The online food ordering/delivery business is skyrocketing: In its simplest form it is a rather easy concept. A restaurant is placed on a well run website. The food is sold electronically and in turn the website is entitled a percentage of after tax sale. (20-25%) is the industry norm. My research shows today's technology and the application of it will increase exponentially and thus increase the probabilities of revenue as pertains to this field.
The other day my partner (Kam) and I met with a gentlemen, who runs a delivery/food ordering site, at a restaurant in Las Vegas. We gave him a pitch on how beneficial our talents would be for his site. After the glad handling was over - it was time for brass tacks - "Look, we have twenty restaurants we can deliver on a silver platter to you. They are well established in the area and currently not with any competing sites. Furthermore, we've spent an untold effort convincing them electronic coverage is the wave of the future, and they only go if we say so." I then look the gentlemen directly in the eyes and say - "What is in it for us if we deliver on our promise? What kind of revenue sharing agreement would we be looking at?"
After my question, he shuffles in his chair a bit and says - "We typically don't work with aggregator's, but I see what your talking about. I would be willing to give you a one time fee for each restaurant you bring to me. The fee would be one hundred and fifty dollars per restaurant." The key to success in a system like this is negotiating a percentage of sales for each restaurant you control - Example...a successful restaurant will do anywhere from ten to twenty orders a day on a well run site. If the average order is $30 (industry norm). You would be looking at ten to fifteen thousand a month - take 20-25% out of total revenue and you come up with $2000-$3000 as a figure to divvy. Keep in mind the numbers I am quoting is merely one good restauant. Imagine having twenty.
After his response to my query, you could hear a pin drop...literally. Before I could respond, Kam chimes in - "Let me make sure I heard you right. Did you say one hundred and fifty was all we would be entitled to if we hand deliver some gold to you?" he nods his head yes, "Do you think I would take a hundred and fifty dollars and in turn be inclined to hand you over all of these restaurants that we have spent years cultivating relationships with? You will make twenty times that amount in an average month!"
There was an uncomfortable silence for a moment and he says - "I have overhead. I have to pay for the insurance, I am going to provide the system and the driver. I think it is fair," his response was weak, and I told him such - "Look, I understand you have things to deal with. I get it. But the potential for what we are presenting is vast. Your overhead will be a mute point once things start rolling," I then ask him bluntly, "You're interested in putting these restaurants on your site - Right?" He nods his head in agreement, "In that case, we are going to take a slice of the revenue," I then add, in a matter of fact tone, "The hundred fifty bucks your quoting isn't even in the same stratosphere as to what we will do!"
He starts in on the overhead spill again and how he might be able to make it two hundred dollars per restaurant. I couldn't take anymore babble - so I say, "Look man, I know you are new to Las Vegas. And if you want to be the lone wolf...by all means go right ahead. But I can tell you this. No one is going to work with you at the number you are quoting!" He then tells me that is what he pays in Milwaukee. I remind him once again Las Vegas is not Milwaukee. He becomes annoyed by the statement, pushes his chair out from the table and prepares to leave, I say this as he is parting, "Hey man, if I am going to get fucked. It has to be by a blond with blue eyes and a wavy figure. Even a brunette or red head would do the trick. The last person I am going to get fucked by is some guy who just blew into town that I don't even know!"
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