Why Listing Your Business on Online Food Portals is Bad News?
Why indeed. Well, at a first glance it may seem that being featured on high profile online food portals is pretty great. Because they can help you gain…
- plenty of online exposure
- more clients
- & skyrocket your online sales
In theory, all these perks sound good. Great even. But there’s a long way to the top. Now, I really don’t want to burst anyone’s bubble, but these benefits can sometimes prove to be nothing more than a dog and pony show.
While in theory, it seems that you do have plenty of benefits, in practice there’s an entirely different story to be told. You see, all these perks are the result of an extensive marketing campaign that these online food portals have fueled a great deal of money into. Back in 2015, both Grub Hub and Just Eat reported having allocated marketing budgets of about €70 million. Each.
Case in point.
They’re actually doing everything they can to milk this exploiting opportunity for all it’s worth. Of course, that’s not to say that listing your business on these online food portals is always bad. For example, for new restaurants – which don’t have the money to invest in ample marketing campaigns – being listed on these food portals can turn up to be a good thing.
Because they’re bringing you new customers, who may come back to order from you again and again if they’re happy and satisfied with what you offer them. So, what’s the catch with these food delivery portals?The only way you can acquire more customers, and thus more orders and increased sales, on food delivery portals is if you’re willing to pay more. Click To Tweet
It’s a sort of you-need-to-spend-money-to-make-money type of situation. However, this usually works out for the best for big-chain restaurants. And not quite for small restaurant owners.
Because they may find themselves owing more money than actually making a profit. Let’s see what else you risk losing.
Disadvantages of Being Listed on Food Delivery Portals
1. Losing Valuable Real Estate on Google & Losing Control Over Your Business
Relying on a third-party service (like these online food delivery portals do) to advertise your business can actually take the spotlight off your own website. And push clients towards ordering food from these online delivery portals. Instead of having them ordering directly from your own website and keeping the profits to yourself. That happens because all of the food portals are heavily investing in aggressive Ad Words campaigns.
According to Bloomberg, “on Google, some small businesses have complained that the company displays advertisements next to their search listings, directing potential customers to competitors or to delivery apps that charge hefty fees.”
And every time someone sees their ad is the first thing that pops up on the results page, your clients instinctively click on it. But, this comes with a price. Each time someone places an order through these portals, these portals steal your order and even get a nice cut of the order’s value.
You see, food portals like Grub Hub can detain quite a big chunk of the total order value to themselves. But if people were to order from you, you would actually get to keep the value of the entire order to yourself. Which brings me to the second point on the agenda.
2. Online Food Portals Come with High Fees
The trouble with all this is that food portals can take an up to 30% cut of the total food costs. That is indeed a problem, considering that you can’t even upcharge the customer. In layman’s terms, that’s money that’s coming straight out of your own pocket.
Plus, they aren’t far from charging you even for the air you’re breathing. Because for you to increase your sales, you need to have plenty of active promotions and/or offer your clients irresistible discounts.
So while you may persuade people to order from you, you’re not actually making any profit. And when you come to think about the fact that you also have to pay more for your restaurant to be featured higher up the list – then it’s pretty clear that you’ll be losing money.
But how will moving up the list help you, you ask?
Well, put yourself in your customers’ shoes. What is the likelihood of you searching through dozens of restaurants and spending some good minutes scrolling a lot further down on the page of any food portal when you’re hungry as a wolf?
You want your food delivered to you an hour ago if that’s possible.
Unfortunately, to add salt to the wound, if to all these costs you also add the cost that these food portals detain from the total value of the customer’s order… you realize that being listed on any of these food portals is pointless.
Because who wants to willingly lose money and work hard just to find himself at a loss?
3. These Food Portals Prevent You from Getting in Touch with YOUR Customers
That happens because they have access to all of your clients’ emails. And that is bad for business because they’re not granting you any access to them. In fact, they’re keeping them and sending YOUR customers offers and promotions from some of the bestselling and best-performing restaurants that they’re partnering up with. Because this way, they get the lion’s share.
So, what can you do, in this case?
The reason why most people choose to order food directly on these food portals is because of the oversimplified online ordering process. So the answer is pretty simple: You need an online ordering system that’s easy to use, so you can enable your customers to order food directly from you.
Without logging in onto any of these aggregator websites. There are plenty of online ordering systems out there. Some pricey and some quite cheap. But there are also some great, yet free online ordering systems that provide your customers with a great user experience overall.
4. Fierce Competition Between Restaurants
All of these online food ordering portals actually promote a fierce competition among the restaurants listed on there. The tricky bit is that unless you have your own online ordering system and you sort of have to send your client on any of the aggregator online food portals to order food from you, then you run the risk of losing that customer.
Having him slip through your fingers. Because after logging in on the app or website, consumers can quickly compare your menu with that from another restaurant. Since these online food portals show them a list of your competitors.
And if the prices are lower, or they have something else on the menu which you don’t… then it’s a 100% chance that you’ll be losing that customer order. So, what can you do, in this case?
Have your own SEO website. Follow the link below to get started:
5. Other Problems
Here’s what other restaurants complain about on Reddit: fees can go up when you least expect them to:
They generate fake websites – to redirect clients through their portal. It’s their way of generating sales, and making you do the hard work (the cooking bit) for them. As well as persuading you that they’re indispensable to helping you grow your business.
The fact of the matter is that each time you decide to list your website on any of these online food portals, you’re giving them a lot of control over your business. And that can be a dangerous thing. So, beware who you’re giving your business to.