Marketing Option Assessment - Websites offering customers Online Ordering mechanisms

Posted by fshsfhsfh on Tuesday, November 22, 2011

Here I am referring to websites such as,, etc. Justeat is clearly the most popular of the lot and I am going to talk about how their model works.
FYI: Justeat is a UK company which acquired Bangalore’s own startup in this space, started by a few IIT guys.
  1. Restaurants can list themselves on Justeat and their menu will be uploaded on the Justeat website. Justeat also actively solicits restaurants to list for free on their website. Justeat works on a commission model - i.e. the restaurant pays Justeat 10% of the order value for all order generated through Justeat. 
  2. Customers visiting the website can choose from the various restaurants listed on the website, place an order online. Since they have their profile stored on Justeat, they do not need to enter their address everytime they order. For select restaurants, Justeat also allows payments to be made online (This is a very small percentage currently though I expect this number to increase in the future)
  3. Upon receiving the order, a Justeat representative calls the restaurant and places the order. They have recently introduced a device that is distributed to the restaurants, which can communicate the orders automatically to the restaurants.
  4. The restaurant then fulfills the Justeat order, like they would do for a normal delivery order. They deliver the food, collect the cash. 
  5. At the end of the month, Justeat sends an invoice to the restaurant listing all the orders placed by them with the 10% commission that needs to be paid to Justeat. They send a guy with a hard copy of the invoice and collect the money/check from the restaurant. 
Their business model is quite nice - easily scalable online model with a 10% commission on the order value. They know that restaurants will start complaining about the 15% commission being high. To circumvent this problem, they are trying to market their website very hard to customers hoping that restaurants won't have a choice but to list to Justeat and cough up the commissions. They may well succeed as they do not have any serious competitors in sight - atleast in India. Zomato seems to trying to replicate the Justeat model, in addition to their restaurant review focus. 

Value Adds provided by Justeat:
Justeat, after the acquisition by the UK company, has become very aggressive with their marketing and is also using creative ways to add value to the restaurants. 
  1. They offer billboards to restaurants for a discounted fee, but include their logo in the billboard generating a very low cost way to market their brand.
  2. They offer carry bags (used for delivery) with the Justeat logo prominently marked on them. They offer these bags at a discount of 20% to the restaurant owner. Again a very creative and low cost way to increase awareness of their brand.
  3. They also partner with the restaurants and share the costs of printing flyers - again the Justeat logo is prominently displayed on the flyer alongwith their number. In some ways, customers may call Justeat for the order since their number is the one visible on the flyer. Again they subsidize the cost to the restaurant owner by about 20%. 
  4. They are also starting to provide restaurants with napkins, napkin holders, standees for the table and everything else a restaurant needs at a discounted price, but with the Justeat logo on them. 
I must say that I am impressed with the aggressiveness with which they are trying to build their brand., on the other hand is trying to provide genuine value to the restaurants by trying to manage the delivery logistics (i.e. they operate bikes with a delivery box and are trying to get restaurants to outsource their delivery service to them). While this is more value adding and restaurants won't have a problem paying 10% or even higher as commissions to for doing this, managing the logistics of their operation is a challenge. If they can get their execution right and figure out a way to monetize their service, then would be more useful to restaurant business owners than Justeat. Delyver also supports other establishments (not only restaurants) with their delivery services. 

It will be interesting to see in a few years what happens to both of them. My guess: Justeat with their new investor, cash on hand and some real aggressive marketing will end up dominating this space. Zomato is attempting to catch up with Justeat, but will need to be even more aggressive than Justeat with their marketing and brand building - maybe they can start with the cities not currently supported by Justeat. 

{ 4 comments... read them below or add one }

Cristina Dylan said...

Thank You ! for your perfect article.. you raise some nice ideas and i appreciate your ideas

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Daisy Lola said...
This comment has been removed by the author.
Daisy Lola said...

Thank you For restaurant online ordering website a such a wonderful post really!....

Daisy Lola said...

Thank you For restaurant online ordering website a such a wonderful post really!....

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