Adwords Arbitrage, Brandjacking, and Misleading and Deceptive Conduct – Did somebody say Menulog?

This article looks at the latest “Did somebody say Menulog” campaign in the light of increased concern about adwords arbitrage, restaurant brandjacking and possible misleading and deceptive conduct within the industry.

Menulog ad campaign
Menulog’s recent marketing campaign.  We look at some of the practices that Menulog conducts that have been receiving increasing scrutiny recently.

 

Menulog brandjacking is in the news again after they released a new marketing campaign, “Did somebody say Menulog?”, which is strangely reminiscent of KFC’s Did somebody say KFC” campaign from 2018 except not as funny, but a recent story from Smart Company has highlighted Menulog’s practice of registering Domain Names, often without the knowledge of the Restaurant.

Restaurants are often unaware that the domain has been registered, with either their Restaurants primary domain name having been taken by Menulog, or having a competiting domain name.  This can include having the Google My Business account pointing to the Menulog website.  The situation is worse with Adwords Arbitrage campaigns driving customers to the fake websites, with some customers unaware that they are not dealing with the Restaurant, but instead dealing directly with Menulog.

Did somebody say KFC
The Menulog campaign riffs off the recent “Did somebody say KFC” ad campaign, it’s just not funny.

Menulog brandjacking hurts Restaurants who are trying to deal directly with their customers by increasing costs, either to the Restaurant or the consumer with the business having to manage the increased costs, often as high as 13.5% commission.  Restaurant customers are also unaware that the Restaurant does not have their contact details.  A change last year made by Menulog means that Restaurants do not even receive the customer’s phone number.

The brandjacking practice is quite common with multibillion dollar companies desperate to increase market share.  In the United States, Grubhub has been accused of registering over 23,000 domains to brandjack Restaurants either on their platform or that they are pitching to.

Legal Response to Menulog Brandjacking

Given the impact that it is having on Restaurants, Smart Company is reporting that former AuDa director, Nicole Murdoch is encouraging Restaurants to join a group action against Menulog to fight back against the unfair practice.  Menulog has created over 6,000 of these websites and the aggregate impact of these could be huge for the entire industry.  Nicole is now a lawyer at Eaglegate and given her previous role, is an expert in the Intellectual Property issues that many Restaurants are seeing.

Menulog Restaurant Website Brandjacking
This is what Restaurant Website brandjacking looks like. Our concern is that despite these Restaurants having their own websites, their customers may not be able to tell the difference between which website belongs to the Restaurant and which is the brandjacked website.

Above is an example of a Restaurant brandjack site.  The restaurant may or may not be aware that there is a Menulog web site for their Restaurant.  Customers may or may not be aware that they are not dealing directly with the Restaurant.  One of the insidious aspects of this campaign is that there is no phone number, nor is there an ability to book a table on the site.  This means that customers may think that there is no dine in option and this can be a reason why customers are less likely to dine in, an area of Restaurant operations that many owners are very keen to increase.

Menulog should be transferring the ownership of the domains to the Restaurants, and I am not sure why they are registering the domains in the name of Menulog in the first place.  Our experience has shown that it is quite difficult to get them to transfer ownership across, often just changing DNS settings or ignoring the requests.

The process of Adwords Arbitrage and brandjacking has even been covered by SBS.  https://www.sbs.com.au/news/embeds/video/1185422403748

With some Restaurants doing more than $10,000 a month in online orders, there is a lot at stake with every Restaurant like that who transfers away decreasing profits to Just Eat, Menulog’s parent in the UK by $1,350 per month or $16,200 per year.  We have seen Restaurants keen to migrate away and to pocket the $16,200 in savings struggle to get the domain changes made.  We think it is important that there is a government inquiry into the practice given the fact that Menulog has registered over 6,000 of these websites.

example of menulog brandjacking and adwords arbitrage
An example of Adwords Arbitrage that Menulog is currently running on one of their customers.

Your Google My Business account is another area that you need to be aware of, as changes here can make it less likely that you website will receive visits from your customers and your customers could be redirected to for fee booking and ordering sites.

