Monopolisation of Food Industry

Why are food ordering platforms expensive?

All online ordering systems for cafes are just glorified emails in the sense that the information about the order is sent from the customer to the restaurant. From the technology point-of-view, these orders are invariably a few entries in the database and now-a-days that doesn’t cost much.

Given these facts, why are these platforms so expensive for the restaurants.

35% commission for UberEats is by and large the cost of the promotions and delivery. 15% commission for EatNow is largely the cost of their promotions.

Promotions are good and sometimes they bring in new customers. A customer who has never heard about you or a customer who is simply too far away to reach you.

But be mindful that mostly these promotions work to converting your existing customer into the platform’s customer and make him place the order that he would have otherwise placed with you directly. So the millions of dollars that the platforms are spending in advertising is to act as a middleman in a relationship that already exists between you (the restaurant) and your customer.

While anyone would agree that it’s not a desirable outcome for a restaurant, the irony is that the very restaurants are funding it by paying huge commissions per order.

This leads to a vicious cycle where the platforms feed on the profits of the restaurant and get even more powerful by attracting more customers.

Before the advent of these platforms, restaurants had their audience and a phone number, it worked well. Of course there has always been a competition to attract each others customers, but that was fair because both the competing parties were restaurants. Now-a-days ordering platforms are fighting to take control of the restaurant’s customer and it’s no longer a fair game.

It’s not fair because when it comes to who could win over a customer, your local restaurant doesn’t stand a chance in front of UberEats

In Australia,

  • Woolworth and Coles have taken over the FMCG market
  • Bunnings have taken over the hardware market
  • IKEA has taken over the furniture market
  • K-Mart and Big-W has taken over retail market

Food is one industry where monopolisation has not happened and will not happen any time soon. Otherwise McDonalds and KFC would have made it to the list on top.

But now because of UberEats and Eatnow, there is a huge fight to consolidate, take control and own the customer. This transition has all the characteristics of monopolisation.

Monopolisation in a different sense of course but then the ill effects are the same.

As Zagl our mission has been to empower small businesses with technology that’s at par with giants like UberEats and Eatnow. A 1st party ordering channel which they cannot afford otherwise, to combat the ill effects of the aforementioned transition.

Our objective is not to eradicate or compete with these platforms, but to educate and empower the small business owners in making the choices they ought to make when it comes to technology.

We are achieving this by designing Zagl with the community in mind, so there is no need for command and control — just enough good will to empower and liberate.

For newbies — Zagl e-Shopping Mall is a smart way to setup mobile ordering for your cafe/restaurant on a mobile app for free. For more information checkout our blog.

Photo by Troy on Unsplash