There are many dining businesses in the market place who will only be concerned with what is happening locally, and won't be looking at the wider picture. They may not therefore be aware of the potential impact on their businesses that is just 'around the corner'. In this Trade Talk section of the magazine Taste Swansea brings you news from elsewhere that may affect your restaurant/takeaway and your livelihood.
Let's face it, we are all in love with takeaways, at some time in our lives. Some more than others. Pizzas, Chinese, Indian or any other concoction of food that has now formed an alliance with technology is flying out of the takeaways and directly into consumer's homes on a huge scale. This and the advancement of the internet, phone technology, and apps has led to a new area of takeaway ordering and for many outlets has moved the onus away from telephone to online. For many it's a really convenient way to order and of course, at first glance, there are without doubt advantages for the outlet to use online takeaway ordering services. The accuracy of the order reduces errors. Money is paid in advance of delivery, albeit the outlet doesn't actually receive their share for at least 7 days! Some eateries tell me that they wouldn't survive without them....or so they think! The fact of the matter is that many of the online takeaway ordering platforms (such as Just Eat, Deliveroo and Uber Eats - they are the main players in the Taste Swansea catchment area) are very detrimental to the outlets, and IT'S GOING TO GET A WHOLE LOT WORSE! For some eateries it's only after having signed up and lost their customer details to the platform and realised that they aren't making a profit (and in many cases a thumping loss) do they wake up to the reality of the cost of the service.
Let's look at the main players and how they work. They provide a central platform and add the outlet's menu. In some cases they encourage the poutlet to offer an introductory discount to attract new customers to use the service....as much as 20%. Secondly they take the orders online and charge the outlets for the service (up to 35% commission on each order, plus delivery charge)... Next they retain the outlet's customer's contact details and most refuse to share those details with the outlet, citing the data Protection Act as their excuse not to share. In some cases the platform will then use the outlet's database of customers to drive them to a new and alternative outlet that has just signed-up to their service. In some cases the money received by the platform is retained up to 14 days before being released, less commission, to the outlet. Not a pretty icture is it? So for an outlet that has gone along with the suggestion of a discount whether it be for students or merely to attract customers in the first place, they could, including commission charges be parting with 55% of the cost of the order. A great deal for the consumer and the platform but a bum deal for the outlet, whose usual average profit margin (pre-charges from a platform) will be about 3-5% (admittedly some could be as high as 15% but on average the industry agrees with a 3-5% profit margin).
Now, you'll also note that the platforms retain the all important customer database, and the poor outlets that has slaved away to make the food, doesn't even know how to reach his customers! And as I have stated, in many cases the platforms are known to drive the outlet's customers away from their outlet! Enter an entriely new and potentially very worrying problem (for independent outlets) which can have huge repercussions throughout the marketplace and could see you closing your business, quicker than you ever imagined possible!
One such platform, i.e. Deliveroo, has just announced that they are to open their own kitchens and produce their own food for delivery! Have you grasped the implications of this yet? The have used all YOUR outlet's data details, who, where, what they order, when they order it, from whom they order it and THEY intend to supply directly to YOUR customer probably cutting your outlet out of the loop. They can re-create your dishes perhaps even with your recipes, and go straight to your customers....and there will be nothing to prevent them. Of course they won't merely be supplying your customers with their regular dishes (rather than you supplying them) but they will also be supplying the regular customers of almost every outlet which is already signed up to their service! If you are a Deliveroo outlet, they are are in a position to crucify you and your business! And do you know what's more galling? You have been paying them at a rate of up to 35% to steal your business from under your nose!
If you are a restaurant and you don't do deliveries, then you too will still feel the pain, because Deliveroo's proposals will change the face of the dining market and less and less people will go out to eat.
So what's the answer? As a Food & Drink Business Consultant I strongly recommend that you ACT NOW!
~ Firstly, invest in a website if you haven't already got one, and be careful in this regard because website agencies are notorious in screwing their clients, especially when they wish to swap website designers.
~ Secondly, drop your use of the third party platforms that charge commissions. Use only third party platforms which charge NO commissions. (Yes, they exist, and one of my client's has used one successfully for over a year - check out marketing4restaurants.com and their FORBS and FROLO services).
~ Thirdly, use only a third party platform who allows you to retain the customer data. (Care here because new data protection and direct marketing regulations have just been introduced in the UK, which prevents you from merely writing to your customer database, without their opt-in permission) - Yes they exist and again the service my client uses doers indeed allow the outlet to retain all collected data.
~ Finally, find a reliable 'delivery service' which is prepared to deliver for you. Maybe team up with like minded outlets and you control the team or use your own staff within your business.