Restaurants are becoming more and more dependent on third parties like Yelp, Google and GrubHub to drive business. But these providers sometimes prioritize profits for themselves over the interests of their restaurant partners.
Mobile and online ordering is becoming the top area of same-store growth for lots of brands, most recently and notably Wendy’s, Chipotle and McDonald’s. Delivery apps like GrubHub, UberEats and Doordash are helping restaurants serve new customers and grow, but it comes at a cost. Most charge a delivery fee in the range of $4 to $8, and some add a service charge of 15% on top of that.
So it probably doesn’t come as a surprise to learn these third parties are looking for ways to drive up the volume of orders placed through them rather than directly with the restaurant. Vice Magazine’s story about Yelp and Grubhub replacing business phone numbers with Grubhub phone numbers is just the latest example of what can happen when a restaurant’s interests collide with a partner’s.
More importantly, services like these insert themselves between restaurants and their customers, diminishing a restaurant’s ability to manage relationships and build loyalty.
Restaurants can push back by taking more control over their own marketing and promotion to build stronger 1:1 relationships with customers. Restaurants actually have a stockpile of data about their customers that can be used to draw in new visitors, and keep them coming back. Systems like POS, reservations and WiFi are the key.
Paying for protection
Intermediaries with conflicted interests aren’t anything new in the restaurant business. By becoming the number one review site for restaurants, Yelp managed to insert itself between restaurants and potential patrons. They’ve been profiting from the arrangement, in ways that both delight and bedevil restaurant operators, ever since.
Bare-knuckled tactics like displaying more negative review information for companies that don’t pay for its advertising services have caused restaurant owners to liken Yelp to protection rackets. But it’s obviously a racket many of them feel obliged to support. In 2018, Yelp earned $943 million.
In recent years, the pool of partners profiting from restaurants has only grown. Restaurant operators pay reservation services like OpenTable for reservations. They pay delivery services like GrubHub and UberEats for take-out orders. They pay Google for local search. And the list goes on.
Bottom line: restaurants have no end of companies to help them find customers and grow their business. But these companies also have their hands deep in the cash register. They all offer valuable services, but restaurants need to treat these relationships with care, sort of like carrying a hot pan through a busy kitchen.
Avoid the shakedown
Take control of customer data. Don’t rely on others to know where to find your customers and how to reach them. Use systems you have in place to better understand who visits, when they come and what they like. POS, WiFi, Loyalty and other systems collect data that can help you better understand and communicate with your customers as well as target them effectively through digital advertising.
Build strong, direct relationships with customers. Customers become more valuable the longer they remain loyal to a business—as much as 10x more valuable. Returning customers tend to buy more, and buy more frequently. Newsletters, loyalty programs and events keep customers coming back, reducing the need to rely on expensive new customer acquisition programs.
Make sure your business is easy to find. Check listings and search results for your business regularly to ensure information is all up to date and accurate.
Use syndication services to distribute content. Your business lives in a lot of different digital environments where potential customers can discover you. It’s next to impossible to manage them all one at a time. Platforms like SinglePlatform, Yext and MomentFeed make it easy to keep information consistent and accurate.
Don’t give away anything you don’t have to. Margins in the restaurant business are tough. You don’t want to waste discounts or special offers on customers who are happy to visit without any giveaways. By tracking customer visits and spending, you can align offers and timing to maximize sales and minimize discounting.
Technology partners are helping restaurants access new customers and channels, dramatically changing the landscape, including restaurants that exist only in the virtual world. But for businesses that want to operate in the real world, third parties should be handled with caution. Savvy use of customer data already on hand can be the key to building strong, direct customer relationships that ultimately lead to a healthier, more profitable business.