that advantage.”
According to self-reported salaries on Glassdoor, it’s not quite a monumental gulf, but it’s significant. Uber Eats, Doordash, Grubhub and Bitesquad drivers earn between $23,000 and $27,000 in their markets. Drivers for Domino’s average $25,000 plus about $7,000 in tips for $32,000 total. By comparison, the average Uber “taxi” driver can earn about $30,700 each year. Also according to Glassdoor, the total average restaurants and bar delivery drivers is a little over $18,000 a year plus $6,500 in tips for $24,500.
It’s easy math for drivers. Third-party offers more flexibility and more money for those who want to work 40 hours a week and big pizza can offer more money, especially cash tips.
Blinkewitz said he’s been talking to those drivers directly about delivering for his restaurants part time, but it can be a tough sell given the gap in wages.
“We work a lot with third parties, we are talking to them to see if they want a part-time job. But they all make really good money, so it’s a tough balance because of what they can get and what we can pay,” said Blinkewitz.
Without raising wages through the nose and destroying margins themselves, it’s hard for the average independent or semi-frequent delivering restaurant to find help since they just can’t make it work without that driver taking on other duties in the back of house. And few people want to be in the kitchen in this employment market.
For now, Blinkewitz is just making due with who he can find instead of raising driver wages and pressuring the bottom line further since he’s not looking to raise prices. He’s also sticking to a 3-mile radius and leaning on third-party drivers to fill in the gaps.
He said the real key has been working with local independent third-party delivery firm Delivery Dudes. For any orders outside the 3-mile radius he just calls on one of their drivers to fulfill the order. He said they’ve been easier to deal with because he can sit down with the owner and negotiate around his blend of internal and third-party delivery.