By David Clough
It’s easy to see why takeaway apps have been so readily adopted by consumers. They combine every stage of the ordering process in one easy-to-use platform – from researching local food types and restaurant reviews, to choosing menu items, ordering and paying. This convenience has no doubt contributed towards small establishments finding new customers that they wouldn’t have otherwise.
However, restaurants pay upfront, sign-up fees to feature on these apps. They then pay a commission on each order. For example, one of the most well-known apps, JustEAT, charges an initial setup fee of £699+VAT as well as 10% on each order after.
What does that look like in real monthly numbers?
Recent statistics suggest that the average takeaway order value is about £17 meaning a restaurant would pay somewhere in the region of £1.70 in commission on each order. Sounds pretty reasonable, but it adds up fast and takeaway restaurants can expect to pay an average of £725 per month in fees.
But it’s important to look at results, too. Restaurants who use such apps see their average order values increase by 30%. We can presume that the number of orders they get increases too. That 30% increase in AOV could be worth around £3-5 so would be offset the 10% commission fee per order and you could begin to recoup on the initial outlay over time.
Whilst apps may be dominating right now, it’s important to remember that they are just one marketing option. Furthermore, competitors mass migration to the app platforms may even have created room in traditional marketing spaces for your business to thrive in.
One of the best ways to access whether your restaurant should make the leap into app-land is to compare it with other means of marketing. We’ve done that right here and compared the costs of using a takeaway app versus traditional printed flyers distributed locally.
Menus & flyer distribution
Before your leaflets even begin dropping through local letterboxes, there’s investment required in designing your takeaway menu. Regardless of whether you’re planning on using a take-away app, you’re going to need a menu so it’s relatively unavoidable cost, not an additional one.
We’ll take £350 as the benchmark figure for the purposes of the comparison which is based on 1-2 days of a freelance graphic designer’s time. That cost can, of course be higher or lower depending on the complexity of your menu and sophistication of the design you require. As a rule, you shouldn’t really cut corners with something this important to your business, though. The design can be used for several years and it is essentially the first impression someone will have of your restaurant. It needs to inspire enough confidence in your audience to convert them into paying customers.
Flyer printing costs
The next job on your to-do list would be printing the menu flyers. Again, the costs could vary depending on paper quality, size and shape cuts, etc. But a good estimate would be around £214 for printing 5,000 A5 flyers. When we add that printing cost to the design cost we get what could be called the setup fee of about £565. That’s a good bit less than the app set-up fee of £699+VAT. Obviously, you still need to get the flyers into the hands of local customers, and that’s probably the biggest job in the process.
Flyer distribution costs
A catchment area is generally defined by a five-mile radius around a takeaway shop. Within that area that could be somewhere between 5,000-25,000 homes depending on how densely populated the area is.
It’s estimated that you can probably deliver about 100 menus an hour on foot. That number is obviously hugely impacted when delivering to those with long driveways or to those in close-proximity like blocks of flats. Delivering 1,000 menus would therefore take 10 hours which would cost £60 in wages for someone paid £6 p/hour.
If you’d rather outsource the task, you can obtain the services of a professional direct mail marketing team, including Royal Mail. The downside being the fact that your leaflet might be delivered among ordinary (possibly more important) post which will increase the chances that the menu will end to end up in the recycling bin.
A specialist door drop business will give you the option of delivering your menu alone and these companies can charge between £25-£60 for every 1,000 flyers they deliver. Prices vary based on whether you they flyer bespoke or with other marketing materials.
All the above figures point to it costing about £60 for every 1,000 flyers delivered to homes locally, with the confidence that the job has been done well. That’s a maximum cost of £300 or a minimum cost of £125 to deliver all 5,000 of your printed menus (depending which option you choose).
Menu drops potentially much cheaper
Looking at it from costs alone then, manufacturing and distributing 5,000 menus to local homes with potential customers is a significantly less expensive than the app sign-up fee plus 10% commission.
However, the only true way to conclude which option is the best marketing investment for your business is to investigate and compare both by trialing each method. This is something we would strongly advise you to do.
A key piece of marketing advice for any business is to be open to experimentation, especially in an ever-changing environment where customer needs can change over time. Apps could begin to lose their popularity once the novelty wears off – take Groupon for example. Maintaining menu distribution could be a good idea especially as the distribution costs are comparatively inexpensive.
Securing your restaurant’s future
Takeaway apps definitely provide a level of income security but this luxury should be balanced with the fact that your future success is largely in their hands and comes at a cost. Menu flyers are just one of many ways you can market your restaurant. Some of the best alternatives are surprisingly affordable and are effective ways of taking control of your marketing.
For example, a local SEO expert could help you to appear on Google maps. Marketing on social media could give you a channel to directly communicate updates and promotions more regularly with customers. A PR company could get your restaurant featured in local newspapers.
Marketing agencies for small businesses could cost between £350 – £500 meaning you could afford as many as two days for the equivalent cost of the monthly takeaway app fees. That is adequate time to make a measurable impact. Hiring a freelancer for around £150 – £200 a day could achieve even more for your money (if you’re happy manage them).