St. Louis, MO (StLouisRestaurantReview) Many restaurant owners have bought into the business model of third party online ordering and delivery companies.
For lack of better words, “food for thought” is that you are giving away a significant gross sale amount. If your restaurant has a negative profit margin, you are losing money by executing these agreements.
As an alternative, restaurant owners can create their online ordering system for a flat fee, avoiding the percentage of sale concept. When most restaurants have had to rely on online ordering and delivery, it is not a time to give away the house with 20-35% of the gross sale as a commission.
In some cases, these third-party vendors buy ads to steal traffic away from the restaurant’s website to attract them to their website to get the sale. The result is severe financial damage to the restaurant owner at a challenging time.
If you doubt this concept, call your accountant and explain the structure to them and see their advice.
If you operate a restaurant with good financial records, you will see that your profit margin is 20-35%. In that situation, how can you pay a referral fee of 25-35%? At best, it is a breakeven sale.
The biggest mistake restaurant owners make is a lack of accounting to give them the financial information you need to make prudent decisions. We strongly encourage all restaurants to engage the services of an account that generates monthly financial statements or encourage the owner to learn an automated accounting system like QuickBooks to help navigate all economic circumstances.