The Standoff Begins at high NOON
All it took was a company like Noon to announce that they’re ready to launch into the food delivery market to make the food delivery market rethink their sales and marketing strategy. The service is expected to be rolled out across the region in the coming months.
One year ago, I wrote an opinion piece about how food delivery companies could help the F&B industry instead of leveraging the pandemic and trying to pad their bank accounts.
I suggested that they do a few things, such as reduce the commission fees temporarily. It was an opportunity for the food delivery companies to improve their brand image with businesses and the market. I wrote that I had pricing models to share. No one from their sales, marketing, or product teams reached out. One of the models I considered was a subscription-based model. Something Careem is launching, which is a better approach than your typical old school commission-based model. I’m not too familiar with Careem’s version, but below is the one I came up with a year ago.
The below table is something I came up with as an example of how an aggregator can set up a more beneficial model where everyone benefits.
On the other hand, Noon has taken a commission approach of 17%, half of the other food delivery companies, which is a positive move. The other part of Noon’s model is that if the restaurant runs a +20% discount, Noon lowers the commission to 12%. From a business point of view, it’s smart. It puts the decision in the restaurant’s hands, and it’s very competitive versus the other food delivery companies. When the restaurant runs a 20% discount on Noon and the competitor, the restaurants forgo 32% of revenue compared to 50–55% from the other companies. This equates to more money in the bank for the restaurant and will incentivize them to push Noon versus the competitors. How will the other food delivery companies respond?
What’s Next?
The market is saturated with food app aggregators — Noon (new), Deliveroo, Talabat, Zomato, InstaShop, Carriage, Entertainer, Munch, MunchOn, EatEasy, Careem Now, GoFood, Eat Clean Me, Tawseel food, NowNow. If I’ve missed any, please add them in the comments.
It’s just a matter of time the aggregators make a change or suffer. They will lose market share, and businesses will go where the market is shopping.
How will the food delivery companies differentiate themselves for business and consumers? They need to start thinking about everything; here are some thought starters,
- LAST-MILE COMMISSION
- MARKET PLACE COMMISSION
- LOGISTICS
- DISCOUNTS
- ACCOUNT MANAGEMENT
- TRANSPARENCY
- MARKETING PLANS with restaurant
- REVENU/PROFIT justification report
- KPIs that the food companies will be held accountable for.
In conclusion, it’s been a rough year for food operators and many other businesses. We know things won’t be changing any time soon. Any relief for the F&B industry is appreciated if it empowers business owners to survive one more uncertain year.
