March 23rd, 2020 this is the date that most of us in business will not easily forget, this is the day that everything changed for the local Fish ‘n’ Chip shop and the Independent Takeaway Food Outlet.
At first local and existing customers flocked to the chippy, we all accepted the queue outside, also the weather wasn’t too bad either.
But who were all these customers happily being patient to get their chippie tea?
The simple answer is loyal customers, the very same people that bought from you before March 23rd.
Why did processing orders and payment become expensive?
There would have been many Independents shocked at the increase card payment fees as they turned to taking orders and payment by phone.
The reality being that a £10 order taken over the telephone with a debit card had a 50p CNP (Customer Not Present) charge applied, in most cases.
Card processing fees were more than likely exceeding 6% when all POS related charges are totalled up, even when a merchant negotiated low rates and fees previously.
What happened next has been like watching a disaster movie play out and we still have not got to the ending.
Signing up to 3rd party online ordering apps and food delivery services. This joining of an aggregated delivery service has proved exceptionally problematic for the smaller Independent and hugely expensive.
Charges and fees are high and ranging anywhere from 20% – 35%.
Regardless of what business you are in, 20% added to your cost of sales is a tough cookie to swallow. A business owner in the hospitality industry will run on a very tight margin, where it appears the orders are coming in thick and fast, turnover is increasing, unfortunately, so are the costs!
Not being able to lower this average 30% running cost, becomes a huge issue for most. The general rule of thumb in any business is to increase sales and the profit margin increases, so the high costs associated with this type of platform is like trying to fight your way out of a paper bag!
Cancelled orders and refunds out of the business owner’s control.
The fish and chip shop owner’s page on Facebook now has daily comments and complaints by owners regarding the control the 3rd party delivery apps have over their business.
Dispute resolution and the customers getting their money back is actioned directly by the 3rd party provider, it has also been reported that funds were being held for over for 3 weeks while a complaint was being resolved.
A business owner not having any control over their revenue is simply absurd and can also be exceptionally harmful to a business.
Only today I saw a post asking if any other owners had orders delivered and when they marked the order as so, on the return of the driver received a notice the customer cancelled the order. This resulted with an immediate refund issued by the 3rd party operator.
Sadly, the owner could do nothing about it and the thread comments went on to say that this was happening more and more frequently as customers had started to use the loophole to their advantage.
As a side note, owners are also reporting the customers phone number does not work if they try to contact the customer, but if the 3rd party driver calls then it will go through.
Delivery and reputation in the hands of the 3rd party delivery driver.
You only need to read reviews in your local area to get an instant picture of the impact a delivery driver not directly employed by the business the influence with reviews and ratings.
Not only do restaurants get the raw end of the stick when it comes to reviews, they also get blamed for the customers bad experience. When something goes wrong with the order, whether the food is cold, or the delivery is late the negativity is thrown directly at them.
Loyalty and engagement
This is the most important part and owners need to strip back to the core of the business model prior to COVID to get to a healthier position.
The local Fish ‘n’ Chip shop is a perfect example, back in the old days (pre-March 2020) we would all pop to the local chippie whether it was a regular Friday night thing or just when you needed something quick and fast, we have all got our reasons. I know I have two favourites by me and if I want battered fish, I favour the one over the other and I class myself as a loyal customer.
Jump onto the 3rd party food delivery app where food can be delivered from a business several miles away, then your local loyalty position drastically changes.
The distanced customer ordering has probably chosen you for several different factors, usually focussed price or special offers, this is likely to encourage the behaviour in points 1 and 2 above.
So how can you strip it all back and take ownership of your brand and reputation?
The months through last year, there did not seem to be any other option, the assumed cost of developing your own app or building an online solution seemed to be too far out of reach, also this method is still costly.
Even the monthly costs from the pop-up app providers in the summer were at times just as eyewatering and the 3rd party delivery apps offered an immediate solution.
The rise in next gen tech from Sticky.to is revolutionary, the platform is designed to help business solve problems, exceptionally cost effective and accessible to all. The platform library alone will put you back in control of your business and your customers do not download an app at all, imagine having your sticker on a customer’s fridge and when they fancy fish and chips simply tap the sticker, place an order, and pay in 20 seconds or less!
That is powerful engagement with your customers, having total ownership of your reputation is simply down to being a customer’s favourite fish and chip shop, again.
Tracy Hazlewood offers FREE consultancy and payments support that is informative and inclusive for the Shropshire SME. Her expert knowledge and resources allow her to give the local business owner an understanding of the customer payments eco system, and includes a proactive and responsive approach.