Third-Party vs. Internal Online Ordering

Online ordering and delivery have grown 300 percent faster than dine-in traffic, moreover, 86 percent of consumers are using delivery services at least once per month, and 26 percent of consumers order food for takeout or delivery once per week. McKinsey & Company reports that online penetration of the total food delivery market passed the 30 percent mark in 2016 and predicts it will reach 65 percent as the market matures. The Coronavirus stay-at-home orders and business closures have only enhanced these online ordering predictions. Ordering online has now become a primary source of revenue for restaurants and that trend will continue as restaurants re-open across the country.

Those numbers indicate that online ordering is no longer an option. What is up in the air, however, is how restaurants take orders online. Restaurants can enable their own online ordering or they can use third-party services such as aggregators, which allow consumers to log in and access multiple restaurants through their online portals, and third-party delivery services.

The Debate

There’s an ongoing debate about the pros and cons of these options, and the conclusion you and your clients draw will depend on each restaurant’s circumstances. Consider these four points of contention:

Cost

Both online ordering options have some cost associated with them.

      • Restaurants often pay a monthly fee to use online ordering solutions and premium features.
      • Online aggregators or delivery services assess fees for their services. CNN Business reports that restaurants pay from 15 percent to 30 percent for each order placed through third-party platforms.

Restaurants also need to consider future orders. Driving customers to your own websites instead of to an online aggregator or delivery portal can save restaurants approximately 12 to 23 percent each time a return customer orders. The direct order revenue is paid to the restaurant in real-time where the aggregator usually pays the restaurant bi-monthly or monthly.

There are literally hundreds of platforms out there. Before allowing one to represent your business, do your homework. Keep track of the orders and payments to avoid a situation like this Brooklyn gourmet sandwich shop. You don’t want to work with a business collecting your revenue and then not paying you.

This is a copy of a bill sent to Chicago Pizza Boss from Grubhub. On sales of $1,042 this restaurant only made $376!

Reach

For smaller restaurants or new restaurants with limited brand recognition, a website that’s online ordering-enabled may not get enough traffic to build an online customer base. And for casual or fine dining restaurants that don’t offer delivery on their own, third-party delivery services may help them build a new revenue stream.

The fees to well-known third-party ordering and delivery sites like GrubHub, DoorDash, Caviar, Uber Eats, and Postmates may be worth it to have a wider reach and expand a restaurant’s customer base. The high fee makes business sense if you are acquiring a new customer. The key is to have a strategy to convert that customer to order direct next time, saving the fees and allowing you to begin to build a customer profile that is enhanced with every interaction.

Data

A major difference between using a third-party ordering platform vs. an online ordering solution integrated with the restaurant’s own network is access to and ownership of data. As new regulations are put in place regarding what online services can do with data, it’s not certain if restaurants will be able to access and analyze data on their customers using third-party platforms. Restaurants with their own systems will be able to collect their own data, which may result in great value for marketing, operational efficiency, and profitability in the long run.

Customer Satisfaction

A huge factor in the decision of whether to use a third-party online ordering or delivery service or an in-house system is customer satisfaction. When using a third-party service, restaurants lose control of the overall customer experience — at least a part depends on the service customers receive through the third-party portal and delivery service. A recent Technomic study found that 76 percent of consumers hold the restaurant at least partially responsible for errors that may occur, which could put the restaurant’s reputation at risk.

Restaurant Business News reports 74 percent of delivery customers say they would prefer to order directly from a restaurant as opposed to ordering through a third party.

The best solution for your business should not be based solely on cost. A successful online ordering strategy uses data to personalize the customer experience and communication. Choosing the right tools will enable your business to increase order frequency, the size of the average order and to tap into each customer’s social network to acquire new customers.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.