Giuseppe Badalamenti, owner of the Chicago Pizza Boss food truck in Chicago, recently posted his March Grubhub statement online, and it went viral. The numbers are horrifying. You pour your blood, sweat, and tears into your restaurant, only for you to turn over almost all of your profits to a third-party marketplace.
Enough is enough. Put your hard-earned money back in your pocket. Here’s a step-by-step guide to how you can do that.
1. Start your own first-party system
The only reason third-party systems are able to get away with successfully pocketing a major portion of your restaurant’s profits is because we let them. If we all stopped using them, they’d die. Like with any boycott, though, it only works in solidarity, and therefore requires trust. Terrifying.
“Unless you are Domino’s and have spent tens of millions on your own tech and online ordering and marketing, you have to incorporate the third-party services into your business model,” says Euripides Pelekanos, CEO at Bareburger.
Take every opportunity you can to reiterate that Grubhub is not helping your brand. Grubhub has grown so powerful that they themselves know small-business restaurants have to use their services to survive in today’s social climate. And they continue to take advantage of this dependency by inundating their clients with fees.
Badalamenti revealed on Facebook that of his $1,042.63 in prepaid orders, Grubhub took $666.09. Badalamenti confirms his “earnings” were barely enough to cover the food cost. While these outlandish fees are the absolute norm, these services can seem downright predatory during the pandemic, essentially forcing restaurants to offer discounts while still taking commissions off of the pre-discounted rates.
“When the restaurant operating model is built around 10 percent or even single-digit profit margins, how is a 15 percent third-party delivery commission sustainable?” says Sam Eckstein, cofounder of Springbone in New York City.
Drop the services. Integrate your own internal systems, starting with your restaurant’s website and mobile apps. There is plenty of dummy-proof software that will help you do this; all you need is to hire your own delivery staff and do a little Googling. Advertise the good-ol’ call-in-and-order method. Vintage is in right now—a creative “throwback” campaign would work.
2. Offer gift cards
Word of mouth is still one of the most valuable marketing schemes. It’s free. It only requires that your food is good and your customer experience is positive. If you don’t have those two things, it’s an entirely different discussion, but you’re going to have to figure that out on your own. Gift cards are a way for your spot to make money while (probably) bringing in new guests, who will then (probably) become regulars.
If your POS provider doesn’t offer them, look into companies like Square. Or consider upgrading to a POS system that won’t stunt your growth.
3. Develop a social media marketing strategy
Utilizing social media will give you the most return on your investment, if done strategically. Start by setting specific, attainable, and measurable goals that align with your business objectives.
Now, get to know your audience. Follow the brands they support and learn their spending habits. Utilize social platforms’ marketing tools. Google Tag Manager will supply you with in-depth analytics on your customers’ ordering habits. Facebook Pixel helps you create your own Abandoned Cart campaigns, and will bring customers back. A little bit of research will unearth a lot more.
Meanwhile, make sure to learn your competitors. Learn from their mistakes, and be creative in emulating their successes. Pay attention to your own wins and losses. Adapt with the current trends in order to stay relevant and interesting, but keep your brand strong and consistent.
Create a calendar and a posting schedule. Use a variety of media types, spaced apart sensibly and shot beautifully. Keep track of holidays, restaurant events, and specific sales. Evaluate and adjust as often as you see fit.
If all else fails, speak to your guest directly, from the heart. Here’s a template to help you get started:
Subject: [Restaurant Name] needs your help!
My name is <<Your Name>>.
I am the owner of <<Restaurant>>.
I need your help. Unfortunately, I don’t make any money when you order from <<insert third-party marketplaces >>. It would really help us if you ordered directly from our website, and you’ll probably end up spending less, too!
As a thank you, I am giving everyone <<offer something that has low food cost>> with their first direct order.
[NOTE: It is absolutely OK if you don’t want to offer anything. Simply cut this paragraph entirely!]
<<Your Name/Your Restaurant>>.
4. Utilize print and digital marketing
The sheer volume of digital advertisements the average human sees on a daily basis has created a special appreciation for print ads. Digital may be processed more quickly, but people spend more time with print. They remember print better. Maybe it’s nostalgia for simpler times. Maybe it is the current trendiness of everything vintage.
Either way, don’t underestimate the power of print. People find a stronger emotional response to print marketing, and connecting on an emotional level is one of the best ways to make a sale. The above email can be printed on a small postcard and put into every bag that goes out to marketplace customers. We have seen a conversion as big as 34 percent so far, which is huge.
