“Do you deliver?” According to a recent Forbes article, this is the most-asked question by restaurant customers. Thanks to online and mobile delivery apps, customers can now take delivery of everything from fast food to gourmet cuisine. Online ordering has certainly come into its own since its pizza delivery heydays. Grubhub, DoorDash, and Uber Eats have all contributed to the delivery app revolution. Yet, there is little consensus about how truly beneficial third-party ordering platforms are. Instead, restaurants are beginning to question their reliance on them. Below, we discuss how you can grow your revenues by converting customers from online and mobile ordering platforms.
Online and Mobile App Ordering: Past And Present
Online and mobile app ordering has come a long way since World Wide Waiter’s founding in 1995. Today, this popular delivery platform is known as Waiter.com and delivers in cities across California, Texas, North Carolina, Washington, and the Canadian state of Ontario.
That said, pizza still holds the grand prize for being the first delivered food. According to Food & Wine, the first pizza was actually delivered in 1889! Legend has it that Queen Margherita of Italy demanded a change in diet one fateful day. Raffaele Esposito, the owner of Pizzeria Brandi, rose to the challenge. He was then Naples’ most well-respected pizza chef. In response to the queenly demand, Esposito created a delicious pie, featuring mozzarella, basil, and tomatoes.
The rest, as they say, is history. The Queen gave her royal seal of approval, and Esposito named the pie after her. Today, many gourmet pizza shops across the western world offer pizza Margherita on their menus.
Back to the present: Customers don’t need to be royalty to get food deliveries. Instead, online ordering platforms make it easy for them to place orders. Consequently, food delivery in the United States is projected to grow a healthy 12% from 2018-2023. With those numbers, restaurant owners feel increasingly pressured to partner with third-party ordering and delivery platforms.
Online And Mobile Ordering Platforms: The Good News
Platforms like Grubhub and DoorDash make it easy for restaurants to connect with hungry customers and fulfill their delivery orders. Proponents maintain that these apps help restaurants grow their revenues in several ways:
- Third party delivery platforms provide the drivers. So, restaurants have a delivery fleet at their disposal without hiring new staff.
- Grubhub uses a streamlined, customer-friendly platform that’s rumored to give restaurants a 30% gain in monthly revenues after a year.
- Uber Eats provides even more convenience: Uber members can order food from the same account they order their rides. Restaurants get access to a larger client base during busy seasons, such as the holidays.
Online And Mobile Ordering Platforms: The Bad News
Restaurants increasingly favor online and app ordering as a means of staying relevant. However, partnering with a delivery platform may do little to increase actual profits.
Here’s how badly your bottom line could be affected:
- Order Commissions: Gourmet restaurants like Mulberry & Vine pay between 20-40% in commissions. Managers maintain that, despite the increase in deliveries, Mulberry & Vine’s profit margins have shrunk by at least a third.
- Delivery Commissions: Small businesses are especially vulnerable, as they have little leverage to negotiate better terms on order and delivery commissions.
- Phone Order Commissions: Phone orders incur another burden. In fact, most businesses have few ways of determining how these commission costs affect their bottom line.
- Processing For Prepay Orders: Restaurants must pay extra fees, if customers prepay for orders. Fees are generally higher than if the restaurant processes these prepay orders in-house.
- Pay Me Now Fees: The typical third-party app takes 3-4 business days to release paid funds. However, restaurants can order same-day release for an extra fee.
The Ugly Bottom Line
Restaurants generally pay commissions of between 15 to 30 % for every order made through a third-party platform. So, if a total order is $45.00, the restaurant may only receive $31.50 after fee deductions. That’s a huge price to pay for partnering with platforms like Grubhub, Uber Eats, and Doordash.
Arguably, delivery apps have their place. While the cost concerns are valid, restaurants can use Grubhub and DoorDash as a means of attracting new customers.
Perform Better Analytics By Converting Customers from Online And Mobile Ordering Platforms
There’s another downside to partnering with third-party online ordering platforms. These providers don’t share valuable customer data, which prevents restaurants from marketing effectively to customers. The restaurant/ third-party platform relationship can be compared to that of retailers to Amazon. While it’s true that Amazon provides a venue for merchants to expand their reach, they charge hefty commission fees and keep critical buyer information for themselves. Shoppers get more choices, but retailers are handicapped by a lack of access to crucial data.
