Online food delivery service has changed the landscape of how Vietnamese could enjoy eating. The demand has accelerated through the period of Covid-19. Although food service industry is in general in the financial turmoil, it is true that these online delivery trend has generated the new opportunities for the innovative challengers who take this as the opportunity to grow the services.
We had conducted the interviews with two restaurant owners who made the impressive revenue generations by making the most of these online opportunities.
These restaurants started to use online delivery platform one year ago. In prior to that they relied on the traditional sales from the stores only but interested in using the online delivery platform seeing the rising demand of GrabFood, Now and others.
Nguyen: I have used Now and GrabFood for several months and Baemin for one month. I sent the document to Baemin 4 months ago but they just approved last month.
Hien: I started to use Now and GrabFood one year ago and Baemin for a couple of months. Before that we provided the delivery service but the online ratio is too low. We now use Now, GrabFood and Baemin, the online sales ratio went up to 85% of the total sales.
In Vietnam, we have several platforms that work to serve food & beverages online. They use Now and GrabFood for some reasons.
Nguyen: We use Now, GrabFood and Baemin mainly and our reliance on Now is 40% while the other services such as GrabFood or Beamin account not more than 20%. The reasons why the sale of Now is bigger than the others are due to the promotion differences. For Now, the brands support the frequent promotions and they bear the cost, thus it makes easier for us to run the promotions more frequently.
Hien: I like Now the best. The application for Baemin took 3 months while the others took only 1 month. In terms of the support from the customer services, Now is the best, their customers support response more quickly and take proactive approach to run the promotions or campaigns. For the others, they are not as helpful as Now.
We see many drivers queuing in front of the shops during the peak hours. What kind of people use online food delivery services? Let us hear their comments
Hien: Our main customers are official staff with the age from 20’s to 30’. They came to know us through the campaigns as the pricing is more attractive. They tend to become the repeaters after the initial trial and now 40-50% of our customers are the recurrent customers.
Nguyen: Our key customers are official staff, so our peak days are from Monday to Friday with the peak hours are from 11 a.m. to 4 p.m. For the distance, it is within 3 kilometers radius from their office. On Sunday, we almost do not sell on online delivery platforms.
What are the secrets of them winning in this market? They both stress the importance of the promotions to call out for the more customers. How do promotions work to lift their sales?
Hien: Although there are many types of the promotions, I believe Now promotions (e.g shipping free) work the best. Since we started our services, we could get 200 orders in a day when the promotion worked the best. What is good about Now is that they cover all the cost for the promotions, thus we could increase the sales without damaging our profitability
Nguyen: In case of Now, explain how the promotion scheme works, I could estimate the sales increase by 30% - 40% usually.
Knowing that there are many restaurants that use these food delivery platforms, what make them be outstanding among the others. What are the tips to make their stores popular?
Hien: Our sales has increased at milk tea once we gained the badge of “favorite store” from milk tea. This is the token received from Now platform when your sales exceed the criteria that they set. By having this, our shop is on top when the customers search on the platform. Customers tend to pick the top stores that have promotions, high ranking and store’s location is near to them. In order to make the sales better or repeat orders, we often catch up the market trend for our dishes, and continue to run the promotions.
Nguyen: At the beginning, we do not have the profit but after several months, we continuously push for the promotions, our sales picked up. We also to put the images, which are on the Internet, on platforms with attractive description, this make our dishes look more eye-catching.
Most importantly, how much do they make from their online business? Their shops are not big and not located in the big street area where the high traffic comes. However, they utilize their low cost operations to make the good profit by relying on the delivery platform for traffic generations,.
Hien: Online platform sales contribution is 80% of our total sales. We usually sell 120 – 200 units in a day to make the sales of 100 million – 125 million VND in a month. Even though we have to pay 20% to Now, this gives us the strong reasons to keep relying on Now.
Nguyen: The cost of the platform usage varies by the platform name. Now charges 20% while GrabFood and Baemin are 25%. I use Now due to now commission. For our sales, 80% comes from online, out of which 40% come from Now.
Monthly sales outlook
The store location, which was one of the most important factors when running restaurant, came to lose its importance in this online era. These stores stick with low cost operations while their platform partners play the great role of bringing the customers. Their business have been stable even after paying the transaction-based cost to their platform partners.
Covid-19 has changed the way Vietnamese enjoy their cuisines and these are the players who made the most of these changes into their new business.
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