March 1st, 2017

Restaurant Ordering Consolidators Making Restaurants Unprofitable

Restaurants are seeing declines in profitability as more and more consumers begin utilizing services from consolidators such as UberEATS, Seamless, and Yelp! for ordering and delivery services. In order to stay on top, restaurants must act now to address these issues.

Proprietary consumer research conducted by DMI’s consumer insights team found that mobile ordering and having the option for delivery or pick-up are two of the six most important things quick service restaurant (QSR) diners are looking to do via mobile when engaging with a restaurant. In order to deliver on those use cases, restaurants are subscribing to such services in the interests of satisfying customer needs.

It seems like that would be good for restaurants, except for a very important issue – restaurants have to pay anywhere from 8% to 35% of the check value to those services on every order. That’s right, an amount that is more than the typical restaurant profit on an order.

So, almost all orders that come through the consolidator channels are unprofitable for restaurants. Furthermore, this not only affects orders from new customers, but current restaurant customers that previously ordered directly from the restaurant may begin to use the consolidator service also. The more orders a restaurant gets from such services, the more hurdles to profitability it has to overcome.

An important option for restaurants to consider is how to switch consolidator ordering customers to private channel ordering customers, so the restaurant controls the profit.

Join DMI on an upcoming webinar on March 8th to learn what the six most important things QSR customers are looking for on mobile, as well as how some restaurants are utilizing emerging technology platforms and services to deliver customized ordering and delivery without going through a consolidator. Register here.

Tags: qsr Seamless UberEATS webinar Yelp!

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