Reduce cost on digital ordering in Hospitality and Restaurant Industry

The digital transformation in the Hospitality industry has been booming lately. Every hotel and restaurant is using a mix in their technology stack, starting with:

• a Property Management System (PMS) for day-to-day functions
• industry-known software (because everyone in the industry is using it)
• Marketing / Booking Aggregators (like Booking.com / Trivago  for hotel reservations, or JustEat / Deliveroo for restaurants).
• affiliates and loyalty platforms
• vouchers and coupon systems
• social media, email marketing and other customer engagement platforms

So you may end up with 5-7 separate systems with their own Customer Relationship Management (CRM) each adding cost on the average Cost per Acquisition (CPA).

But is enough to have all the ingredients and mix together, or sometimes you have to follow the recipe? All these platforms have one thing in common, their pricing is based on a percentage commission varying 10-20%. It’s easy to sign up, but what if the CPA could be cheaper? Especially for return customers, where some may have 1.7-3.4 orders per month.

Your local restaurant – monthly commission per Aggregator

We’ll do a simple scenario, using a restaurant and comparing the cost using a commission percentage (using the lowest 10%) versus using the restaurant website including an Order / Booking engine.

Digital Transformation can look complicated, but done right it can help to:

• Increase revenue and website traffic

• Reduce operational costs

• Improve service quality

• Improve customer experience

Let’s compare

To calculate the cost on the website, it implies a few services:

• Cost for maintaining: starting from £140 per month
• Online Payment gateway: 1.4% + 0.20 per order
• Email and SMS notification: this may be optional, for small volume is £0.02 per message.
• Online/Offline Marketing budget: this vary per business, to simplify the calculation we’ll set a 5% budget from the Aggregator commission percentage

Our calculation will be based on 250 orders with an average of £25 per order.

As conclusion

There is a saving of £119, but we have included additional costs (website maintenance and online/offline marketing) which anyone in hospitality already have in their budget. All included, this cost for acquisition will be 8.1% from total revenue.
Excluding these, the saving would be of £571.5. The cost for acquisition will be 0.9% from total revenue.

To find out how much you may save, check how much commission has been paid to an Aggregator and at least 20% of commission may be saved.