For restaurants, third-party online food portals have been something of a mixed blessing.
On the one hand, they can provide visibility into potential customers and access on online ordering that they might not easily be able to construct on their own.
But the price restaurants pay for working with those third-parties can be quite high, both literally and figuratively, James McCarthy, co-founder of Flipdish, told PYMNTS in a recent interview.
On the cost side, third-party portals hold massive customers bases and “wield a huge amount of power” over the restaurants on their platform, and don’t always use that power in ways that are to their economic advantage. The cost of being connected to these services is often quite high in terms of what percentage of a restaurant’s online sales they claim — and those charges are going up annually.
But more than the monetary hit, the real cost to restaurants of working with third-party aggregators is that they are basically giving their customers away, McCarthy said — or at least giving up the primary relationship with their customers.
“The aggregators say we are going to do all the heaving lifting, all you have to do is plug in the machine and you are going to get orders, but that is a very short-term solution and restaurants have been stung by giving all this power to the portals,” McCarthy said. “Some of them are now opening up their own restaurants so now they are competing with their clients. So that 30 percent they are charging is now becoming 100 percent.”
Flipdish is a white-label solution looking to solve this problem by helping restaurants of all sizes build their own in-house online ordering and loyalty programs so that they are no longer reliant on third-party portals. The Ireland-based startup recently raised €4.8 million in Series A funding to help give restaurants the ability to “fight back” against the aggregators with a suite of tools that allow them to directly accept online orders and manage their online presence and operations in house.
“End users — people ordering — are actually usually very happy to order from the same place over and over again, if you can offer them a really slick, enjoyable user experience. That is the aggregators’ advantage, and we want to help restaurants grab it back,” he said.
The Right Tools
Restaurants have more power than they think, McCarthy noted, because at the end of the day they actually have what consumers want — the meal they want to eat. The online aggregator or food marketplace serves an instrumental role, as the easiest and most convenient way for the consumer to order online.
“If that restaurant decides they want to take control back of their business and really future-proof their business, they can come to a brand like Flipdish to get a partner in building their own digital experience,” McCarthy said.
That means, in Flipdish’s case, embedding payments and ordering capacity into a restaurant’s site if it has one — or building the website entirely if it doesn’t — as well as constructing a mobile app for iOS and Android, all under the restaurant’s own branding.
From there, he said, often the best way to get customers to start using the platform is to “simply just to ask them” by slipping a flier in with their order, or sending them a text or email to alert them they can now order online directly through the restaurant’s site.
“What we do is encourage all of our customer to take 20 percent off the first order — that gets people to use the system and realize that this is easier to use than the average food portal,” McCarthy said. “It’s also now a chance to get them enrolled in loyalty offerings and keep them involved in a consistent relationship.”
How Restaurants Can Grab Back Digital Ground
Flipdish, McCarthy said, works with restaurants of all sizes, from the single-location café to massive chains planning online ordering rollouts over hundreds of locations nationwide. And while there is no one-size-fits-all solution when it comes to gaining ground in the struggle to control the consumer relationship with third-party portals, he said, there are patterns of use emerging among the restaurants Flipdish has seen come to its platform.
At first, he noted, many restaurants come with an ambition to merely wean themselves back from over-reliance on the portals and aggregators, but they don’t end their relationships with them. Instead, they use the two services concurrently, at least at first.
“The majority of our customers are on food portals and are trying to get away from them. They start using them side by side, and they then try to move their customer from the portals to their internal ordering system. We try to get them to the stage where they are happy with the number of online orders they are seeing that way, so they can exit the portals. It is usually then that we see a huge spike in the number of orders that they get through their site.”
Getting comfortable isn’t easy, as the aggregators are large and intimidating, which is why the focus for Flipdish in 2019, apart from expanding its integrations, is further perfecting its portal so that restaurateurs can easily log in and manage digitally manage their operations — from menu listings and order times to rewards offerings.
But the rewards for restaurants are clear, and the case for being in charge of their own digital destinies more or less makes itself — particularly when they see how many customers they can keep in-house with a “slick and seamless online ordering experience,” as McCarthy put it.
“Consumers are loyal to the restaurants, rather than to the food portals,” he said. “And that is encouraging.”