Commission based online ordering systems in Australia such as Menulog, Foodora, EatNow, Uber Eats, Delivery Hero and Deliveroo all charge over 10% commission for every order that goes through their online ordering system.
10% may seem like a small commission to pay, but with the high costs of running a restaurant this commission may actually result in a negative profit margin.
Based on Australian Tax Offices’ industry performance benchmarks for 2013/2014, restaurants expenses range between 85% - 92%, which results in profit margins ranging between 8% - 15%.
Below is a break down of costs of running a restaurant in Australia based on ATO performance benchmarks.
|Cost / Turnover||Item|
|33% - 35%||Food and drinks|
|17% - 32%||Labour|
|7% - 20%||Rent|
Other costs include equipment rental, stationary and repairs.
If your restaurant is running at a 8% profit margin, paying 10% commission for every online order results in -2% profit margin for online orders.
Below is a profit margin calculation for a restaurant turning over $100,000 in online orders at 10% commission and operating with 92% expenses.
|Revenue from online orders||$100,000|
|Expenses for food, drinks, labour, rent, etc||($92,000)|
|10% commission for online orders||($10,000)|
|Total Profit Margin||-2%|
In the above example the restaurant is losing $2,000 year from commission based online orders yearly.
With more customers ordering online every year, restaurant’s should look into online ordering systems that won’t cost them a commission for every online order, allowing them to increase profits.