The online ordering market is a huge marketplace for restaurants. Learn how this new revenue stream can benefit your business, and how to ensure you’re not wasting money.
Online ordering is a vital expansion of your restaurant’s business in the years to come and even beyond. Customers will continue for a place to order food from their favorite eateries, even when eating in-person isn’t as popular or canceled. However, how they choose to place orders can greatly impact the profit margins of your business. Third-party providers offer convenience and ease however, they come at a cost.
The most important thing to ask proprietors of restaurants is Are you making use of ordering online as much as you could? Are you seeing the profits go to fees and commissions imposed by delivery companies?
Let’s dig in.
Online Ordering is the Future
COVID is only speeding up what was already a growing trend. In the year 2019, 51% of customers were making reservations on the internet directly through a restaurant’s website or app according to Toast data. In 2020, that figure was up to 82% further proving that customers are actively searching for your restaurant on the internet -using their computers or their mobiles.
So the online ordering process isn’t going anywhere, even if COVID seems like an ephemeral memory. The reason is that your guests’ expectations are changing and they’ve become accustomed to the ease of placing orders online. They can choose two additional spicy pad Thai dishes as well as an assortment of spring rolls, and visually verify the accuracy of their order and take payment without having to speak to anyone or going away from their own home.
The Importance of Online Ordering in the Time of COVID
COVID-19 has helped accelerate technological advancements in the industry of food. Ordering online, curbside pick-up and contactless delivery are more crucial than ever and restaurants are dependent on technology advancements to make it through this winter as temperatures get colder and COVID-related restrictions could increase.
The data proves it. Between February and August 2020, only restaurants using Toast had their off-premise sales increase from 15% prior to COVID, and then jumped to 70 percent. These restaurants have an average of $15,000/month through online ordering, with the top restaurants earning at least $40,000 per month.
If you’re not yet optimizing your technology for digital ordering recently, this article can aid. You’ll discover:
- The cost of setting up online ordering
- the advantages of integrating first-party online ordering platform and
- How to convince your customers from third parties to purchase straight from you in order to aid your business to grow in COVID and beyond.
How Much Do Different Online Ordering Systems Cost?
To accommodate the growing demandfor food, restaurants are looking to order services such as Grubhub as well as UberEats to connect with local customers seeking to purchase meals online. These online ordering companies provide an important network of prospective customers. They can help with marketing for restaurant owners who are independent and help ensure the flow of orders that would not be available.
However, it comes with costs. Third-party online ordering companies cost restaurant owners a large part of their earnings in charges. This is a cost of food ordering online services cost restaurants.
How Much Does Grubhub Charge Restaurants
Grubhub has an average cost of 15 to 25% commission per order. There are lower rates available however, even that comes with the “cost” for your restaurant of having a lower rank on search results. The rates vary according to the type of restaurant you are searching for, but usually include the processing fee of 4 and a marketing charge that ranges from 15 to 20 percent, and a delivery service charge of 10% when you employ their drivers.
How Much Does UberEats Charge Restaurants
UberEats costs restaurants 15-30 percent depending on whether you are using their drive as well as your personal.
How Much Does ChowNow Charge Restaurants
ChowNow costs restaurants $99 per month as well as a setup cost of $199 for each location. Additionally, they offer a variety packages which increase in cost starting at.
How Much Does Eat24 Charge Restaurants
Eat24 offers a set percentage that will result in 12.5 percent of the restaurant’s net online sales.PRODUCTSToast online orderingLearn about how a more efficient online ordering system will help you cut down on time and boost the revenue.
The Benefits of an Integrated, First-Party Online Ordering System
in 2020 more that half of the revenue generated by off-premise dining will be comprised of delivery. Restaurants lose between 25 and 30 percent per month due to third-party delivery services.
These rising commissions and charges make it clear that the more business the restaurant conducts online the greater percentage of profits go to the vendors and reduces online profit.
Restaurant owners should search for online ordering technology that can increase their profits rather than make use of it. Certain POS companies provide online ordering as a element in the POS system. This offers restaurant owners with a variety of advantages that aren’t offered to them if they employ third-party online ordering companies.
The integration of online ordering into the restaurant’s POS is logical. Here’s the reason.
There’s typically a fee that comes with ordering online via the POS system, however it’s typically not as expensive as the charges of other vendors. Restaurants that offer online ordering using their own POS systems, such as the online ordering option offered by Toast it is free of charges for setup or initial fees as well as no commissions. A monthly flat fee will mean an increase in revenue for your business in a period when this is crucial.
Restaurants retain more of the revenue from each online purchase instead of giving it to third-party vendors as commissions and other fees.
Capture Customer Data
Data drives business. If you’re operating an eatery, a retail shop, or software business the more information you have on your customers the better.
