The past couple of years have been challenging for us all. While we shouldn’t downplay the impacts and sadness of what's occurred, we can also say the food delivery sector has learned a lot.
Whether it was established players ramping up their delivery operations or the rise of dark kitchens helping high street brands chase lost over the counter sales, everyone had to learn how to cope under the circumstances. And in this process, takeaway delivery has moved on considerably.
A new report by KPMG confirms that demand for food deliveries remains buoyant and is set to grow stronger as the pandemic wanes.
Moreover, the research shows that the lockdowns accelerated the growth in home orders bringing the industry to levels previously forecast to happen in 2023 or 2024.
This is further confirmed by research from Deloitte/Dealroom that found UK food delivery annual revenues will grow to an enormous $9.4 billion by 2025. It's a juggernaut that's only just getting going.
On the face of it, the picture seems rosy. Everyone's A Winner?
It turns out, using Food Portals is not conducive to long term success - there is however another way.
Unfortunately, for those who use the big aggregator portals for their orders, the situation is not quite so clear cut.
According to a recent McKinsey report, takeaways have a limited menu of actions they can call on to offset rising costs. Pretty much the only option available is to increase their pricing on food portals to compensate for the high commissions they pay.
The picture gets bleaker in the face of increasing energy, wage, and raw material costs. As a result, a struggling takeaway's only realistic survival option is to cut costs by lowering product quality. But, whether it's decreasing portion sizes or using cheaper ingredients, this will inevitably impact medium-term customer satisfaction. It's a lose-lose scenario. There may be fewer orders because prices are too high, or you lose customers who find the product is no longer to their taste. Not to mention the impact of poor reviews clients will add to an online portal.
The Industry Fights Back
An interesting snippet of news from over the pond gives us an insight into the US restaurant sector's dissatisfaction with the food portal providers. Bloomberg reported on a consumer-led lawsuit brought against Grubhub, Uber Eats, and Uber owned Postmates. The litigation, which has been approved as worthy by the US courts, claims that the 13.5 - 40% commissions charged by these aggregators are making food businesses uncompetitive.
These commissions, plus sometimes contractual clauses that disallow restaurants from charging a lower price on direct and eat-in orders, have a detrimental effect across a hospitality firm’s entire business model.
This means customers are being charged more by going direct and are driven to a food portal to save money.
While this is not a common model in the UK (yet), it illustrates the issues caused by sky-high commissions and the anti-competitive clauses that can lurk in food portal's small print.
Time To Opt-Out?
We've outlined some of the problems that accompany signing with a food portal on our blogs, including the eye-watering commissions and losing control of your online business, brand and customer data.
While a portal's glitzy marketing may appeal , it's soon clear the long-term impacts of working with an aggregator can be disadvantageous, especially when you cash up the till.
While a portal's glitzy marketing may appeal , it's soon clear the long-term impacts of working with an aggregator can be disadvantageous, especially when you cash up the till.
In deteriorating economic circumstances, hospitality firms will need to thoroughly review how to best use limited resources. All in an effort to get higher value orders and repeat business from the cash strapped-punters they rely on for their income.
One immediate action is gradually withdrawing from your portal subscriptions by launching a dedicated food ordering app. Then, in one fell swoop, you're back in control of your pricing and online marketing. Plus you can build an authentic relationship with your customers.
Our research shows that by establishing a dedicated food ordering app and using some simple social media marketing techniques, your order volumes go up by 22 - 32%, order values increase by 18% - 22% on average and a staggering 85% of customers will order again. Better still, the commissions you pay to use your app will reduce by a massive 95%.
Many restaurants and takeaways are already reducing their Food Portal commission bill by over 95%.
These savings will make a huge difference to any hospitality business operating under current market conditions.
Add in the positive psychological impacts of being in charge of your own success, and it's what's commonly known as a no brainer.
To coin a familiar phrase, now's the time to take back control.
Unlike other food ordering platforms, we're committed to your success, so call our team today on 0161 222 7672 or visit www.orderdigital.co.uk to find out more.