Why franchises do not want to work with UberEats or similar anymore
by Ordering on Jun 30, 2022 3:18:54 PM
Most of us have tried ordering our favorite fast food meal through a popular app, like Uber Eats or DoorDash. Your initial reaction was probably, ‘how convenient is it to have all of my favorite brands all in one place?’
At first, many franchises saw collaborating with third-party platforms as an opportunity to reach a broader pool of customers and improve customer experience by focusing on providing convenience and accessibility.
When apps like Uber Eats reached their peak, everyone saw it as a huge opportunity to increase sales, including the most powerful franchises like McDonald’s.
It is estimated that the exclusive partnership with Uber Eats, made up about 10% of the company’s total sales.
However, over time, the third parties started imposing very high commission rates and created financial codependency between their partners, making the franchises question their strategy.
As a result, franchises like Mcdonald’s and KFC started looking into other options.
Why are franchises moving away from the third-party strategy?
The biggest reason why large franchises are switching to smaller providers or implementing their own technology is the constantly increasing commission fees.
As an example, UberEats charges between 15-35% commissions on their partners and imposes service fees as well as variable delivery fees. The company is very fixed on its rates and does not like to negotiate nor apply loyalty discounts to long-term partners.
That is one of the reasons why McDonald’s moved away from their exclusive partnership and started collaborating with other, smaller providers.
Brands, such as KFC, already started implementing their own applications in order to provide the full experience of the brand online. As mentioned by the chief marketing officer of the company, ‘We want our fans to enjoy the full KFC experience with all the trimmings.’
Access to technology
Technology for creating your own high-tech on-demand delivery website or application became a lot more accessible in recent years, especially during the pandemic. Before, having your own technologically advanced delivery website was considered something time-consuming, extremely costly, and unattainable in a short period of time.
However, platforms such as Ordering.co already work with franchises like KFC, Domino’s, and Starbucks, providing them with custom featured apps websites, real-time tracking, driver apps, and much more, making their technology comparable with third-party providers.
This increased accessibility and quality of technology encourage franchises to explore the options of independent, direct deliveries.
Flexibility of pricing
For franchises, having their own platform enables interaction with their loyal customers and creates discounts and deals on their own terms. Platforms such as DoorDash or UberEats do not offer the same level of flexibility, and always profit from discounts, deals, and any other strategic decision made by a franchise.
Having an independent, direct food ordering technology in place, gives plenty of opportunities to offer deals in order to manage excess inventory whenever it is needed. Also, providing member loyalty discounts, etc., and collecting the full revenue, instead of only a fraction.
Third parties benefit more than the franchise
In these types of partnerships, the benefit was not always equally mutual. Oftentimes, the third-party providers were the ones who relied on the franchise, even though they imposed strict, non-negotiable commissions. Following the example of Uber Eats and McDonald's, the app made an estimated 60% of the volume through McDonald’s orders in 2019.
Being independent provides more opportunities to install payment options that are the most suitable for the targeted location. Third-party apps do not always provide the options, however in Ordering PayPal it’s already working, also any other payment gateway can be easily implemented in your branded Ordering Native App.
Many food franchises have earned their customer loyalty through consistency. The same multisensory experience including smell, packaging, kids menus, and interior design, consistent throughout many years, is what customers are coming back to. Being a part of a third-party app takes away a big chunk of that experience, which is already limited by being online.
Having a fully customized website resembles at least some real-life experience for the long-time customers, and encourages direct purchase because it represents the consistency of the product that they experienced in-store.
To summarize, franchises have plenty of options and reasons to venture out on their own, as opposed to being fully reliant on third-party platforms.
With the current accessibility to the right software and custom delivery apps, it is definitely attainable to reach similar revenue by combining partnerships with independent sales.
Whether you are a franchise or a small business owner who is thinking about whether you should invest in your own app, platforms such as Ordering can help to walk you through the options and try out demos, before you make a decision.
You do not need to be a professional in technology to get more insight into the processes and find out how on-demand delivery applications work.
Topics: Solutions and Use Cases