The Importance Of Data
Today, Big Data is crucial to helping restaurants increase their ROI on marketing campaigns. But, what exactly is Big Data? Simply, it’s made up of structured and unstructured data. Structured data includes dates, credit card numbers, phone numbers, income levels, etc. Meanwhile, unstructured data includes emails, social media posts, and customer reviews.
So, how does access to Big Data help? Specifically, access to customer data leads to better analysis of your operational costs and profitability levels. Knowledge is power: the ability to correctly analyze data is crucial in helping your restaurant improve its operational efficiency and by extension, its profit margins.
Convert Now To Increase Your Profitability Margins
So, restaurants that want to grow their revenues should consider converting customers from online and mobile ordering platforms. The benefits far outweigh the disadvantages of doing so:
- Conversions Increase Profit Margins – It’s frustrating to pay 10- 30% in fees for the same customer over and over again. Yet, this is what happens when you partner with a third-party delivery provider. Some restaurants pay as much as 40% in commission fees. Commissions of 30-40% on every order can cause a massive hit to a restaurant’s bottom line. Additionally, these fees can wipe out what’s left of a restaurant’s marketing budget, making it difficult to advertise anywhere else.
- Conversions Facilitate Direct Marketing Efforts – Restaurants may get significantly higher delivery and takeout orders by partnering with a third-party delivery provider. However, they have no access to important customer information from the platform’s database. This makes it a challenge to discern customer trends and to create the right promotions.
- Having Your Own Online Ordering Platform Helps You Stand Out From the Crowd – Restaurants can fade into the background when using online and mobile ordering platforms. After all, each restaurant represents one of many restaurants competing for customer attention. To add insult to injury, restaurants gain little customer loyalty when Grubhub or DoorDash are in the picture.
Ways to Convert Food Ordering and Delivery App Customers
1. Offer Website Only Special Promotions
It’s vital for a restaurant to think of its website as the centerpiece of its online marking strategy. All online campaigns should guide potential customers to the restaurant’s website, which will ideally contain fresh and relevant content. New menu items and special offers should be highlighted prominently. Providing a customer with a onetime coupon code for a 10 % discount is a lot cheaper than paying a 30 % commission for the same customer. Also, websites should be mobile-friendly: Responsive website design is key to increasing revenues. Invariably, you have greater control over website design when you operate your own online ordering system.
2. Increase Your Restaurant’s Online Presence
Grubhub and DoorDash have massive online footprints. It’s time to follow their lead. Restaurateurs can start by building a content portfolio of engaging blog posts and videos on their website. Leverage Google’s love for fresh and relevant content to boost your restaurant’s SERP (search engine results pages) rankings. Additionally, increase your interactions on social media by posting regular, engaging content. You can also try Google Posts, which allows you to publish upcoming events and new menu item promotions through Google Search And Maps.
3. Remove References to Third-party Apps
First, acquire your own online ordering system. After you’ve done this, remove all logos and links to Grubhub, DoorDash, Uber Eats, and other online ordering platforms. Today, increasing numbers of restaurants are becoming savvy to suspicious links on their Google business listing pages. These links draw customers to third-party menu and ordering platforms. Do everything possible to remove these links.
4. Do Sweat The Small Stuff
Entrepreneur Magazine maintains that “transparency has never been more important to a successful business model… in order to build brand loyalty, companies need to first build trust.” So, how can businesses build trust? By making the first impression count. Getting your own online ordering platform is only the first step in increasing brand reach. You’ll want to impress by careful attention to decor, color schemes, menu design, quality of waitstaff, cleanliness, food quality, and lighting. Sweating the small stuff will go a long way towards building trust between your restaurant and customers.
5. Use A Branded Online Ordering System
Providing a viable alternative to your third-party platform customers is crucial. A branded online ordering system gives you control and access to customer order history data.
Here’s the bottom line: while apps like Grubhub and DoorDash provide some functionality for restaurants, the costs can quickly add up. Food ordering and delivery apps can help restaurants reach new customers. However, converting these customers is key to sustained economic viability.
9Fold Is In Your Corner When It Comes To Increasing Your Brand Reach And Loyalty
Did we miss anything important? Share your thoughts below or on Facebook. If you’re a 9Fold client and would like more ideas for converting customers from online and mobile ordering platforms, please reach out to our team. If you’re not currently using 9Fold, contact us for a free demo today!