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The pandemic bolstered intermediaries in the restaurant industry

Updated: Jan 4


revenue management for restaurants

There has been plenty of discussion in the hotel industry around how the pandemic led to a sharp rise in traffic and bookings to hotel direct websites. Although this trend started to dissipate as travel started to ramp back up and the Online Travel Agencies (OTAs) unleashed their PPC marketing budgets, there was a moment that hoteliers had only dreamed about for 2 decades. Consumers weren't taking any chances with rapidly changing travel restrictions and flight cancellations. The information on hotel websites was more up to date and accurate than what was found on OTA sites. Furthermore, if consumers had to suddenly cancel travel plans, they wanted to speak directly with the hotel instead of dealing with the OTAs' customer service.


The restaurant industry, however, experienced something radically different. For the most part, the restaurant industry enjoyed direct relationships with its customers until the Covid-19 pandemic hit. OpenTable, Yelp and Tripadvisor had found ways to facilitate reservations, but upon arrival the restaurant had the ability to build a direct customer relationship. This was similar to the OTA/hotel relationship in which the OTA (Expedia, Booking.com) would facilitate a reservation to the hotel, but then it was up to the hotel to establish and maintain a direct relationship.


That all changed during the pandemic. Uber Eats, Doordash and Grubhub suddenly became the brand that consumers turned to so that they could enjoy meals in the comfort and safety of their homes. It's a good thing that these companies existed, and that they had built the infrastructure that they had built by the time the pandemic radically changed consumer behavior, because the industry would have most likely been even more devastated without them. But it's a reality that suddenly, restaurants found themselves taking orders from and preparing meals for anonymous customers. The consumer data remained in the hands of the 3rd party intermediaries essentially removing the restaurant from the consumer relationship.


I agree with the argument that the 3rd party delivery companies in the restaurant space provide more of a service and are more deserving of their commission than the OTAs in the hotel industry. I have also heard the stories of the aggressive tactics that some of these delivery companies employed early on in order to gain market share. The OTAs did the same, and far worse in my opinion. But the economics looked very different as I've stated in prior videos and posts. The restaurant industry was not used to paying 3rd party commissions the way the hotel industry was when the OTAs arrived in the late 90s. So the sudden dependence on delivery services was an economic hardship for restaurants, regardless of whether or not those commissions were justified.


The bottom line is that the restaurant industry is adapting, and technology will play a large role in its recovery. The industry must be open to new ideas and be willing to adopt winning strategies from other similar industries. We are here to help.



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