During the lockdown, thousands of shuttered restaurants pivoted from dine-in businesses to re-open as takeaway and delivery food outlets. Over 60% of the Irish population ordered food from restaurants and takeaways during the lockdown.
Most people believe they are supporting local businesses when they order from apps like Deliveroo and JustEat. However, new research by Amarach shows that more than three in four people (77%) don’t know that restaurants are charged up to 30% commission per order by such apps.
Conor McCarthy, CEO and co-founder of Flipdish, who commissioned the research, says restaurant and takeaway owners need to take back control of their revenues and their customer data.
JustEat and Deliveroo will argue that they offer restaurants a seamless, all-in-one solution to reach more customers and drive volume sales. Isn’t this true?
It’s suicide for restaurants to send their customers away to these marketplaces. Not only do the marketplaces keep a substantial percentage of revenues for themselves, but they also take the restaurant’s valuable customer data, putting at risk the relationship between the business and its customers.
By having control of their digital ordering channels, the restaurant can learn about their customers and target return customers with marketing promotions and loyalty programmes – this is how a restaurant grows.
So while it might be tempting to sign up with a marketplace to get up and running quickly, restaurant and takeaway owners should make an informed decision on their choice of partner. Marketplaces have started to create restaurants themselves and direct people who were once the restaurants’ customers over to their service. Restaurants who’ve signed up with these marketplaces may lose their customers entirely.
Aren’t restaurant owners put off by ‘the hassle’ of creating their own app and running their deliveries?
Getting started with a digital app or website for online ordering is way simpler than they might think. We can have a restaurant up and running with a digital takeaway service via a brand new website (or your current one) in just a matter of days.
If a restaurant or takeaway has never provided food delivery before, they might be put off from doing it themselves by thinking they need to hire their own fleet of drivers and riders. But Flipdish handles that too, and it is much more cost-effective than listing on food delivery marketplaces.
Do you think restaurant owners are willing to stand up and ‘take back more control’?
Yes, absolutely. Restaurant owners are increasingly aware of the threats posed by the online food delivery marketplaces. More and more restaurant owners see the negative impact on their bottom line when they have to pay 30% per order to a third party. Restaurant profit margins are notoriously slim – they can’t afford to lose a third of their revenue for each order. And they definitely shouldn’t lose a third of their income every time one of their regular customers orders from them again and again.
We’ve seen what has happened in other industries, such as travel, where hotels now receive a large portion of their bookings from aggregators like Booking.com instead of directly on their website or app.
Were you surprised that most people don’t know how much the food delivery marketplaces make from Irish restaurants?
It’s not surprising, and if they did, they wouldn’t use them. That’s evident from the survey results. More than four in five Irish consumers think the marketplace fees are unfair. Customers want to support their local restaurants and takeaways and will order directly.
The vast majority (89%) of the people we asked in our research said that now they do know about the fees restaurants face, they would order directly from the restaurant as opposed to using an online marketplace. In fact, 92% of people who order from an online marketplace more than once a week would order directly from restaurants now that they know about the high marketplace fees.
How is Flipdish different – why would a restaurant owner consider it?
Flipdish customers don’t just get ‘online ordering’; they get sites, and mobile apps and they enjoy more orders and more revenue.
It’s simple, quick, we offer generous support, and we enable all our customers to really grow their business – rather than simply fulfil orders for a Silicon Valley multinational.
Typically, what kind of investment does a restaurant have to make to get set up and selling on Flipdish?
None. We’re partners in success, so Flipdish operates almost entirely on a commission basis. We just happen to be very fair in terms of the amount we charge. And in terms of time and effort – our customer success and managed marketing teams are always available to help with both initial set up and the longer-term relationship.
What trends do you see in the takeaway sector?
Even before COVID-19, there was a growing trend towards digital ordering via a website or mobile app. In recent months, this trend has accelerated, and many more restaurants now offer ‘Click & Collect’ and delivery. The COVID-19 pandemic has brought even greater disruption and accelerated the rate of change in the sector.
Systems like Flipdish generate vast amounts of data as transactions are processed. Restaurateurs are starting to understand that they need to take advantage of that data. This increasing role of data will become more entrenched over time as the information available becomes ever more sophisticated and actionable. It’s hugely valuable and not something to be ignored or handed over to anyone else. It should be the driving force behind a restaurant’s business growth strategy.