Is it just me or are restaurant tech companies crossing more and more ethical lines to make money off of restaurants? The restaurant business is hard with low margins, hard to find quality help and fluctuating food prices make running a profitable restaurant a daily struggle. Tech companies, especially, SaaS companies cannot charge a large subscription fee because restaurants cannot afford it so they look for other alternatives like charging commissions for leads or deliveries. But charging commissions on transactions is an unpredictable revenue model for tech companies and it takes a very large customer base.
To boost the commissions, tech companies have taken to questionable practices like having fake phone numbers to take credit for a delivery order (Yelp swaps restaurant phone numbers with Grubhub-affiliated ones when you call from the app) The most recent questionable practice that I have seen is charging for event leads. This is how it works:
- The tech company has the restaurant replace your event lead inquiry form for their form
- When a prospect fills out the form on the restaurant’s website that lead will now go to the tech company, not the restaurant
- If the restaurant wants to see the lead or contact the prospect they have to pay the tech company for it, even though the lead came directly to your website, which makes the lead technically the property of the restaurant
- The tech company, because they get paid a commission on leads, will also take the proprietary lead for that restaurant and “farm it out” to the restaurant’s competitors and charge those restaurants a fee too.
This practice obviously has a lot of problems for restaurants. The first issue is that restaurants should never pay for a lead that came from their own website. A prospect found a restaurants website by a search, word of mouth or directly, not because of a tech company, why would anyone pay for that? Second, the tech company is now the middle man coming between the customer and the restaurant. The tech company will ruin a restaurants brand, response time to leads and reputation. Why take the risk? Third, the tech company is looking out for #1, themselves, and farming out your lead(!) to your competitors so they can make more money from the restaurant. Finally, if you pay, say a 10%, commission on your leads, you have basically given away all your profit to the tech company making that lead cost you money, not make it.
At Tripleseat, we purposely stay away from sharing revenue or charging a commission. We have captured and delivered over 6 million leads to our customers and have never, not once, ever charged for those leads. We charge a fair subscription fee and that is it. No hidden fees, no commissions and we don’t share your data and lead with your competitors!