How Online Food Delivery Companies are Fooling Restaurants
We think all that glitters is gold. The busy daily life demands people to opt for easy options that include munching their favorite food without having to take the trouble of walking down to their favorite food stop. The fast-growing trend of ordering food “online” is an option that nobody denies. The face of technical world is experiencing a transcendental shift and we know about it. Restaurants are relying on online food delivery companies to generate revenue in order to sustain themselves and function properly. But is that a profitable option? Well, let’s see.
Is Online Food Delivery Slowing Down Your Business?
The aggressive expansion of online food delivery companies have taken over the restaurant footfall. While it gives the restaurants a regular revenue option, it also extracts the money that never leads to the restaurant’s profit. What restaurateurs need to understand is the problems that food delivery companies bring along. However, these online orders from various portals and apps give restaurants business but it also takes business away from them. With the ease to get food at home, people stop going out to their favorite restaurants. This causes incessant slowdown in the direct footfall at the restaurants.
The Pain of Paying High Commissions & Delivery Charge
With a minimal stride, restaurants waste money on the interiors and logistics involved in the day to day functioning of that food venture. It’s ironic that the delivery platforms charge restaurant steep rates as commission but restaurants aren’t profitable still. These online ordering and delivery companies charge delivery fees from the customers as well as extract commission from the restaurateurs, in the end making profit only for themselves. To be precise, a delivery company charges 30% of the price as a commission for delivering the food (source – Forbes). There are few others who levy commissions plucked out from both the restaurant as well as the customers, making it a win just for the company. Restaurants fail to understand that the companies are extracting money from them and also from the customers as a delivery charge. In the whole transaction, the only party that’s actually making money is that particular company.
Are You Losing Customers?
What’s worse is the fact that the restaurants also lose their existing consumer base being unaware of who their loyal and frequent customers are. These delivery companies restrict the customer data to themselves. The transaction with the restaurants being restricted only to the order detail and commission required. The success of the delivery platforms replaced the core business of some restaurants instead of complimenting them and adding a profitable hand there. The commission that is charged mostly hurts the bottom line for most restaurants. Another trap is the offer from one of the leading company that says no commission will be charged. But that comes with the most dreadful clause – Terms and Conditions applied. In order to waive off the charges, the restaurants need to comply with the conditions that are more often than simple to achieve.
What’s also problematic for the restaurateurs is, the fact that few of these food-jets come with an ‘exclusive’ partnership. Rendering the food businesses to limit themselves just to that particular company and not to any other. This not only just restricts the business model but also pressurizes the restaurants to not tie up with other better or partners of their choices. In order to compensate for the charges, the restaurants land up inflating the prices of the dish or reducing the quantity of the dishes. Now, this is something that hampers the brand and loyalty of the restaurants. The customers tend to find other places to order from. That’s how restaurateurs lose the customers.
Profit-Making Through Online Food Delivery
Moreover, these new iterations in the online food delivery companies are exploiting the restaurateurs in the name of the business. By throwing lucrative offers to generate more revenue, the restaurants are giving in to the hope that, one day they will meet the cost and gain profit. As far-fetched as it looks, this dream remains unachievable as the market is flourishing with a new competition every day. More than the loss of profit; many times, there’s a sliding shift in the reputation of the restaurants because of the poor delivery committed by the companies. However, a hope that will be left stranded, restaurants are running for it wishing to gain profit someday. Definitely, all that glitters is not gold.
Want to know a solution? Keep an eye on the blog (Source: https://blog.laalsa.com/online-food-delivery-companies-fooling-restaurants/ )