The customer data platform built exclusively for multi-unit restaurants.
Most often, digital transactions from third-party sources exceed a brand's first-party channel. They're a cornerstone of the modern restaurant marketing and operational playbook. So why do so many fail to optimize it?
We spoke with Jared Cohen, COO of Protein Bar & Kitchen, about how they've made third-party delivery a profitable part of their business. He shared 7 years of lessons in just 15 minutes.
We covered:
Here are our key takeaways from the session:
Third-party is a necessary channel for your restaurant, but one you don't own.
As such you need to optimize it relentlessly to make sure it works for your brand, and treat it as a guest and experience that's totally separate from in-store or first-party ordering.
At Protein Bar & Kitchen, that means:
The ship has sailed on trying to convert guests from your third-party platform to your direct ordering channels.
The third-parties are too big - and successful - at driving new guest acquisition, retention, and frequency.
They can spend and optimize their ordering experiences way more than a mid-size (and even many enterprise) brands can do alone. Instead, be open to making the channel work for you. If guests migrate over directly to your owned channel, that's a great bonus. But operate as if they'll stick to the third-party channel and focus on making it a driver of margin points and dollars.
Abhinav Kapur: Could you give folks your background and the brand, a little more insight on Protein Bar, and then walk us through the role that third-party plays for your brand?
Jared Cohen: Absolutely. I’m Jared Cohen, Chief Operating Officer of Protein Bar and Kitchen. We’re a delicious, nutritious, and protein-packed food and beverage brand with 16 locations today, based in Chicago. Our menu offerings include quinoa and rice bowls, salads, protein shakes, and smoothies—basically whatever an active body needs, whether it’s breakfast, lunch, or a snack. Third-party delivery plays a significant role in our strategy for going to market, acquiring customers, and driving them to the Protein Bar and Kitchen brand.
My background wasn’t originally in the restaurant space; it was in management consulting before I took a role with McDonald’s, where I did a lot of work building the global partnership with Uber Eats. My time at McDonald’s gave me a deep understanding of third-party delivery as an emerging sector in the restaurant landscape. When I joined Protein Bar in 2017, we approached it with a clear strategy to make it a permanent part of our business, and we’ve continued to evolve and grow that part of the business strategically over time.
AK: Your footprint has historically been in dense city centers, like in the heart of Chicago. Pre-pandemic, during the pandemic, and now post-pandemic, you’ve been expanding more into the suburbs and other markets. Has the role of third-party delivery shifted as your footprint has become more balanced outside of city centers?
JC: I’d say it hasn’t shifted much in terms of being part of our go-to-market strategy. However, the specific parties we use and the types of orders we see do change based on whether we’re in a dense urban area or a suburban, more residential area. For example, we might see more large group orders in suburban locations and more single orders in urban settings. The types of items people order also differ, whether downtown or in the suburbs. Over the last seven years, especially accelerated by the pandemic, we’ve seen a rapid adoption of delivery platforms, even in suburban areas.
AK: Has that shift changed the profitability of the channel or the overall profit dollars you would expect from it?
JC: In more suburban areas, we’ve seen a gradual increase in ticket size, as we often get orders from families or larger groups. Whether it’s workplace lunches in areas with fewer dining options or individuals ordering for themselves, the average order size tends to be larger in the suburbs. Overall, we manage this aspect of our business to be margin accretive on a dollar basis, even if the percentage margin might be slightly more challenging.
AK: Pricing seems like the easiest lever to make third-party delivery profitable. Is it still typically the case that if a marketplace charges a 20% fee, you raise your prices by the same amount?
JC: That’s the crude and simple way to do it, and it’s probably what you see across most of the marketplace. We’ve certainly evolved from the days when third parties stipulated that restaurants couldn’t raise prices on their platforms. The consumer is willing to pay higher prices for the convenience of delivery, and marketplaces recognize that this is necessary for restaurant operators to make it profitable. Pricing remains the easiest and most direct lever to pull, but there’s more to it than just matching fees with price increases.
AK: Can you give an example of how you’ve optimized menu assortment or merchandising on third-party platforms?
JC: One obvious example is our line of coffee and functional lattes, like keto coffee and matcha latte. We quickly realized that these items wouldn’t provide a great experience in a delivery environment, even though they have high percentage margins. We also exclude some lower-margin items like smaller-sized shakes from third-party platforms. We’ve found that customers ordering on platforms like Uber Eats or DoorDash are fine with getting the larger sizes, which helps us be more profitable.
AK: How have you optimized modifiers on third-party platforms compared to in-store or first-party channels?
JC: We limit the choice of modifiers on third-party platforms and ensure they are appropriately priced. Initially, we allowed a wide range of complimentary modifiers, but we found that customers would overload their orders, which wasn’t sustainable. Now, we offer a limited selection of paid modifiers to maintain a better margin. We also removed the option for customers to leave special requests or notes on third-party platforms, as this often led to requests for additional, unpaid items.
AK: It sounds like you aim to constrain the third-party channel more than your first-party or in-store experiences to optimize the customer experience and profitability.
JC: Absolutely. We want to present a simpler, more controlled experience on third-party platforms. This approach helps us manage profitability while still delivering a quality experience. Additionally, we focus on showcasing our best, most craveable items on these platforms to attract new customers and encourage repeat business.
AK: Is the debate about converting third-party customers to first-party users still relevant, or is the focus now on optimizing the third-party channel?
JC: The idea of converting third-party customers to first-party users is not as feasible as it once seemed. The budgets that DoorDash, Uber Eats, and Grubhub have for attracting and retaining customers far exceed what we can do. We’ve shifted our focus to making the third-party channel work for us on its own terms, optimizing operational procedures, merchandising, pricing, and negotiating commissions.
AK: Thank you so much, Jared. We appreciate you being here and sharing your insights. Thanks to everyone watching, whether live or recorded. Jared, have a great day.
JC: Awesome, thanks. Take care, everybody.
Note: This transcript has been lightly edited for clarity.
The customer data platform built exclusively for multi-unit restaurants.