iCHEF makes online ordering possible for small F&B businesses with 0% commission per order
Since circuit breaker measures kicked in on April 7, F&B has been one of the hardest-hit industries. It is at a time like this, when dining in is no longer possible and public spaces are virtually empty, that F&B businesses with other means of reaching their customers and generating sales will be at risk if it drags on for another 2-3 months.
Small restaurants are subsidizing technology for F&B chains
While big chains like McDonald’s can afford to close their restaurants during this time to safeguard their employees and still continue to pay them, small businesses cannot afford to close as they depend on income from their daily operations.
F&B chains have an unfair advantage over small restaurants when it comes to adapting to this situation. Most restaurant chains already have a digital presence in the form of a website and social media pages, and have the bandwidth to quickly implement online ordering. In most cases, they are already on board food delivery apps and featured prominently to ensure order volumes. On top of that, some chains can pay as low as a single-digit commission fee in contrast to the average 30% paid by other restaurants. This is at the expense of small restaurants. Additionally, food delivery apps favour speed and volume of order fulfilment, so chains with central kitchens that can easily ramp up production have the edge over small restaurants.
Graphic by ground-up movement #savefnbsg, a coalition of over 500 Singapore restaurants.
Stop-gap measures
Many local food businesses have turned to social media to promote their offerings, manually taking orders on Facebook messenger or Whatsapp. While these methods serve their purpose, it often takes between 15-30 minutes to confirm every order, a time-consuming process involving sending the menu, answering customers’ questions, confirming the items, arranging a delivery time and address, finding a delivery driver, and collecting payment. This often results in a slower response time to customers’ enquiries, sometimes even forfeiting orders as customers get tired of waiting for order confirmation and occasionally missed orders. Not to mention, the logistics of managing such orders on an Excel spreadsheet requires the full attention of at least one staff member at all times. This unnecessarily labour-intensive workflow makes it unsustainable in the long term.
iCHEF launches new online platform for small F&B businesses
iCHEF, a leading cloud-based POS software company, has been supporting F&B owners in managing their orders, customers, inventory and reporting with a single platform since 2015.
Hearing that many of their clients were forced to cobble together an online ordering process from scratch, iCHEF quickly built a FoodAcorn, a platform that allows F&B businesses to go online with minimal disruption to their current operating style. FoodAcorn builds F&B businesses their own online ordering website, where customers can browse their menu and order directly with the merchant.
No commission fees
Unlike food delivery apps and other online ordering services, FoodAcorn does not charge a commission on every order made. Instead, an average merchant pays a fixed subscription fee of $59/ month, compared to $5,400 on other delivery platforms (based on an estimate of 30 orders of $20 each per day at a 30% commission fee).
“Before Covid-19, when delivery orders make up a small portion of a restaurant's business, the high fees can be categorized as marketing cost and restaurants can accept it. When delivery makes up the bulk of a restaurant’s revenue, the 30% fees makes the business unsustainable.. Even after the circuit breaker is over, it may take at least a year before the world is free of all social distancing measures. Restaurants have to be prepared for the ‘new normal’ and adjust their business models to survive. That is what FoodAcorn was created for,” explains Jay Teo, international director of iCHEF.
The importance of cash flow
To help restaurants better forecast their orders, customers can pre-order and pay up to 7 days in advance, so F&B operators can order their ingredients accordingly and prepare. FoodAcorn prompts customers to make payment by PayNow for their orders to be confirmed.
But there is another reason why this online ordering platform uses PayNow:
“Restaurants are in need of cash flow now more than ever, and many third-party ordering sites charge a transaction fee and will hold the merchants’ cash for a period of time before transferring it to their account. The transaction fee and delay in payment double penalizes restaurants who use them. PayNow is an immediate cash transfer, so F&B businesses will have the cash needed immediately,” Mr Teo says.
Building a customer base for restaurants
One challenge with using food delivery apps, or any platform that aggregates restaurants for customers to choose from, is that restaurants do not have direct access to their customers.. Restaurants have no customer insights and no way of reaching the customer to get repeat orders. The food delivery app, on the other hand, owns that information and customer base. That is how they ensure that restaurants are reliant on their services for orders. Restaurants still have to pay the 30% commission even if the customers make a repeat order at the same restaurant.
With safe-distancing measures becoming the new normal even after the circuit breaker measures are lifted, restaurants can anticipate their dine-in capacity to be halved. Consumers will be more cautious with their spending and favour more affordable options. Disallowing gatherings means that ticket sizes will be smaller – F&B outlets can no longer count on higher spending per table when a group is dining, and have to think of how they can encourage individual customers to make smaller, repeated purchases. Having customers order directly from them, so that they have customer information, is crucial for creating a strategy for sustainable and repeated business.
To learn more about FoodAcorn and use it for your business, click below.
