The digital age we live in functions to serve at one’s greatest convenience. This extent has most recently gone as far as mobile delivery apps taking the restaurant industry by storm. Uber Eats, Postmates, and Grubhub are popular United States media companies that enable an awareness for a brand and also functions as a cost effective option to the average customer. Most recently, the discounted rates and promotional offerings through these apps have negatively affected many restaurants financial stability.
While consumers may feel as if their easy access to take-out food is of benefit, what many don’t realize is the amount of commission these apps are taking away from the business. The #Logout campaign is a movement created by the National Restaurant Association of India, where over 1,200 restaurants across the country pulled out of online food tech platforms, claiming how significant discounts hurt their businesses.
Aakanksha Porwal, the owner of a diner called Vahnilla & Company, stated that Zomato (an Indian delivery service) users who pay $14 for a year of buy-one-get-one-free dining at 6,000 restaurants has cost her about 20 percent of the company’s revenue. And Vahnilla pays Zomato 28 percent on every order that is delivered. To put in perspective how this translates to U.S companies, restaurants such as Uber Eats and Grubhub charge companies up 15 to 30 percent in fees for each order customers place through their platform.
The recent campaign thousands of Indian restaurants have supported has persuaded Zomato to limit its discounted rates and invest in alternative options to keep its subscribers satisfied. While these efforts may provide some minimal stability in the meantime, the long-term effect of these delivery apps foreshadow an unclear future for the restaurant industry globally.
I have never used a third party delivery service so I was fascinated to learn more about how these apps can benefit, or in fact hurt a business. The information provided by the article certainly demonstrates how effective media companies can be in any capacity. Just as we have most notably seen how streaming services are causing some to cut the cord with cable eventually the restaurant business may not be too far off.