On January 18, 2018, the Sydney Morning Herald ran an article that described online delivery giants as “business partner they never wanted.” The big 4 Food online ordering aggregators, Menulog, Deliveroo, UberEats and Foodora (Foordora isn’t that big in Australia and we expect them to close down Australian operations, based on their current market share), are seen to be charging have been driving consumers to online ordering systems and apps and clipping the ticket on the way through. Many consumers are unaware of the high commission fees that are charged.
The article describes the aggregators as frenemies.
Google defines a frenemy as “a person with whom one is friendly despite a fundamental dislike or rivalry.” This is a great description of the relationship that many restaurant owner finds themselves in with the online aggregators.
The article describes the experience of Robert Galati, the owner of Fratelli and Co and Baywok, which uses both Eat Now and Menulog (these are the same company, which is owned by Just Eat out of the UK). He agrees that the convenience is great for his customers, but he is losing 16% off his bottom line. He describes Menulog as the busines partner that he never wanted becasue it also brings in his existing customers and take a fee on those orders. “Customers that were coming into my restaurant or were ordering directly from my website or over the phone are now going through Menulog because of convenience, and customers that were 100 per cent mine are now going through these other avenues and they’re taking a cut, indirectly losing money that was already mine,” he said.
“Having these companies take a slice of your bottom line didn’t exist five years ago and now they have become a 10-15 per cent shareholder in your takeaway bottom line,” Mr Galati said. He also said they take 16 per cent inclusive of commissions, EFTPOS fees and GST.
- For every meal ordered online, there is a corresponding decrease in customers dining in. It isn’t a 1:1 correlation, but it is taking from that
- For every meal ordered online – the aggregators are taking their clip of the ticket.
- The commissions paid to the aggregators is unsustainable for most restaurants, leaving little profit, or worse, that every online order is shipped at a loss. If your net profit margin isn’t 13%, your shipping every online order at a loss.
- The worst component is that the customer email address is not passed onto the restaurant. The aggregators state this is because of privacy concerns, but at best this means that the customer is not yours, it is Menulog’s or UberEats’s. At worst, they can contact your customers with whatever messaging they want with offers for any restaurant and restaurant owners have lost a powerful way to market to their own customers.
Our position is that Restaurant owners should be fairly paid for what you do:
- You take out a lease on the Restaurant;
- You fit out the Restaurant;
- You hire the staff, your train the staff;
- You lead the staff, you pay the staff;
- You buy the food, you store the food;
- You cook the food, you serve the food;
- You do all this plus everything else need to run a business,
- the accounting, the marketing, the legals, and the all of the other things necessary to run any small business.
You do all of this and Menulog thinks it deserves 13% for taking the order.
Tell ’em their dreamin!
It just might be time to break up with your online ordering Frenemy, the business partner you never wanted.
Try FROLO today. Free today, free forever, no commissions, no monthly charges. Collect the email address from each and every customer that orders from you.
Each night we take orders for restaurants around the country, in the US and UK and some of our customers are saving over $1,000 a month in commission.
This is how smart restaurants find more customers and turn them into repeat customers.