Restaurants all over the world have a love-hate relationship with aggregators.
Restaurants don’t like to pay 30-35% commissions to aggregators.
And the reality is that the aggregators are still not profitable in most of the markets they are operating in. They are not profitable because customers don’t like to pay the full delivery cost, the labor is too expensive in certain markets, or the average order value is too low in some other.
From the restaurant’s perspective, here is some advice on how to manage the aggregator relationship better – works well with mid-sized restaurants (5 to 50 outlets)
1. Have different price and menu for each channel
Most restaurants have started jacking up their prices by 10-25% on aggregators. This allows them to have better margins on aggregators’ orders.
2. Have a different portion of the menu on aggregators
Many aggregators sign a price-parity clause with restaurants to ensure that the pricing remains the same across all channels. Many restaurants escape this by having a different portion of the menu e.g. Offer 3 pieces of chicken on aggregator instead of 2 pieces of chicken on your regular menu or offer 400g of serving instead of 500g of serving.
3. Target your lower AOV deals through aggregators
Target your mid-sized deals through your direct delivery channel and target your largest/premium deals through your dine-in.
The lowest AOV orders still have the same delivery costs associated with them. So let’s share the cost of that with aggregators.
4. Use aggregators for customer acquisition
Restaurants need to use aggregators for customer acquisition. It is still the most risk-free channel for a new restaurant to acquire new customers.
However, for your loyal customers, it is the most expensive channel to have. Make sure you are providing your customers with a great first-party ordering experience so you don’t end up paying 30-35% of each order from your loyal customers.
Smart restaurants:
- Acquire new customers through aggregators
- Provide excellent first-party experience to your already acquired customers (through dine-in, own marketing, etc.)