5. Offer more on your website
Your website should offer, above all, a great user experience. (If applicable, this goes for your app as well.) There should be nothing frustrating about pursuing your menu or finding your contact information. Its aesthetic should match or compliment your brand. Wings Over, a restaurant franchise founded in 1999, decided to elevate its brand by upgrading its systems, updating its website, and creating its own app. Almost immediately, it experienced a 25 percent increase in sales from the previous month.
“We make sure guests have a great experience if they order via a third party, but we also ensure that they have an even better experience via our own channels,” says Dan Levya, chief wing officer at Wings Over. “We’ve worked to develop an app and web experience that tracks loyalty, makes the ordering process simple, shares promotions, and so much more.”
Sticky’s Finger Joint has a similar story. Upon upgrading its online ordering system, it just about doubled its sales in the first month. It’s sometimes as simple as a quick technological upgrade.
Speaking of aesthetics, invest in good photography. The user-generated food photos on your Yelp page aren’t doing your dishes any justice, and those dimly lit, slightly blurry interior photos aren’t going to cut it. People want to see something that looks polished, planned, thoughtful, and delicious.
Make sure your website has a simple call-to-action button to entice browsers to order. Tell them what to do. “Order Now” always works. “Feed Me” enters a more creative realm. Come up with something that makes sense to you and your customer. In addition to the ordering call to action, create a place for customers to sign up for newsletters and promos. You don’t have to be a writer to pull this off—attention spans are short and a couple paragraphs will suffice. Gathering emails will give you a good idea of your fan base, and a weekly update will bring people in the doors (virtual ones included).
We’ve gone over the power of emotional connection when it comes to making sales. You’re a human with a story—share it. Why did you start your restaurant? What keeps it in business? Tell you story authentically, and make it accessible to your customer. People love to talk, and they especially love to support something they feel connected to.
6. Develop a strong customer loyalty program
Give your customers incentive to come back, beyond delicious food and a good experience. Getting rid of your third-party services will put thousands of dollars back in your pocket, some of which can now be spent on your customer.
“In the next year, we hope to take the $150,000 that we would have paid in third-party commissions and give it back to our customers in incentives like loyalty rewards, sign-up discounts, and, ultimately, lower pricing,” says Springbone’s Eckstein.
Offer a point system that leads to free food or merch. Integrate it into your ordering systems, and send out personalized (don’t worry, they can still be automated) emails to help customers keep track of their reward eligibilities (and remind them to come back in). Get creative with it; think about your favorite company’s loyalty program, and mirror it to work for your establishment. People go crazy for free stuff, especially if they feel like they earned it.
7. Join HelpMainStreet.com
Almost half of the American workforce is made up by small businesses, spread across every single industry. That’s 60 million people employed. They’re not just the heart of our economy, but also that of our neighborhoods. They are our friends, our family. We rely on them differently than we do the giant corporations—they offer the things we need with an experience that has the power to change our days for the better.
Help Main Street is an initiative engineered by my team that was propelled by the COVID-19 crisis, attempting to lessen the economic consequences caused by lockdowns across our country. It is a one-stop-shop on which you may find your favorite local businesses and then order online, purchase gift cards, or donate to them directly. Gift cards are, after all, the best no-interest loan out there. As of now, about 121,828 restaurants are listed on HelpMainStreet.com. The team has successfully raised over $340,000 to directly support local businesses and even launched a partnership with Stella Artois called Sessions@Home, launching their first episode starring Eva Longoria.
“Restaurants also need to find new and creative ways of driving value and sales opportunities with each other,” says Solomon Choi, founder and CEO of 16Handles. “Our customers are learning new behaviors during these stay-at-home periods. When doors open back up, it’s foolish to think everyone will be rushing back into restaurants, so the opportunity is to create more occasions and reasons to get your products/services to them at their workplace and home. A spirit of collaboration will be a better recipe for success than competition.”
To list your own restaurant on Help Main Street, click that link and find the button that says, “Don’t see your favorite business?” Fill out your details. Boom, your venue will be listed shortly (or someone will get back to you within 48 hours). Note: This only works if you already have a gift card program—scroll back up to No. 2 if you already need a refresher on that.
The bottom line is that we can take down the third-party marketplace. We have in our power to cease theirs. Badalamenti’s Grubhub statement is something we’ve all seen monthly. It’s our customers who are seeing it for the first time. Let’s strike while the iron’s hot.
Nabeel Alamgir is cofounder and CEO of Lunchbox.io, a tech startup offering restaurants an all-in-one ordering suite that combines unique web, app, kiosk, loyalty, and catering systems while giving guests a personalized experience. Contact him at firstname.lastname@example.org.