Aussie restaurant owners have it tough these days. Not only are you competing against each other but also against the rising cost of rent and cost of employees.
It’s no wonder then when third party food ordering and delivery companies such as Menulog and Uber Eats come knocking, offering a platform that can help you to promote your business that many restaurants signup without batting an eye. Afterall, how can you refuse the publicity that comes with a free listing on app and your very own web page not to mention delivery drivers at your beck and call?
While this might seem like an excellent idea at first for many restaurants, it is not all gravy. This articles highlights why it’s sometimes dangerous to use such operators without having a backup plan and a long term strategy.
Loss of Control
While there are many advantages to using Menulog and Uber Eats, there is one major aspect that can undeniably affect your business in the long term and that is the loss of control. This is perhaps the most dangerous aspects when it comes to bringing in middlemen for your order and delivery requirements.
When you visit the third party ordering and delivery app or website do you notice something missing? That’s right, the contact details specifically the email address and phone number of the restaurant listing are missing. This is to prevent your customers from ordering through the restaurant directly and cut out the middlemen. What’s worse still is that once they have your customer’s personal information, they may periodically advertise your competitors to them!
When you are signing up to a third party ordering and delivery company you are essentially putting your hands up for them to take control of your customer’s details, to build up their clients database, not yours.
Why is control of your own client database important?
For starters, unless you are purely serving tourists and one-timers, repeated customers are the lifeblood of your restaurant. For them to be repeating customers, you need to advertise and market to them regularly and remind them of how good you are. That’s why you absolutely need control over your customer’s database.
Take for example Dominos – say what you will about their pizzas but not many will argue their efficiency on accepting orders and delivering pizza to their customers. Indeed, Dominos is as much as a logistics and technology company as they are a restaurant chain. Notice they are NOT on any other third party ordering and delivery platforms? This is because they want total control over their ordering, delivery and marketing operations. This is the one thing that large food chains and restaurant want more than anything else.
In this information age, can you really afford to not have control over your customers data?
Other aspects that you have no control over include:
Pricing for third party ordering and delivery services are normally based on a flat fee or a commissions model depending on the provider. Commission per order can be up to 35% – so for a $100 order, you’re paying up to $35 to the delivery company, for every $10k revenue, you are paying them $3.5k and for on. As you can see, this quickly adds up as your business grows.
It doesn’t stop here. What if they decide to charge even more to raise revenue and please their shareholders? This is something you don’t have control over.
2. Quality of Service and Accountability
By outsourcing the ordering and delivery process you are risking your reputation with untrained and unprofessional delivery drivers. Indeed, most complaints coming from online reviews websites are that of bad customer service due to the ordering process or delivery rather than the actual quality of food itself. As they are not employed by you, they are not held accountable to your standards of customer service. In fact, Uber Eats declare themselves (on their contract terms) as a ‘technology services provider’ not a logistics or customer service focused company.
3. Marketing and Advertising
Third party ordering and delivery apps provide a directory of restaurants in an area and based on the type of food. Every restaurant in that region has the same priority when it comes to advertising. So, when a customer wants to order for instance, ‘Italian takeaway’ in Hurstville, all the Italian restaurants in the area will be listed including yours.
While you can have your own restaurant’s menu hosted on the third party app, chances are, there will be very limited customisation if at all. Most importantly, you will not have access to your clients info so you won’t have the ability to market to them periodically to remind them of your excellent food and service. The third party ordering systems meanwhile, will periodically hand out coupons and special discounts (sometimes of your competitors) to your clients.
Make no mistake, a third party ordering and delivery app have many benefits. For small, startup restaurants especially, it helps you to promote your business for free and by outsourcing your online order and delivery, you can focus on what you do best.
For medium size and well established restaurants however, you will need a little more. Below are some recommendations you may want to employ to have an edge over your competitors and cut back on costs:
1.Finding the Tipping point.
When does Uber Eats and Menulog cost outweigh its benefits? Depending on your provider, you need to calculate how much you’re paying them compared with the cost of building your own ordering platform and hiring your own delivery driver.
For example, if your restaurant is doing $10k a week on online orders, (all businesses are different so we just used an easy, rounded number in this instance) you pay up to $3.5k a week to the order and delivery company. How much does it take to hire your own delivery driver? In Australia, average delivery driver earns $20 per hour . So you can get 175 hours out of the $3.5k. Divide that by 40 for an average work week and you can hire 4 full time delivery drivers for your business. Can 4 full time delivery drivers deliver the $10k a week online orders? Well, that’s a question only you can answer. What’s undeniable though is that the drivers you hire will be selected by your standards and they will be held accountable to your level of service.
Now you might be also be thinking ‘what about own own platform for the ordering?’. For a mobile website that can be used to collect customer details, a menu and a restaurant ordering system with all the bells and whistle cost start from as little as $2k. No recurring monthly fees.
2. Gain Back Control
To evolve from a small restaurant to a large one or even a medium sized one, you need to have control over your own ordering and delivery platform to give the best customer service possible. If you’re on Uber Eats, Menulog or any other third party delivery app, make sure you get down your customers details, enticing them with a freebie or a discount. That way, you can cut out the middlemen and have them order directly through you either via the phone, in person or through your own mobile website ordering system.
Make sure you have your clients email and mobile phone number so you can send well-timed marketing and advertising materials to them via SMS or Email. Email marketing is free while SMS marketing can be as little as 2c per SMS.
Make no mistake, this article is not used to discredit those third party ordering companies but rather to offer a solution that can work in conjunction with them. It can be used as a free platform for many small and starting up restaurants to gain exposure but in the long run, it would be more ideal to have your own platform so that you can take control back from these third party companies. By analysing and measuring the tipping point you will learn when it is more beneficial to establish your own platform and by having your own platform alongside the third party you really can have your cake and eat it too.
What’s your take on food delivery companies? Are they helping you to grow your restaurant business or are they more trouble than they’re worth? Share your comments below.