The Restaurant Aggregators are the companies which collect up the details of Restaurants and provide an online service for them, be it Online Bookings, like Dimmi / Tripadvisor, or online ordering like Zomato Order, Just Eat, Fod Panda, Eat 24 and Grub Hub.
Gopal Sathe wrote an excellent article discussing the backlash in India against Zomato Order and we are seeing a growing number of Restaurants desperate to cut costs for their Online Ordering systems with many paying in excess of 10%.
Restaurant Aggregators: A Business model from 5 years ago?
Five years ago it was difficult and very expensive for a Restaurant to access their own online booking or online ordering feature. It made sense for the Restaurant Aggregators like Just Eat or Grub Hub to spend the time and money to build an online ordering system and then give access to it on a per sale basis.
Online ordering is quick, convenient and it frees up staff whilst decreasing the frustration and problems with language barriers and ordering mistakes. Many Restaurants cooking an authentic cuisine can do so because they are immigrants to that country and English may be a second language. Some of my favourite Restaurants are the ones with owners who struggle with English so it makes sense to have the orders taken online. The increase in staff productivity can also be significant.
Restaurants all over the world were keen to access these benefits, but in a rush to capitalise on the value that they have created, many of the Restaurant Aggregators have become greedy, pushing up commissions and also denying the Restaurant owners the email address of the customers. They understood, often better than the Restaurant themselves, that the email address is the key to driving return business.
Sath quotes Arjun Sethi, “They’re just aggregators,” he says. “They’re only interested in the numbers, but they aren’t really interested in the product. These guys are not food companies.” Sethi sees 85% of orders coming from his own site. With companies like Just Eat and Grub Hub retaining the email address, they can promote other Restaurants. The often promote the Restaurant offering the largest discount. The big discounts oftencome from either low cost Restaurants with poor quality or Restaurants struggling with cash flow, eager to increase revenue any way that they can.
Restaurant Disintermediation – a proven model that cuts costs.
Marketing4Restaurants first introduced a Free Online Restaurant Booking system which has been used by Restaurants to take over 200,000 seats without being charged per seat and allowing them to collect email addresses. FORBS addressed the fundamental mismatch that customers still wanted to make a booking on the Restaurants own website. Most restaurants see around 90% of their bookings coming from their own website. FORBS allows them to capitalise on the great work their websites do without incurring a fee. In Austrlia FORBS competes against Dimmi / Tripadvisor and we believe that this is behind the low price paid for Dimmi in comparison to Menulog. Dimmi raised $10,000,000 to build a business that only turned over $10,000,000 as Restaurants become increasingly reluctant to give away email addresses whilst being charged for something they can now get for free.
For online ordering, our Free Restaurant OnLineOrdering system waiting list has grown to 212. Only 2 more features are to be built before it goes live. Last week we had a new record with one of our Beta testers bring in $1,800 in one night of orders. We believe that the imminent release of FROLO was a factor in the timing of the sale of Menulog. Just Eats share price has been hammered and Zomato is struggling to raise further funds. Ifgrowth stalls, the Restaurant Aggregators will find it much more difficult to raise funds which could put their entire business model in jeopardy.
If you are looking to cut costs in your Restaurants and want to build your customer database automatically, please look at: