We’ve been finding that restaurant operators are flocking towards these Delivery Services, Daily-Deal Companies, and creating “Marketing Partnerships” in order to help drive top-line sales into their joint.
The question is: At what cost to the business? Navigating these shark-infested waters can be treacherous, and the water’s only getting more saturated.
It’s no secret that the life of a restaurant operator is akin to stepping on a roller coaster and never getting off. For a brief second you’re on top of the world with seemingly everything going your way, and then Murphy’s Law kicks in and the O-ring on all of your kegs break the morning of St. Paddies Day.
Suffice to say, a consistent marketing strategy most likely doesn’t top each day’s to-do list when you walk through the door every morning; also possibly a major contributor to that line of sales reps out your door trying to get you to sign up for the next new hot delivery service/daily deal/insert AMAZING internet website name here.
We’ve pulled back the green curtain and broken down a handful of the most frequented types of services that we’re seeing on an increased basis… what do these deals mean for you?
Direct Delivery Services:
Within Direct Delivery services, a customer orders from the service, the order gets placed to you, and finally, picked up and delivered to the customer – FOR A FEE TO YOU – the restaurant owner. Fees come in as low as 10% and as high as 40% depending on the service chosen, and orders could be as small as a single menu item.
In using a service like this you can expect to receive payments as often as weekly yet as infrequently as the month’s end, and in most cases, the company placing the order will take fees out of what is deposited to you.
This service typically satisfies larger orders or multiple meals based around business centers where large groups are meeting. There are always exceptions to the rule, but for the most part, they work very much like the Direct Delivery Services in terms of payments and fees; you’re simply seeing larger orders coming in.
These sites “partner” with restaurants in your area and promise to drive your sales up and increase YOUR awareness in the market through their site. They do not offer Delivery Services of their own so you have to provide delivery, but since they are essentially “delivering” you a new customer you can expect to see a fee taken for said service.
On these sites, a customer makes a purchase from the offering company that in-turn pays you a small fraction of what was received. You then provide a discount on your products or offer freebies when the guest comes in. These often benefit the Offering Company and the purchaser, but a loyal consumer is not earned unless another offer is made at a future time… potentially earning you instead, a boatload of once-in coupon clippers.
Alternate Payment Sites:
This is a secondary batch that’s aside from your regular credit card processor. These companies will have their own fees. Typically these are used for off-site types of transactions or online gift card merchants that intend to get you more sales.
Online Gifting Sites:
Customers buy a product or service for someone, which is then redeemed at your location. It’s important to note in these scenarios, that the “gifting” company will take any applicable fees out of the originally purchased sum and pay you the remaining amount at a later date.
Now that we’ve given you a brief list of what each “deal” company will provide for you, take a second to think about the following:
- What impact will this service have on my overall business plan or marketing objectives?
- Will this company help drive my brand recognition to my target markets?
- Do the fees align with my budgeted advertising expenses?
- What effect will this influx in revenues have on my Top-line sales, Bottom Line Profits, and more importantly what will it do to my cash position?
Check out Restaurant Deal & Delivery Cash Flow that discusses the math behind these deals as well as cover any other considerations when weighing if one of these services is right for your restaurant.