How Marketplaces Are Eating Away at Your Restaurant’s Bottom Line
Third-party marketplace online ordering platforms like Postmates, Grubhub, and Uber Eats may seem like a smart choice for your restaurant. After all, it pays to have online ordering, and these services can offer you a large audience of new customers. If you currently work with one of these delivery middlemen, you may very well have a steady stream of orders lighting up your tablet, announcing yet another customer hungry for your food.
The volume of orders, though, masks a sobering truth: these third-party marketplace-style online ordering platforms are eroding your margins and undermining your business.
How much do third-party online ordering platforms like Grubhub cost?Third-party marketplace online ordering platforms charge commissions on each and every order, which can range between 15% to 40%.
Grubhub, for example, might charge you a base of 20% per order just to appear on their site and accept online orders. If your restaurant is in a competitive area and you’re eager for marketing help, though, you’ll want to opt for a sponsored listing, which would place your restaurant near the top of search results. That, though, might cost 30% of each order instead. Delivery is another 10% of your order. Even if you have your own delivery person and charge your customers a delivery fee, Grubhub will take 10% of that too. All in all, platforms like Grubhub cost you up to 40% of what you take in for each order.
Those commissions add up.Perhaps you’re not paying anything close to 40% of each order—maybe your third-party online ordering platform charges you 15%, for now at least. Even then, these commissions can put a large dent in your profits.
Say your restaurant operates at a 10% profit margin, which is above average for the industry. On a $50 ticket, you’d actually keep $5 in profit after accounting for your food, supplies, labor, rent, and all the rest. Even if you’re giving just 15% of each ticket to your marketplace, that equates to $7.50, which leaves you with a loss of $2.50.
That loss wouldn’t be significant if it only applied to a customer’s first order. After all, you’re using third-party marketplaces to reach a new audience, right? However, third-party marketplaces like Grubhub cost the same whether it’s a diner’s first or fifteenth order. That $2.50 loss gets multiplied, and you end up paying these marketplaces a massive sum of money to sell your food.
That's why SVSMARKET has put online ordering back in restaurant hands with a flat monthly fees. Escaping from unfair Third-party marketplace fees.