How Restaurants are Evolving Labor with Third-Party Delivery

How Restaurants are Evolving Labor with Third-Party Delivery
Dew Smith

By Dew Smith

The restaurant industry will look back on 2020 as the spark that changed how it does business. The COVID-19 pandemic left dining rooms empty and accelerated the industry’s shift to third-party delivery services as a major revenue driver. With this shift comes a challenge to labor conventions: how does one properly staff and budget for labor in this new era for dining? We asked hundreds of restaurant professionals to find out.

This report is based on direct feedback from hundreds of restaurant managers, executives, and owners across the United States and Canada. From their real-world experiences and honest feedback, we can supply you with actionable insights and statistics for one of the industry’s biggest elephants: third-party delivery. Here’s a preview of  what you’ll find inside the full report:

DOWNLOAD: How Restaurants are Evolving Labor with Third-Party Delivery in 2021

Key findings from the report

Restaurateurs are making significant changes to their labor structure and business models in the wake of the pandemic. Here are the key findings from [the full report]:

Delivery-related roles being created have grown by 243%. Nearly 900 delivery-related roles have been created in the 9 months since March 2020. This is in comparison to just 254 roles being added in the 9 months prior to March.

The biggest revenue stream during COVID-19 has been outdoor dining. 37% of restaurants report outdoor dining as their biggest revenue driver during COVID-19. Indoor dining is slightly behind (29%), and third-party delivery came in third at 16.5% of revenue.

The share of front of house shifts have dropped 7.6% since March 2020. Before March of 2020, front of house shifts made up 34% of all shifts. Since then respondents reported that number is down to 26.4%

The margins for mid-scale restaurants were just too thin before, and [COVID] kind of broke everything. We’re resetting, and I think that places that are going to thrive in the future are just going to have to reset as well. If to-go is going to become a thing [of the] future, there’s going to be more labor allocated towards the back of the house and the expediting and the logistics of all of that. And if you want the in-house experience at a not-super upscale place, it’s going to be a little more ordering on your phone, and everybody is going to have to get used to that”
— Zack Schwab, Co-Founder, The Snug

A Look at Restaurants & Delivery
Most common revenue streams during COVID-19

  • 37% outdoor dining
  • 29% indoor dining
  • 16.5% third-party delivery
  • 8% takeout
  • 7.4% self-operated delivery
Breakdown of which restaurant types used third-party delivery
The breakdown of restaurants offering delivery by type

2020 gave us delivery and pick-up options galore, as restaurants leaned heavily into these options due to pandemic-related restrictions. Even restaurants who never considered it—full service and fine dining—found themselves offering food to go, meal kits, and delivery as a means to survive. Nearly a third of our respondents total revenue came from third- and first-party delivery and takeout combined. Despite this, on-premise dining took the leads for revenue, with outdoor (37%) leading indoor (29%).

While some restaurants have opted to operate their own delivery and takeout, we found that restaurants are more likely to adopt third-party delivery due to the ease, convenience, and connection it provides to an existing network of diners.

DOWNLOAD: How Restaurants are Evolving Labor with Third-Party Delivery in 2021

The widespread reliance on third-party delivery service has drawn significant attention to their impact on the industry. With high fees, (30% of restaurants experiencing average fees at 30% or higher), a quarter of restaurants had a more negative view of the platforms.
Read more: How to Turn Your FOH Staff into Delivery Drivers

The Future of Restaurant Labor Management

COVID-19 has changed the restaurant space forever making the restaurant industry look far different today than it did a year ago.

DOWNLOAD: How Restaurants are Evolving Labor with Third-Party Delivery in 2021

There’s been a shift away from the standard front and back of house roles to more flexible positions. Before the pandemic, shifts in FOH, BOH, and others (managers, drivers,...) were split fairly evenly. However, the lack of indoor dining and increase in online sales drove a pivot to schedule more flexible positions like managers and delivery drivers.

Types of restaurant shifts scheduled by department in 2020

Hybrid roles outside of the traditional BOH and FOH now make up half of all shifts scheduled. Many restaurants have been forced to lay off or furlough staff, having managers pick up slack.

Labor Cost and Productivity

Over the last year, we have seen in-house dining decline, which leaves restaurants to find alternative ways to increase sales and keep their labor cost down.

Average labor cost percentage for restaurants in 2020

Read More: Can restaurants make delivery efficient? Employing drivers vs. not

The restaurant of the future

The restaurant industry was forced to evolve faster than ever during 2020, which makes us wonder what the restaurant of the future will look like. Based on our report, key findings include the reliance on delivery, the decline of full-service concepts, and non-traditional revenue streams. Get our complete insights on the future of restaurants and labor in 2021 by downloading our full report.

DOWNLOAD: How Restaurants are Evolving Labor with Third-Party Delivery in 2021

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This post was a collaboration between

Dew Smith, Josh Margles

  • Dew Smith

    Dew Smith

    Hey! I'm Dew, the former Brand Strategist. I cultivated 7shifts' social and content garden, and I looked for ways to grow our network of restaurateurs, local talent, and tech companies.

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    Dew Smith
  • Josh Margles

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