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Is the 35% Commission to Food Delivery Platforms Worth It? Here’s a Secret That Could Turn The Tables For You

Deciding whether or not to use a third party delivery platform is often viewed as a simple “yes” or “no” problem.

Those in the “yes” camp, feel that the extra sales generated by partnering with third party food delivery platforms outweighs the huge 35% commission on orders.

Others in the “no” camp firmly believe that these delivery platforms are a terrible idea, and will eventually cannibalize their profits and customers.

What if I told you there’s a way to make these third party delivery platforms like UberEats, Deliveroo, GrubHub and Food Panda work for you, despite the insanely high 35% commission?

What are Third Party Delivery Platforms?

Third party delivery platforms are companies like UberEats, GrubHub, Postmates and Deliveroo that put your menu on their app. Customers browse their app, place an order, and these companies will pick up your food and deliver it to your customers. According to Zion & Zion, 63% of young adults use third-party delivery apps.

The Pros of Using Third Party Delivery Platforms

1. You get extra sales that you wouldn’t otherwise have made

If you can get extra sales without doing any work, then you’d probably be willing to make little or no margin just to keep the kitchen busy and get your food and brand in front of a new customer.

2. Some of those delivery customers become your dine-in customers

Some of those new customers might turn into “regulars” and dine-in with you. When that happens, you get to keep 100% of the profit.

3. You don’t need your own delivery fleet

Third party delivery platforms handle fulfillment and logistics. This means you don’t need to worry about:

  • Delivery Drivers & Vehicles
  • Gas
  • Food Storage & Delivery Equipment
  • Insurance
  • Licenses
  • Delivery-Tracking System
  • Customer Service Issues
4. You don’t need your own food ordering app or website

You don’t need to worry about building your own app or online ordering service on your website.

The Cons

1. Commissions are high

35% is eye-wateringly high. According to Statista, your online food delivery sales are only going to grow over time. Eventually, your kitchen will need to accommodate a lot of activity that ultimately is not profitable. Imagine if 50% of your kitchen was devoted to fulfilling orders at zero margin?

2. Your brand is at their mercy

On food delivery apps, you share precious screen “real estate” with hundreds of other restaurants. How do you know your competitors aren’t being shown before you?

The truth is, third party food delivery platforms know how important search positioning is on their apps. To boost sales, they will often ask you to pay extra promotion fees so that your brand becomes more visible to their app users.

3. Web-traffic hijacking

Perhaps the most dangerous consequence of using third party food delivery platforms is the disastrous effect it may have on your website traffic. If you are already using third party food delivery platforms, you may have noticed that your search rankings on Google might be appearing below your directory listing on UberEats or Deliveroo.

This means that anyone actively searching for your business, either to make a booking or to order food, will be tempted go to these other delivery websites first. If old or new customers order food through these other websites, then you will need to pay commissions.

Unfortunately, this “web-traffic hijacking” is at the heart of virtually all third party platforms’ business strategy. Web-traffic hijacking will eventually erode your ability to connect with your audience online. As both old and new customers are diverted to third party platforms, your own website loses effectiveness. This ultimately reinforces your reliance on the various third party platforms that seek to dominate organic search results for your business.

4. Loss of customer data

Customers who order on third party delivery platforms may love your food, but you won’t be able to reach them because you don’t have their data. This is another major disadvantage of relying on third party delivery platforms. They keep your customer data and use this information to offer different food choices to your customers.

Secret: Here’s How You Can Beat the System

So how can you make using food delivery apps actually worthwhile? The answer is to capture the contact details of every customer who buys through each of the delivery platforms you use.

No matter how you sell your product, you must start collecting all your customer details. Your strategy should be to collect customer information, and then use this data to eventually get everyone to buy directly from you.

Take Back Control

Here are 4 steps you can use to take back control over your customer base.

Step 1: Sign Up With Food Delivery Platforms

Your ultimate objective is to collect customer information. Sign-up with third party food delivery platforms and use them to expand your customer reach.

Step 2: Get Everyone Onto Your Loyalty Program

If you don’t have one already, create a simple but compelling customer loyalty program. Then, for every home delivery order you send from your kitchen, include a flyer that asks your customer to join your new loyalty program.

Loyalty programs are the best way to incentivize customers to give you their contact details. Companies like Flex Rewards help you create a simple loyalty program, and give you flyers to insert in home delivery packaging so you can signup customers with unique QR codes.

Use your loyalty program to sign up as many of your customers as possible. As soon as customers join your program, you will get their names and email addresses. You now have a way to reach all your new customers directly.

Step 3: Build Your Own Home Delivery Capabilities

This will take time, but there are loads of tools and services that will allow you to put together a robust online home delivery service that you control 100%. Depending on how you do it, you could have your own home delivery portal up and running in a couple of months.

In an article aimed at uncovering what restaurant guests want in their off-premise experience, Restaurant Business found that 78% of delivery orders are placed through the restaurant itself, while only 22% of orders are placed through third-party delivery companies. So, if choose to keep delivery in-house rather than signing up with a third-party delivery service, that data is encouraging.

Step 4: Get Customers to Buy Direct

This is where you now turn the tables. Armed with your database of new home delivery customers, you now can reach your customers directly to convince them to migrate to your in-house delivery platform:

  • If you are using a loyalty app like the Flex Rewards app, use it to send messages and emails to all your loyalty members and let them know about your new home delivery platform
  • Offer special discounts or incentives to customers who order directly from you
  • Upload your customer list to Facebook and Google to create “custom audiences“, and advertise your new service directly to them
Conclusion

If you are willing to spend the time to build your own direct sales channels, then you can use third party food delivery apps to your advantage to expand your audience and build your customer database.

Once your home delivery platform is ready for launch, you can get your customers to buy directly from you. In this way, you not only save the 35% commission, but more importantly, you retain control over your website traffic and your customer data.

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