Restaurant Adwords Arbitrage

Restaurant Adwords Arbitrage occurs when a company aims to redirect customers away from a Restaurant website, either for a booking or an online order.  They are then able to charge the Restaurant a fee for processing the transaction.  Often the price charged to the Restaurant is higher than the amount that they pay to Google.  Not only does this create a fee to a Restaurant, it also builds the online aggregators database.  Every customer transaction goes into a database so that the company gets a better idea of each consumers eating patterns.  This can be used for marketing to other Restaurants and we think it is one of the biggest reasons for decreasing customer loyalty.

The brandjacking issue is a part of wider regulatory interest, with the Victorian Government looking at the way that Menulog is employing riders as a part of it’s efforts to transition to providing delivery services in response what we see is a lack of relevance as Restaurants either transition to their own online ordering services or to online ordering aggregators like Uber Eats and Deliveroo who also provide delivery.

How to manage your Restaurant’s Menulog Relationship

We believe that for some Restaurants, it is worthwhile maintaining their presence on the Menulog platform for new customer discovery, however it needs to be managed carefully.  If customer contact details aren’t given to you, then the customer isn’t really yours in our opinion.  Here are our tips to increase profitability in your Restaurants online ordering processes.

1.  Consider differential pricing for meals

The higher costs of online ordering, either through Menulog or UberEats / Deliveroo can be passed onto customers – ensuring that your online ordering is profitable.  We have seen customers with UberEat create a specific UberEats menu and put their prices up 35% and seen no decrease in revenue.  The increase in per transaction value offset the decrease in customers.

2.  Consider pick up only.

Many Restaurants shy away from delivery because of the logistics challenges involved with it.  We have seen some Restaurants attack the middle ground of those wanting your food at home and convenience with a pick up only option.  This scales a lot more easily as there is no requirement to hire and manage delivery people, and if you have spare capacity in the kitchen, you are able to utilise it, especially on busy nights like Friday and Saturday night.

3.  Run an order direct and save campaign.

Many Restaurants are able to combine loyalty discounts with fliers detailing the lower costs of ordering direct from the Restaurant to significantly increase customer loyalty.

4.  Use your own online ordering system.

Whether it is your own POS system or FROLO, the Free Restaurant Online Ordering system, there are choices for Restaurants and they can make a big difference in the bottom line.  We have seen Restaurants who have saved over $40,000 in commission by moving to FROLO instead of using Menulog.

5.  Market direct to your customers.

Buy building up a database of online ordering customers, Restaurants are able to increase the frequency of transactions, which increases the long term customer value for each of the new customers.  This can dramatically increase profitability as one off customers are transformed into habitual customers with higher and more regular purchases.  Email and Facebook retargetting can be key in this process, and is only available when set up with your own website and / or database.

6.  Google your own Restaurant

Many Restaurants are shocked to see websites that they did not know existed, or their Google My Business Account linking to third parties rather than their own website, which can be costing them significantly in increased commission.

Tools for more profitable online ordering.

Marketing 4Restaurants have created a range of products to help Restaurants better manage their online  ordering, including FROLO, the Free Restuarant OnLine Ordering system.  Restaurants like Chalisa Indian in Canberra can save the 13.5% commission from Menulog and increase their own customer database.  Chalisa is now saving over $1,300 per month.  This is a significant amount of money and is contributes to great profit and funding a marketing budget that is increasing the number of customers they see, both for dine in and take away.

For more information on managing your Online Orders, listen to these episodes of Secret Sauce, the world’s number 1 Restaurant Marketing Podcast, or contact the team at Marketing4Restaurants.

Try FROLO today.  No per order or per month commission, collect your customer details, payment within 3 days with Stripe and no contracts.  Our customers use us because they love what we do for their business.

Best Restaurant Podcast Episodes for online ordering.

Restaurant Adwords Arbitrage

Restaurant Online Ordering Profitability

Making more money with your online ordering system

Differential pricing – How Domino’s Pizza does it.

Making UberEats and Deliveroo orders profitable and more.

These are all podcasts you can download on your mobile phone and listen to whilst doing prep or driving into the Restaurant and will help you understand best practices in Restaurant Online Ordering.

 

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