Picture the scene. You’re a new restaurateur or takeaway provider and your food is awesome! You set up your business to showcase your culinary expertise, engage with your clientele, build relationships, and most importantly your reputation and business. Your food is good and you’re a good person, but you could do with a few more people through the door. Then, you’re approached by an online food aggregator. If you’re not familiar with the term, it describes an organization purely set up in order to send you more food orders or customers. Think of it as more like the classic broker model, but not for anything financial or even tangible – just for hungry people!
This online food aggregator takes care of the marketing, orders, online payments, etc., and then THEY take the payment for the business they’ve sent your way, minus any commission. Sounds good, right? Well, not it's not really as good as it sounds in some cases. What if the aggregator you’re dealing with decides to up their commissions, without any notice? This affects your bottom line. What if your eatery becomes so dependent on the orders that come through the food aggregator that you could never part with their service? Again, your bottom line is affected.
53 percent out of 405 eateries surveyed want to leave the biggest aggregator…
According to a survey commissioned by Preoday, 53 percent of 405 eateries are looking to leave the biggest aggregator – Just Eat. but only if there were a better alternative available and they wouldn’t be affected by any loss of business. Even with the small amount of eateries questioned, this is still a pretty worrying figure. Looking at the take-away eateries from those surveyed, on average the eateries pay £725 every month in commission payments based on a minimum order of 10 percent. These same take-aways also claim to have lost significant revenue due to being tied to the big aggregator.
So, what needs to happen? Basically, restaurants need to regain control over THEIR customers. How will an independent restaurant or take-away ever build any sort of brand or customer loyalty when the majority of their orders are being provided through a brand completely different brand from their own? I’m not saying that an aggregator model is all bad. I am saying that there needs to be some real changes before the restaurateurs and owners start seeing more of a benefit to them, rather than to a third party. Currently, the eateries put in all the work but lose much of the lions share of the profits to aggregators.
So, will anyone step up to the mark? Where is “Our David”…
I started to look into the whole “food broker” industry and wanted to know who the main players were and if anyone was planning a revolution. My search took me into the realms of small tech companies who specialize in restaurant websites and apps. There are plenty of these, such as FoodIT, Blueplus technology, and restaurant engine doing just that, and from what I can tell are doing a very good job. I’ve seen some of the sites and apps they build and have to say, they look very good. However, I wanted to find a company that could do all of the above and still manage to provide a workable alternative to paying out high commissions in exchange for orders.
This is where I came across a company called Kukd. Kukd is part of the Euro Foods Group of companies and solely funded by founder and CEO Shelim Hussain. From what I can tell Kukd is currently one of the only companies offering a solution to the problem. I spoke to Hussain and asked him a bit more about Kukd and the motivation behind the company. Hussain, who supplies 85 percent of Indian restaurants and take-aways explained:
“My business [Eurofoods] operates in such a way that my customers (restauranteurs and takeaways) place their orders with us, sell their meals and then pay their invoices the following week. We’ve noticed over the past few years a huge increase in our debtors and clients who owe us money. The main reason for this is down to them not receiving ANY of their money from the orders from aggregators for 2 weeks! This means they have no money to pay their bill with me. These aggregators are essentially holding my money!”
Personally, I care about the take-away industry. Many of my family members still run and operate take-aways and restaurants, and they tell me that the aggregators are killing their bottom line. So much so that many are now considering closure. This is my main interest in the formation of Kukd.
Hussain he told me that he plans to “take on Just-Eat and the other aggregators head first!” To do this, he’s offering capped commissions of no more than £75, printed menus, free websites and apps, marketing advice, and a whole load of other benefits that will allow take-away owners and restaurateurs to break away from third parties, become independent, and take back the majority of control over their customers.
From what I can tell, this is shaping up to be a real David vs. Goliath kind of battle between the main three providers of online ordering and Kukdpartner.com – Hussain's rival online ordering and restaurant marketing service. If you were to compare the twp marketing budgets, you’d think that there would be absolutely no contest. However, after speaking to Hussain and his marketing department, they let me in on some of their plans which I have to say sound very fun and hard hitting. Whatever happens, I know I'm going to enjoy watching it all unfold.
Image: Flickr / Ewan Munro