Why You Need to Take Your Restaurant Food Ordering In-House
There has never been a better time to get into the online food ordering and delivery business as a small restaurant business owner.
Consumers’ appetite for online food delivery is on the rise, according to recent market research.
In a survey by Morgan Stanley, which included nearly 6,000 customers, 47 percent had their food delivered over a six-month period in 2017, compared to 44 percent in the previous year.
Similarly, food delivery sales have grown 20 percent while the overall number of deliveries increased 10 percent over the last five years, according to the NPD Group.
Investment firm Cowen Group is bullish about the online food delivery space, predicting a 79 percent spike from $43 billion in 2017 to $75.9 billion in 2022—or 12 percent growth annually—in the total U.S. food delivery market.
All signs point toward an influx of sales (and profits) for restaurants in the online ordering-delivery business. But for restaurants using third-party ordering apps such as GrubHub, Uber Eats, Postmates and DoorDash as their primary means of delivering orders, that could not be further from the truth.
Restaurants are signing up with third-party providers as a way to gain exposure and reach new customers. But as they continue to rely on third-parties—and as commission fees grow alongside increasing food orders—restaurants are forfeiting a significant chunk of their revenue and hurting their bottom line, instead of growing their business.
Restaurants must take advantage of in-house food ordering systems to avoid high third-party commission fees. In doing so, they can increase their profitability by as much as 35 percent.
3 Reasons You Should Rethink Third-Party Food Ordering
Pizza and Chinese restaurants used to be the dominant players in the delivery business. Today, everyone’s favorite mom and pop store is embracing the practice.
Driven by fast-growing consumer demand, third-party online food ordering services such as GrubHub, Uber Eats, Postmates and DoorDash are becoming a staple for restaurants looking to attract new customers.1. Hefty Commission Fees Take a Chunk of Your Business
2. Third-Party Delivery Does Not Deliver Scalability
3. You’re Losing More Than You Think With Third-Party Delivery: Calculate the Cost
Benefits of In-House Food Ordering Systems
We’ve discussed how using third-party platforms can be risky for restaurant owners who are barely squeaking by on single digit profit margins.
Switching to an in-house ordering system guarantees that you’ll retain a majority of revenue from your food orders and avoid losing large profit percentages to the middlemen. Beyond no longer having to pay these inflated fees, here are a few more benefits from bringing your online food ordering in-house.
1. Increased Customer Loyalty
Many restaurants are willing to risk their already low profit margins to third-party apps in hopes that it will bring them new customers that will become loyal.
But the opposite often happens. Once a customer completes an order, the challenge lies in driving brand loyalty. Because restaurants don’t actually own the customers, customer loyalty often shifts to the third-party platforms.
Mark Engel is business development manager at Placebag, a service which offers online ordering capabilities to restaurants for a monthly fee. Engel says third-party portals do little to foster loyalty. Instead, they “drive more competition to gain customers among the many restaurant options instead.”
2. Access to Insightful Customer Data
Whether you’re running a retail store or a restaurant, understanding customer data is the first step to knowing your customers and creating a more personalized shopping experience.
GrubHub alone collects consumer data from over 250,000 orders each day through 80,000 restaurants. Restaurants, on the other hand, rarely gain access to data about the very consumers who’ve ordered from them.
3. Consistency for Your Customers
Working with third-party vendors essentially means handing over the reins of your brand to an outsider as restaurants typically have little to no say over how they are presented on these platforms.
Having an in-house system changes that. From creating a customizable user experience and interface to ensuring that your brand values are reflected throughout the ordering process, it gives you complete control of your customer’s ordering experience.