How can Just Eat balance offering competitive commission rates to restaurants against maintaining profitability on each order?

Introduction

Balancing competitive commission rates for restaurants against maintaining profitability on each order is a critical challenge for Just Eat. This trade-off directly impacts our ability to attract and retain restaurants while ensuring sustainable business growth. I'll analyze this problem by examining key stakeholders, metrics, and potential experiments to find an optimal solution.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking our current commission structure might be impacting restaurant acquisition and retention. Could you share our current average commission rate and how it compares to our main competitors?

Why it matters: Helps understand our competitive position and potential room for adjustment Expected answer: Our rates are slightly higher than competitors, around 25-30% Impact on approach: Would focus on finding ways to reduce rates without sacrificing profitability

• User Impact: Based on user behavior, I'm assuming order frequency might be affected by restaurant selection. Can you tell me how our restaurant coverage compares to our competitors in key markets?

Why it matters: Indicates whether commission rates are hindering our ability to offer a competitive selection Expected answer: We have good coverage in major cities but lag in smaller markets Impact on approach: Might consider variable commission rates based on market penetration

• Technical Feasibility: Considering potential solutions, I'm curious about our ability to implement dynamic pricing. How flexible is our current system for adjusting commission rates on a per-restaurant or per-order basis?

Why it matters: Determines the complexity and timeline of potential solutions Expected answer: We have some flexibility but major changes would require significant development Impact on approach: Would influence whether to pursue short-term fixes or longer-term system upgrades

• Resource Allocation: Given the importance of this issue, I'm wondering about our capacity to tackle it. What resources (team, budget) are currently allocated to optimizing our commission structure?

Why it matters: Helps understand the scale of potential solutions we can pursue Expected answer: Limited dedicated resources, but potential to reallocate from other projects Impact on approach: Would determine the scope and timeline of proposed solutions

• Timeline and Urgency: Considering market dynamics, I'm thinking this might be a pressing issue. How urgent is finding a solution, and are there any upcoming strategic initiatives or competitor moves we need to account for?

Why it matters: Influences the prioritization and speed of implementation Expected answer: Urgent due to increasing competition and upcoming expansion plans Impact on approach: Would focus on quick wins alongside longer-term strategic changes