Decoding recovery ROI analyses: Essential questions to ask to understand the numbers

A Return on Investment (ROI) analysis is about more than just throwing around impressive numbers in today's competitive delivery recovery revenue market. It's about precision, trust, and accuracy. Restaurant operators increasingly rely on ROI analyses to make crucial decisions about their partner for managing delivery disputes. However, not all ROI calculations are created equal, and if you aren't careful, you could be misled. Franchisees must learn to distinguish between:

• Potentially misleading “general” recovery metrics or
• Accurate, granular data that genuinely reflects their business.

By asking critical questions, you can empower yourself to make informed decisions. 

Here are some best practices for accurately deciphering an ROI analysis, giving you the necessary information to make an important buying decision.

The best advice: get granular & personal

The granularity of data heavily influences the accuracy of an ROI analysis. Generic or industry/brand averages can paint a deceptively positive or negative picture, leading companies to make suboptimal decisions. For example, Delaget’s ROI model provides an exemplary approach by analyzing up to seven distinct reports pulled directly from delivery service provider (DSP) portals like DoorDash, Uber Eats, and Grubhub.

Our targeted ROI approach delivers a precise assessment truer to real-world recovery potential, giving operators a clear picture of their potential ROI.

Our process involves: 

• Detailed Data Inputs: Delaget scrutinizes thousands of lines of data, including specific order types such as cancellations and adjustments.
• Success Rate by Order Type: Delaget’s proprietary algorithms analyze dozens of distinct order types, calculating precise recovery rates for each.
• Cross-Platform Insights: The system goes further, breaking down success rates by platform, such as DoorDash or Uber Eats, and even by order details like high-value cancellations.

Such precise data interpretation ensures operators get a clear, trustworthy picture of Delaget’s ROI potential tailored to the operators’ specific operations. 

Generic averages: The pitfall of most ROIs 

In contrast, other recovery providers rely on generalized ROI metrics – most will rarely ask for specific delivery loss data and typically base their ROIs on macro-level data like total sales or aggregated recovery averages. While these numbers might seem impressive, they fail to account for critical variables such as: 

• Order Complexity: For instance, pizza franchisees yield fewer disputes than a wing-focused brand, where menus are more complex with multiple variations and sauces, ultimately increasing the likelihood of errors.
• Business Type: ROI outcomes can differ significantly based on industry nuances, such as delivery volumes and typical order configurations.
• Seasonality or Big Events: Most ROI analyses don’t consider high-volume delivery months, such as February for the Super Bowl.

These ROIs often present rosy recovery forecasts without analyzing specific details, leading to inflated or misleading ROI expectations. As a result, operators who select these services will likely see their actual performance fail to meet the ROI analysis’ forecasted returns.

The ethical dilemma: Auto-recovered orders 

Auto-recovered orders in ROI calculations are another critical aspect to consider. Some DSPs, like DoorDash, automatically refund certain order types—such as cancellations made within a few minutes of placement—without any disputing required from the restaurant or a recovery vendor. The restaurant never sees the order, so they aren't out any food or labor costs to fulfill it. However, be cautious, as these orders can inflate success rates and create an unrealistic comparison. This awareness will keep you vigilant and ensure inflated recovery figures do not mislead you.

Delaget excludes auto-recovered orders from its ROI analyses to provide a more accurate picture of a company’s active recovery efforts. However, many others include these in their ROI calculations, inflating success rates and creating an unrealistic comparison. 

When evaluating vendor ROI claims, companies should ask: 

• Does the ROI include auto-recovered orders?
• If so, how are these orders identified and accounted for in the ROI calculations?

This response challenges recovery vendors to answer expertise-type questions, offers an apples-to-apples comparison, and avoids inflated recovery metrics. 

Setting expectations: Beyond initial ROI 

Accurate ROI analysis isn’t just about selecting the right recovery provider; it's about ongoing and consistent expectations. Businesses need to assess how closely the initial ROI projections align with actual performance after implementation, considering the time of year and any business changes, such as higher or lower delivery sales or increases/decreases in canceled or adjusted order types. This ongoing validation is crucial, confirming that your decisions are based on accurate and reliable data. 

Key steps include: 

• Tracking Real-World Performance: Comparing initial ROI results with actual recovery figures in the first few months post-implementation.
• Understanding the “Why”: If a recovery vendor doesn't routinely meet with its customers to review recovery rates and successes, customers are often left in the dark about what's happening. Recovery amounts frequently go up or down based on several variables, and it's essential to understand what is happening at the above-store and store levels.
• Adjusting Forecasts: Fine-tuning predictions to improve accuracy based on evolving data patterns.

Such validation reinforces trust in the ROI analysis and holds vendors accountable for their ROI claims. 

Questions to ask about any recovery ROI analysis

To honestly evaluate the reliability of a recovery ROI analysis, restaurant operators should ask the following: 

1. How was the ROI calculated?
   1. Are the metrics based on generalized averages or granular (or a mix) order-level data?
2. What types of orders are included?
   1. Does the ROI account for only disputable orders, or does it include non-recoverable and auto-recovered orders?
3. How was the data obtained?
   1. Ensure transparency and trust in data access. Is the vendor gaining access to your data without proper authorization, raising significant ethical and legal concerns?
4. What success rates are used?
   1. Are they transparent about their recovery success rates and provide detailed breakdowns by order type and DSP platform?
5. Does the vendor know your delivery loss to sales percentage?
   1. Knowing the percentage of canceled and adjusted orders relative to total delivery sales is an increasingly important metric in an ROI evaluation.
   2. What percentage of delivery loss is disputable?

These questions help businesses uncover potential red flags and challenge the company by sharing the ROI analysis to provide more meaningful and accurate insights. 

Look for accuracy from a trustworthy partner

Restaurants use data to drive decisions and profitability. By focusing on customer data, validated metrics, and questioning overly simplistic or generalized claims, you can ensure you are making a knowledgeable choice. Delaget's rigorous approach to ROI analysis sets a higher standard for accuracy and accountability, offering companies a trusted partner in optimizing their operations and maximizing profitability. 

When it comes to ROI, the mantra is clear: ask for the story behind the numbers and verify their source, accuracy, and context.