Getting The Mix Right For Your Restaurant Business!

The COVID-19 pandemic has shut down many restaurants around the world, resulting in huge revenue losses for the industry. Many of them have taken to food delivery services to keep their businesses running. As per statistics released by StockApps.Com, the global online food delivery market in 2021 is estimated to hit $151.5bn in revenues alone and reach 1.6bn users, signifying a 10% jump year-over-year.

A Statista survey revealed the revenue in the online food delivery segment amounted to $76.2bn in 2017. By 2019, this number crept up to $107.4bn, which was a 41% jump over a period of two years. In 2020, during the COVID outbreak, the global online food delivery revenues jumped by 27% year-over-year, touching $136.4bn. This increasing trend is predicted to continue in the coming years, rising up to $182.3bn by 2024.

Statista data also showed that platform-to-consumer delivery revenues went up by 32% year-on-year to $70.7bn in 2020. In another 3 years, this figure is set to touch almost $97bn.

The above numbers speak the story. Adding an online ordering layer to your restaurant business can be advantageous in more ways than one. However, choosing between direct ordering and food aggregators can present a dilemma. Here, we try to decode the merits of direct ordering and how it can help your business.

Increased Cost

Food aggregators charge a certain fee for their services. The reach provided by these third-party aggregators may not be worth it when you consider the high percentage of fee incurred. As per CNN Business, restaurants cough up 15-30% extra for every order that comes through third-party platforms. This eats away into the profit margins of restaurants which choose to list themselves on online food aggregator platforms. With direct ordering, a restaurant can save this recurring cost and net more revenues. Setting up direct ordering does involve some effort along with initial costs, but it would certainly pay itself off in the long run. In addition, restaurants also gain when they factor in future orders where they would save more from returning customers with direct ordering on the basis of customer loyalty.

Wider Reach

Direct ordering helps a restaurant business expand its reach geographically and build new customer bases but minus the fee if one were to list on third-party aggregators. Better reach translates into more orders and increased revenues. It also presents an opportunity to establish and promote brand recognition beyond the limited confines of the brick-and-mortar store. It would become a digital asset online just like the physical storefront.  

 Data Ownership

Data is sacrosanct. With direct ordering, your business/customer data remains private and you own it end to end. With aggregators, individual restaurants may not have full access to data or be able to analyse it. Breach of privacy laws and unethical use of customer data could lead to legal issues with third-party platforms. Collecting and analysing data is crucial to making decisions and adds more teeth to functions like marketing, helping ensure operational efficiency and profitability over a longer time frame.


Customer Experience and Satisfaction

It is easy to lose control of the overall customer experience with food aggregators. The third-party portal and delivery service are mostly out of bounds and customers are generally quick to blame the restaurant for any lack of functionality they perceive. This, in turn, damages the reputation of the restaurant in question. A Technomic study revealed that 76% of customers point the finger at the restaurant for any errors encountered. A report from Restaurant Business News quoted that 74% of delivery customers preferred direct orders as compared to third-party food aggregator ordering, which is yet another reason to vote for direct ordering. In this light, it would not be wrong to say that direct ordering drives customer loyalty and brand building.

Considering the above factors, direct ordering is a clear winner and can be a great investment for restaurant businesses to help save on costs associated with third-party aggregators, build and sustain a brand identity and remain ever so connected and top of mind for their loyal customers.  





Published On: April 13th, 2021 / Categories: Digital Marketing, Marketing Strategy /