The amount that the average American family spends on restaurants, online ordering, and takeout every year has been climbing a lot faster than the amount they spend on groceries, according to the Bureau of Labor Statistics.
Online ordering is fast becoming a primary revenue stream for many restaurants. I have clients that have closed their dining room and changed their business model to become a ghost kitchen. They have a profitable strategy offering only online ordering and delivery.
It’s a huge mistake to get involved with online ordering and delivery without a strategy. I visited a customer in one of his locations recently just after his lunch rush. He threw a stack of tickets on the table from the day’s lunch orders saying, “my staff worked their butt off to fill all of these orders and we made no money today.” Why? No strategy.
I’ve seen this before when a restaurant makes the decision to get into online ordering, naively agreeing to pay a high fee for the transaction with an additional delivery charge. The first few orders are a bump in incremental revenue, so they sign up with more platforms hoping to grow that incremental revenue.
As the orders increase so does the labor and the revenue but the profit does not reflect the growth. The platforms take a large share of the profit. They are also training customers to come to them, rather than your restaurant, to place every order, every reservation, and to put their name on a waitlist. If every transaction starts with a 3rd party, you’re building an unsustainable business.
I have a customer in Hell’s Kitchen that shared, “if Grub Hub kicks me off their platform, I’m done”. It’s a frightening position to lose control and be so reliant on a third-party to keep the business going.
This underscores the importance of a strategy to grow a successful online ordering business.
Make Them a Customer
Use third-party platforms as a customer acquisition tool. I’ve had customers that think this is an unethical practice. I strongly disagree. The customers that come back and order again and again are now YOUR customers.
This is an opinion shared by leaders of some of the largest customer platforms. For example, speaking to hoteliers, former Expedia CEO, Dara Khosrowshahi (now CEO of UberEats) told the group;
‘You guys all criticize me for how much I charge you for guests to come to your hotel, I think you’re looking at it wrong. Look at us as the cheapest source of referrals that you could imagine if they come through me, you pay me once, and if they come back to me again and again, shame on you. You should make them a loyal customer.
This is exactly the point. If this is not part of your strategy, you’re creating a monster inside your business, a house of cards that will continue to grow. It’s artificial growth, unsustainable despite the amount of work that ill goes into fulfilling these orders every day.
Your customers are your business and you have to own the relationship and create a communication with them.
Create your own online ordering option where your customers can easily order directly from your restaurant. No commissions or fees and you are collecting customer data from every transaction. Data that can be used to personalize communications that will bring them back again to order directly from your restaurant. If you have invested in a web site, don’t link out to a third party adding an unnecessary fee to every order. if they made t to your website why send them to a third party? Process their orders, take their reservations and manage your wait lines. Invest tools and incentivize returning customers to use them. The result will make the customer relationship better and more profitable for your restaurant.
If you search Google using keywords relevant to our restaurant, the paid and organic top results on page 1 are all for third party platforms. In fact, you have given your permission, in the fine print of the agreement. for the platform to use your business name to create URL’s that link back to their platform where the order be placed at a cost.
Connect directly with searchers by positioning your business to appear in the local search results, often referred to as Google Maps. Your GMB (Google My Business) profile gives a searcher the ability to order without leaving Google. However, the option through the “order” button offers options to order from multiple platforms for the customer to choose from. You want to link that button to your own ordering. It’s not difficult.
There are options to manage delivery. A delivery service can be connected to your own ordering and the cost shared or ad by the customer. If you’re paying for your own delivery people, you might want to look at this option closer as the minimum wage continues to increase. A good delivery partner will provide you and your customers the ability to see exactly where your o on their way to be delivered.
Online ordering will continue to grow and be a significant revenue producer. Relying solely on third-party platforms is not a sustainable path to grow this part of your business. Use them as a part of your strategy, not your entire strategy. Take control of your customer relationships and invest in the tools that make it easier and enticing for them to order direct and/or come in more often. Develop a strategy. A small investment in a strategy will end up saving you thousands of dollars and enable you to actually grow a sustainable online business.