Third-party restaurant ordering and delivery platforms command ridiculously high commissions. 30% or more in some cases. Here is how they justify it:
They source the customer. Although many consumers ordering through these platforms would order directly from the restaurant if it were easy and convenient.
The restaurant has less labor cost to service a guest who is ordering for pickup or delivery. But that holds true whether the customer orders directly from the restaurant or through a third-party platform
There is a real and incredibly significant cost to perform delivery. Of course, that cost is significantly inflated by the one-to-one nature of third-party restaurant ordering and delivery. Each order requires a separate trip to the restaurant for pickup and delivery as opposed to sending multiple orders out for delivery together with a single driver (that would cost much less).
Unfortunately, most restaurants do not realize how easy it is for them to use third-party ordering and delivery platforms to grow their customer base and increase repeat business without continually paying high commissions. The ones that do are focused on converting each order they receive through a third-party platform into an ongoing direct connection with the customer. In other words, they try to pay the high commission once to the third-party platform for bringing them the customer while capturing future business from that customer directly.
Here is how they do it:
First, they include a promo card with a deep discount in each order that comes in through a third-party platform. The promotion advertises a one-time discount (like 20% off) for ordering directly through the restaurant’s commission free online ordering system. How many customers are willing to pick up their order for a 20% discount? It turns out, quite a few. For the restaurant, providing a 20% discount almost always results in a net gain compared to the commissions being charged by the third-party delivery platform.
Second, they continue to incentivize customers to order online directly through the restaurant’s commission free online ordering system. For orders placed this way, the restaurant inserts a promo card that offers an ongoing discount (like 10%) to continue ordering direct. Restaurants are realizing that their labor costs for online orders with curbside pickup are lower when compared to dine-in customers. An ongoing discount to encourage commission free online ordering for curbside pickup makes a lot of sense.
Third, they use mobile commerce technology to digitally connect with their dine-in customers. In doing so, they have a better chance of keeping their customers within their commission free digital ecosystem, instead of losing customers to a third-party platform with high commissions. To do this, restaurants are implementing contactless mobile ordering and payment solutions where the customer can scan a QR code at the table, tap an NFC tag or simply browse to a website to view the menu, order, and pay. For restaurants who find contactless mobile ordering and payments too progressive of a step for dine-in customers, they are turning to digital receipts as a highly effective way to digitally connect with their guests and deliver enticing promotions that encourage and facilitate direct repeat business.
Utilizing PayLink®, Purple Pineapple provides businesses with a powerful mobile commerce platform that helps restaurants and retailers take orders online, create and manage promotional codes and digitally connect with in-store customers. Learn more here.
