This is Just Eat’s fundamental selling point to takeaways: they simple plug in the £699 Just Eat terminal and starts receiving more orders. Yet an independent study from Peel Hunt, a City research firm, queried whether Just Eat is not causing a net growth of orders but simply ‘cannibalising [the takeaway’stelephone orders’ a KPI that ‘is frustratingly not disclosed by the company’. Peel Hunt even go so far as to consider whether this cannibalisation could have a ‘negative net impact on profits’ since of course the takeaway would lose 12% commission to the former telephone customers where they used not be charged at all.
In a recent study Barclays calculated that the average commission Just Eat charges a takeaway is 11.7%. This is quite a difference when you consider all other methods of ordering takeaway are commission-free for the restaurant. Barclays also expect Just Eat to ‘bring this over time to 14-15%’ since ‘merchants have proven to be very inelastic to price increases’. We saw a different side to this “inelasticity”. According to a Secret Shopping Research done by JKS Mystery Shopping around a third of takeaways are being left with no alternative but to raise their prices in order to manage ever higher Just Eat fees. This is not a sign of takeaways being comfortable with the high commission rates, but more of them feeling cornered and trying to find a way to keep their heads above water.
Under their takeaway sign-up page Just Eat claims they ‘invest more in marketing than any other brand in the sector’. This is evident when seeing a takeaway wallpapered with Just Eat merchandise- from the ‘We’re Open’ signs down to the pizza boxes. However this aggressive marketing of the Just Eat brand comes at the cost of the restaurants’ own brand. In an independent survey, Red Brick Research found that 42% of takeaways think the Just Eat brand and marketing jars with their restaurant’s identity and values. There are even scenarios of restaurants’ own website traffic being shadowed by the Just Eat version of their website..
On the sign up page Just Eat tells takeaways that they will ‘instantly connect with local customers already ordering online’. However the Red Brick Research survey discovered that 49% of takeaways found it harder to build direct relationships with their customers. This is most likely due to Just Eat’s role as the middleman in the transaction. When a customer orders from their favourite takeaway through Just Eat, they are essentially ordering from Just Eat, who then outsources the order to the restaurant. This means the restaurant has minimal, if any, contact with their customers. Longtime customers become Just Eat’s customers; customer service and their loyalty is owned by Just Eat, and restaurants , to coin a phrase, ”Just Cook”.
If you’d like to find out how to break free of Just Eat and get the benefits they’re currently seeing, get in touch!
Find out why Preoday clients are choosing the platform over Just Eat in this case study from our client Red Naga.
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