The Hidden Costs of Food Portals - And How to Take Back Control

Food delivery platforms have revolutionised the way restaurants, takeaways, and cafes connect with customers. With convenience at their fingertips, diners can quickly order from a wide selection of meals. However, beneath this appealing surface lies a costly reality: both merchants and customers are often paying much more than they realise.

In this post, we’ll explore the hidden costs of food portals, discuss why your pricing strategy might hurt your business, and present practical tools to help you make smarter, more profitable decisions, without necessarily abandoning these popular platforms.

The ‘Double Commission’ Problem: Everyone Pays More

When a customer places an order through a food portal, they pay far more than the price of your food PLUS commission.

Here's an example of the typical breakdown:

• A restaurant raises its menu prices to offset commission rates that range from 20% to 35%.

• The customer ends up paying additional fees such as service charges, delivery fees, and, in some cases, small order surcharges.

  
  

Let’s look at a typical real-world scenario with a dish priced at £10 and 30% commissions exc VAT:

	Additions	Food Price
Original Price		£10.00
New Price To Cover Commission of 30%	+£5.15
New Price After You Add Commission Marksup		£15.15
Plus Food Portal Adds Fees
Service Charge*		+£1.50
Bag Fee		+10p
Delivery Fee		+£3.00
New Total Food Price Customer Pays		£19.75
What you receive		£10.00
Extra you could have had with Order Digital		+£9.75

*Note Service Charges range from 50p upto £2.99 and vary by portal. We've used a midrange fee for this example.

In the end, the customer's total comes to £19.75, while the restaurant receives just 50% of what the customer pays (because of the extra fees added by the portal)

Even without the "Delivery Fee" the customer is still paying £16.75 for food that actually costs £10.00.

This results in a win-lose situation: the customer pays more, they feel overcharged, which results in less frequent orders.

The merchant sees significant margin losses vs what they could have had, they have made their customers feel their food is more expensive than it really us, which reduces order frequency and brand affiliation.

The only person doing well here, is the food portal.

"But it's fine, customers are willing to pay."

Many merchants are told that its fine to increase prices, customers pay it. So if your shop price is £10, its fine to raise your price to £19.75, customer pays the new price, you get the original £10, who cares? Right?

Wrong. Here's why.

The Hidden Danger: Price Sensitivity and Customer Loyalty

Customers aren’t blind to rising prices they notice. And in today’s cost-of-living crisis, they’re not just noticing…they’re actively searching for better deals. Where is the proof of that?

Google.

Take a look at Google Trends data from 2022 for Just Eat, Uber Eats and Deliveroo. Their search interest is plummeting. This coincides with a rise in fees on those platforms.

Now perhaps you might think, this equates to a fall in food ordering in general.

But Google tells us a different story.

Interest in Fast Food is growing, but interest in the Food Portals is less than 50% what it was.

We can see further evidence of this in Just Eat's valuation.

Add their loss in orders has been picked up by various news organistions.

So where are all the customers going?

The fact is we are in a cost of living crisis. Customer's want better prices. And with Apps and Websites, it's easier than ever for customers to compare prices.

So when a customer sees your Food priced at £19.75 on a Food Portal - it only takes them a few seconds to search Google, where they will see a list of options similar to yours.

Many of those options are going to be cheaper than "Marked Up" food portal price, even if your in-shop prices are actually lower.

Here’s the issue: Let’s say your regular price is £10, but you’ve inflated it to £15.75 to cover commissions, but remember the Food Portals add their own fees, so the real price the customer pays is £19.75.

Now imagine a competitor lists a similar meal for £12.00 on the same platform. Still more than your real price, a whole £2 more. But it;s still much less than your "inflated price" on the food portal.

Guess who wins that order?

The customer doesn’t know your true price. They don’t know you had to inflate it. They don't even care. They just know your food looks expensive - and someone else’s looks like a better deal.

You lose the sale, even though your food may be better value in reality.

Close-up view of delicious food items being delivered

But Is Price Sensitivity Real?

Strong evidence says it is. A 2021 study showed that over 70% of consumers are inclined to choose cheaper alternatives rather than pay extra for the convenience of delivery on a major Food Platform.

For takeaway owners, this creates a significant risk. A slight price increase can drive customers to competitors offering similar food at a better price.

How Can You Stop This?

One effective solution is to explore options like branded apps or your own digital ordering platform. By encouraging customers to order directly from you, you can regain control over pricing and show your true prices. and enhance their overall experience.

Food Portals themselves are not a bad thing. Many shops use them for marketing to attract new clients, but then they tell their customers to start using their own app for a much lower price, and often more profit to the shop.

It's a powerfull strategy, one we have become experts in helping our partners maximise. We have a whole host of tools, strategies and techniques we can deploy to easily migrate food portal customers to your own app, building your own database of regular customers.

But What If You Don't Have Delivery Drivers?

Evidence shows that customers only order Delivery, because the way Food Portals present their prices, it seems like Delivery is a £2-3 charge, so most customers think it's worth it for delivery.

The reality is for a typical £42 order, as much as £22 of that is for delivery, but its hidden is markups and service fees.

When a customer is given the option to order food for collection for £42 or collect it direct for £22, that vast majority will collect.

So weather you do delivery or not, own branded ordering is the future. Google search data proves it.

Taking Command of Your Future

As the food delivery landscape continues to change, it is crucial for takeaway owners to understand the hidden costs associated with food portals.

By grasping how commissions and fees influence your pricing, you can make strategic choices to benefit your bottom line while maintaining customer satisfaction.

Exploring branded apps and implementing improved pricing strategies will help you regain control over your business and boost profitability.

While food portals may provide immediate access to customers, your long-term success hinges on understanding these hidden costs and making informed choices that prioritise profit and cultivate customer loyalty.

Invest in your future: take charge of your pricing, find the best solutions for your business, and ensure that both you and your customers can enjoy the rewards of your delicious offerings.

Eye-level view of a shop window