Pizza franchisee embraces opportunity

Delivery business model combined with an assist from DoorDash, Uber Eats helps keep local Toppers growing during hard times.
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Nathan Leder said his business is a living example of how restaurants in this day and age should seriously consider third-party delivery platforms as a way to enhance food sales.

Leder, owner-operator of Michigan’s only Toppers Pizza franchise, at 947 Wealthy St. SE in Grand Rapids, told the Business Journal this month that his franchise has seen a steady increase in sales since joining the third-party delivery apps Uber Eats and DoorDash about three years and a year-and-a-half ago, respectively.

He said his existing delivery and pickup business model, combined with the growth of sales on third-party platforms, has allowed his restaurant to weather the COVID-19 pandemic better than sit-down restaurants or those that came later to the takeout and delivery format.

About 35% to 50% of his business is still done through Toppers’ delivery drivers, with the rest split between customers’ pickup orders and pickup orders from the third-party platforms.

He said he sets “full menu prices” on the DoorDash and Uber Eats platforms to account for the cut those companies take from the sale price, while still being able to offer deals on his own website to customers who prefer to deal with Toppers directly.

Leder said he believes this structure will allow him to continue running his own delivery and pickup business while still benefiting from the apps.

“If you go to my website, you get other deals, so for example, you could get two house pizzas for $25, and that includes delivery. Whereas, if you do that through Uber Eats or DoorDash, that’s going to be $44 plus whatever delivery adds on that,” he said.

“They get their cut, and I still end up ahead in the game, because with my specials, say the $20 pizza is $10 if you buy two of them, so you’re spending $20 instead of $40. Whereas with DoorDash (and Uber Eats), you have to spend that $40 for two pizzas. So even if I’m only getting $30 (out of the third-party sales), I end up ahead of the game.”

To participate with the third-party delivery platforms, Leder simply had to sign up and upload his menus, and included with his activation fees, he received a tablet for Uber Eats orders and a tablet for DoorDash orders.

Commission fees for each of the third-party platforms vary and have been reported at up to 30% by some media outlets.

However, Leder said he believes it’s still a net gain for him to participate in the platforms, because he is pulling in new customers who might not have ordered from his restaurant otherwise, especially for millennials and members of Generation Z who are used to quick and easy ordering at the touch of a screen.

“I don’t know why, in today’s market, any restaurant or bar — anybody that makes food — would not choose to partner with these guys because of how sales are driven toward those platforms because of today’s younger generation,” he said.

Leder conceded third-party delivery platforms may not be a benefit to smaller, “mom-and-pop” restaurants that are struggling or even needed by big chains like Domino’s that have such powerful brand recognition and market saturation. But it does benefit smaller franchises, like Toppers, which is based in Wisconsin and has independently owned locations mainly concentrated in the Midwest.

“For me, the third-party aggregator has been a boost to my sales from day one because a segment of the market was moving that way already, and so we just capitalized on moving our sales that way,” he said.

Leder sees the apps becoming more user-friendly for both restaurants and customers over time, and he said it will be interesting to see what consolidation of these platforms will continue to happen in the future, given the $7.3 billion acquisition of GrubHub by European food delivery company Just Eat Takeaway in June.

According to a June 10 report from NBC News, the deal came after talks of a merger between GrubHub and Uber fell apart due to fears over regulatory scrutiny in accordance with U.S. laws limiting monopolies.

Whether one platform rises to dominance or not, Leder said he is enjoying his current opportunities of keeping customers happy across multiple ordering platforms while generating extra sales.

“We were made for this,” he said.

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