Why restaurants are fed up with 3rd party delivery marketplaces
3rd party delivery marketplaces were once a blessing to restaurants. The value proposition was great: for a small fee per transaction, restaurants would receive orders without needing to own delivery vehicles and drivers.
Several years later, that blessing has since turned into a burden. In 2021, many disgruntled restaurants are now leaving these 3rd party delivery marketplaces.
On 31 May 2021, Boba Shop SF posted on Instagram: “Starting tomorrow, we are no longer accepting #GrubHub orders.They are scamming their restaurant partners. Why should @grubhub keep the $$ to an entire cancelled order when the restaurant never confirms order? They shouldn't even send a driver until the order is confirmed..”
Since the pandemic hit, 3rd party delivery marketplaces burst into the limelight and milked millions of dollars from the plight of restaurants. Pushback against 3rd party delivery apps has intensified. In December 2021, Star Tribune reported, “DoorDash's IPO will mint countless new millionaires. But is an industry designed to enrich the elite and built atop a growing heap of struggling restaurants truly worth celebrating?”
The following is a closer look at the cons of 3rd party delivery apps and why restaurants are now fed up:
The problems with 3rd-party delivery marketplaces
Problem #1: Huge transaction fees
In an industry with one of the lowest margins, charging restaurants as much as 30% per order in commissions is outrageous. For independent restaurants, this means that merchants have to squeeze into already tight margins to afford 3rd party delivery services.
Problem #2: Restaurants cannot control branding or customer experience
When a customer orders from a 3rd party delivery marketplace, they become the customer of the marketplace instead of the restaurant. The customer pays for the food, but the money goes to the app, not the restaurant. They order from the restaurant menu through the marketplace app. The only time the customer interacts with the restaurant’s brand is when they are eating the food; this means that the restaurant’s branding is lost on the customer throughout the whole order to delivery process.
The irony is that when something goes wrong, the restaurant takes the full blame and is not given a chance to make things right. According to Off-Premise Insights’ study, 82% of customers blame restaurants and not the driver or the delivery app.
Problem #3: Restaurants do not own the customer data
As shared previously, when a customer orders through a 3rd party delivery marketplace, they become the customer of the marketplace, not the restaurant. Since the data goes to the marketplace’s service, not the restaurant, restaurants can’t remarket to these customers.
What do these marketplaces do instead? They use customer A’s data (who ordered from restaurant A) to run promos for restaurant A’s competitors. In essence, when other restaurants in the same vicinity are running promotions, they can use customer data from restaurant A to do marketing for restaurants B, C, D, et cetera.
In essence, restaurants are paying so much money only for the chance to fight for attention in already saturated marketplaces. These marketplaces use customer data to grow their own brands instead.
So what can your restaurant do?
- Embrace a fully-branded ordering experience: Having an ordering page with your branding colors integrated right into your website creates a seamless experience. After all, research shows that an overwhelming majority of people (70%) actually prefer to order direct from restaurants, not 3rd party delivery services. With JoyUp, you enjoy a fully-branded ordering page that fits seamlessly with your website and brand personality.
- Take control of customer data: When you partner with JoyUp, you are in charge of what to do with your customer data. Our powerful dashboard shows the order history, and you can receive detailed campaign summaries to help you power your restaurant marketing. Our managed marketing and enables you to reach new customers and nurture them into repeat customers. JoyUp collects customer data on every interaction and uses the power of SMS, Facebook Automation to re-target them.
- Embrace commission-free ordering: JoyUp’s does not charge monthly fees. You never have to pay commissions again. Focus on serving great food and making customers happy.
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