3 Hidden Pitfalls Of Online Food Ordering Portals

For restaurant owners who are considering the likes of FoodPanda, the online ordering marketplace as a sales channel, we reveal 3 of the hidden pitfalls worth considering.

Growth of online ordering marketplaces

With Rocket Internet's recent aggressive acquisition spree of a US60 million fund, one would start to think about the future of online food ordering. No doubt, food delivery is definitely a sure way to increase restaurant's revenue, especially beneficial with the increasing overheads and rental in Asia. However, what are some of the considerations restaurant owners should have before deep diving into online ordering marketplaces? Here are 3 pitfalls worth considering:

#1 Losing recurring profit margins

From https://www.quora.com/How-does-foodpanda-in-earns-its-revenue

From https://www.quora.com/How-does-foodpanda-in-earns-its-revenue


Taking online orders through major online ordering marketplaces like FoodPanda and Deliveroo comes at a cost. Each time they receive an online order, even if it were for a returning customer, a transaction fee is still charged to the restaurant. For instance, according to articles on FoodPanda’s charging models on Quora, their commission can even rise up to 10-20%.

So what exactly is wrong with per transaction charges? Well, the key objective of getting online orders through online ordering marketplaces instead of online ordering systems is the pull of marketing. Using online ordering marketplaces helps to get your brand name seen but if a returning customer loves your food and remembers your brand, there is obviously no need to pay for the extra marketing cost.

Certainly, online ordering marketplaces are a quick and easy way for brands to be exposed to customers, but from a long term view, would it make sense and "cents" to pay more fees even when the customer already doesn’t need to be reminded of your online ordering service? The smart alternative is to have a combination and redirect second-time customers to your own online ordering system’s frontend menu.

 #2 Losing customers due to poor service levels

From Google Play app review on FoodPanda, 12/5/2015

From Google Play app review on FoodPanda, 12/5/2015

Consumer experience starts from the moment they order from the online ordering platform or online ordering system to the time they receive the food. By hinging a major part of the service delivery on third-party service providers, restaurants could end up with little control over service levels.

A quick search on Google Play app reviews shows a considerable amount of user dissatisfaction in service levels - slow delivery, order cancellations and a lack of communication channels. While the real reasons for dissatisfaction cannot be traced, it is fair to conclude that service gaps are bound to arise when the sales channel is being handled by a third party -  whose interests are not entirely aligned with the restaurant’s. This is why an online ordering system which allows for full control over the online ordering process is more beneficial to an F&B business.

 #3 Operations turnaround time


Online food ordering marketplaces are run independently from restaurants’ kitchen operations. This poses a problem when a certain item runs out of stock, simply because restaurants have no direct access to update the online ordering menu immediately from their end. This gap in operations turnaround time could cause inefficiencies, or even lead to order cancellations should a customer order the very item that is out of stock.

In a nutshell

Online Ordering Marketplaces < Online Ordering Systems

For those who are looking for immediate quick brand exposure and have the resources for service recovery, online ordering marketplaces might be an option worth considering since there's no upfront investments. While this surely makes economical sense (for now), restaurant owners who have concerns about sharing their recurring profits and brand building should consider online ordering systems that they can own in-house.

Find out how Oddle's online ordering system can benefit your F&B business