Food delivery aggregators are a bigger threat to the restaurant industry than Covid-19
It's time to take the threat of delivery aggregators seriously
An industry insider believes the tech giants could be a bigger long term threat than the pandemic for restaurants.
Food delivery aggregators are a bigger threat to the restaurant industry than Covid-19. While they have been much talked about since the pandemic started, we think many have underestimated the power they have in their hands and how they are exercising that power to push restaurants to the side and take their place.
The focus since March 2020 has often been on the high commissions they charge for delivery – in some cases up to 35% of the order value. And it is right that this is highlighted, because it is unsustainable, particularly with margins being thinner than ever, and delivery becoming a higher proportion of restaurants sales than before.
Many aggregators have now started to demand exclusivity from restaurants or else they will charge them even higher fees, reducing their visibility on their platforms and tying them down to agreements with one brand that does not have their best interest at their heart and soil.
Yet, despite charging these exorbitant fees, many food delivery companies don’t even make any money, their burn rates are high and have never made any money. Instead the focus is on restaurant customers data and behaviors – they have full access to restaurants customers and all the information that it brings, which they can then use against restaurants who in the first place are handing it away to them in a golden plate.
We are set to see a rise in dark kitchens owned by delivery aggregators who use data including what types of cuisine restaurant customers are ordering and at what times they are placing these orders to set up their own virtual brands, undercutting real restaurants with low quality produce that cannibalises real restaurants customers. And if they get complaints they can simply change the brand name of the virtual (dark) kitchen and do it all over again, without the customer having any idea they are ordering from the same place, or that they are ordering from a dark kitchen at all.
In a single day a (Virtual, Dark ) kitchen can go from selling breakfast foods in the morning to Mexican at lunch to Chinese in the evening if they believe that is what the customer is searching for.
There is no transparency and therefore no accountability. It’s bad for the customers as the quality is low and it is disastrous for the restaurants industry and the brands that have built themselves up to be trusted by their community because of the quality of service they have provided for years.
Unfortunately though when offered what looks like a bargain, many customers will take the chance, especially now when budgets are tighter than ever. And for the aggregators not taking advantage of dark kitchens, yet, they will instead try and force you to offer a massive discount on their app, thereby reducing your profits another way.
The game is rigged and restaurants cannot win.
The only way for restaurants to get out of this cycle of despair is to encourage direct ordering or use some of the local options that have significantly reduced commission. Unfortunately though, they do not have the same user base as the big boys and it can be impossible to see the same level of customers.
Unless restaurants all come together to solve this problem, the industry will continue to see heavy losses all round or find an alternative solution to receive direct orders to their restaurants that increases their order value, manage & safe guard their customers data and use it to their advantage rather than the other way around.
In OrderBeez We are a team passionately focused on driving restaurants success in the era of digital transformations by enabling and equipping them with digital tools and Channels to operate successfully.
We bring together the powers of world-class e-сommerce technologies make them easy and accessible to keep 100% profit in their pockets, own customer relationships and get of the hook of aggregators who are suffocating and eating up their profits & margins
We want to be your partners by strategy, by personality and by choice by putting our products, our services, our innovation, our people , our world class technology partners - behind a simple, but a very powerful idea. And that is to make technology work for you and your customers.
That is our commitment to Restaurant Owners
Our Model is built around, setting up your digital channels, managing and operating them on your behalf.
You do what restaurants are supposed to do and we enable you with cutting edge technologies to support your business operations.
OrderBeez is in the business of empowering restaurants to receive direct orders from customers from their direct branded digital channels such as websites, mobile apps, instagram, Facebook, Snapchat, blogs and any digital platform which enables operational costs reductions, increase revenue generation potentials to achieve their business objects & increase customer loyalty towards their brand and put them off the claws of food aggregators who are suffocating and eating up their profit margins while diverting regular restaurant customers to their own virtual & cloud kitchens.
- Establish Data Sovereignty
- Protect Small & Medium Restaurants Business from aggregators and their virtual & cloud kitchens