Despite their capability to expand the reach of a restaurant’s online presence and expand their reach, many online ordering providers do not give their restaurant customers access to customer information that they collect when consumers place orders on the respective websites. According to an Forbes publication, GrubHub collects data about the habits of its users who place more than 150,000 orders every day from more than 29,000 restaurants. The wealth of information however, isn’t made available to customers of restaurants.
Although GrubHub Chief Executive Officer Matt Maloney has acknowledged the immense potential of this data for restaurant owners, Maloney says that restaurants don’t want to pay more for this information over the 13.5 percent commission rate. Without this information it’s impossible for restaurants to know which customers they have and how they can tailor their service, and no method to contact customers in the future.
If online orders are processed via the restaurant’s POS instead of an outside vendor, restaurants can collect the contact details of customers and an extensive order history in just as they collect information for transactions in stores. Based on this information restaurants can create custom emails to promote their business and get a better understanding of their overall business.
It could be sending an in-store promotional message to customers who have placed an order online , to increase restaurant traffic, or offering deals for your most valuable customers your customer’s information is more effective when it’s stored within your POS system rather than limited to a database of a third party.
Generate Repeat Visits
Online ordering services are excellent to assist restaurants in attracting new customers that would never have discovered them. After the first transaction, restaurants still have to pay commissions for the guest’s second and third purchase.
Even if you employ a third-party service to draw in new customers, it’s an ideal idea to establish an internal ordering system so that returning customers can make orders through your website directly and you don’t have to pay commissions. Your staff members work to impress customers and bring them back to your establishment. In this way, your company gets a huge reward for the effort.
Through a third-party vendor the ordering menu online is hosted in a separate location from the other assets of the restaurant. It’s usually difficult and costly to set up and to make modifications on menu products. Some restaurants limit the amount of changes that restaurants are allowed to make per month or charge a cost for each modification.
When online ordering is available as an integral part of the restaurant’s inside POS system, menu modifications are as easy to implement as changes made at the counter. Websites can be dynamic and, if using a cloud-based platform modifications can be made immediately taken into account online. With Toast for instance when changes occur to your on-site menu, they are instantly synchronized online. Restaurant operators not only save significant dollars and effort, they can also be sure that their customers who visit the store and online will see a precise image of the menu choices.
Control Your Brand
The brand of a restaurant is built on the high-quality of its food as well as the service and overall customer experience. Online ordering for restaurants is a way to extend the their brand and values. The experience of ordering online directly impacts how your business will be perceived. It’s a chance to stay consistent and please customers who aren’t within the walls of your restaurant.
Through third-party online ordering providers restaurant operators are effectively surrendering control over their own brand. They typically state in their conditions of services that they are granted the full power to promote and present their clients however they choose. Other than the logo and some images, customers of restaurants are not able to influence how their restaurant’s name is displayed on the online ordering platform of their vendor.
With online ordering integrated into their POS Restaurant operators will have more control over their customers’ experience and the overall look and experience of their procedure. Transactions function in exactly the same way as internal processes and are much easier to alter, modify and fix. Branding is important in business. ordering online hosted externally puts the control on the shoulders of the seller.PRODUCTSToast MarketingLearn the best ways to delight your customers by using guest marketing tools.
How can you convince guests to place orders for food online from Third-Party Systems to Order Directly from you
Return that 30% to your pockets by allowing your guests to place orders online directly through you. Once you’ve created your own first-party, integrated order system online, you can communicate the new ordering options with your clients. Here are some ways to achieve this:
Make sure that your online order is prominently displayed on your site
It is important to display your online ordering system clearly on your site, and make sure that ordering is as smooth as it can be.
Make use of a loyalty program
Integrate your delivery and online order program into your loyalty program to ensure that your customers get points and rewards each time they place an order.
Increase the prices of third-party providers
Increase your prices on delivery websites from third parties and maintain prices at a lower level on your order-in-person platform. El Pollo Loco made this happen by transferring the 30% cost of third party upcharge on to the customer, and increasing prices on menu items in the exact same way. This ensures that your restaurant earns enough money from third-party platforms, and also encouraging customers to buy directly from your restaurant to save costs.
Offer a discount code
Include the item (e.g. napkin, receipt) to orders from third parties with an promo code that allows you to purchase directly on their website’s online ordering system in the near future. Rewired Cafe located in Chicago, IL created Koozies they offer with every order for takeaway. They make it easier for customers to pick up their food directly from their website next time.
Limit the menus you use from third-party sources
The Loyalist in Matthews, NC identified their top-selling items, and then removed their menus from third-party sites to only be available on their own platform. They clearly stated this in their advertising and marketing initiatives, so that guests know the best places to purchase their favorite items