What Your Restaurant Online Ordering Tool Really Costs You
Online ordering is a booming market for restaurants. Check out how this new revenue stream can help grow your restaurant, and how to make sure you're not losing money.
For customers who want restaurant-quality cuisine but don’t feel like going out, online ordering for restaurants is a pretty sweet deal.
If you’ve got internet access, you can order two extra spicy pad thai dishes and a side of spring rolls, visually confirm that your order is accurate, and pay for your meal without ever speaking to a single person or leaving the comfort of your home.
According to one expert, digital ordering from computers, tablets, and mobile phones is growing 300 percent faster than dine-in traffic.
In response to the growing demand, restaurants have been turning to ordering services like Grubhub to connect with local consumers looking to order meals online. These online ordering vendors offer a valuable network of new potential customers. They can provide marketing for independent restaurant owners and ensure a flow of orders which might not otherwise exist. However, these online ordering services come at a steep price to restaurant owners who are sacrificing a significant chunk of their revenue and much more by relying on third-party vendors.
Restaurant online ordering is a crucial extension of foodservice businesses today. Restaurant operators should look for online ordering technologies that will accelerate their business rather than exploit it. Some POS vendors offer online ordering as an integrated feature of the POS system, which provides restaurant owners a number of benefits that are simply not afforded to them when they use third-party online ordering vendors.
Integrating online ordering into a restaurant POS just makes sense. Here’s why.
1. Save Money & Increase Revenue
Online ordering with third-party vendors is an expensive venture. Here is the breakdown of how much online food ordering services charge restaurants.
How Much Does Grubhub Charge Restaurants
Grubhub charges an average 13.5% commission on every order. Lower rates are available but it means lower placement in search results for the restaurant.
How Much Does Uber Eats Charge Restaurants
Uber Eats charges restaurants an extremely high percentage at 30%, with an additional customer side charge.
How Much Does ChowNow Charge Restaurants
ChowNow charges restaurants $99 monthly and a $199 setup fee for each location.
How Much Does Eat24Charge Restaurants
Eat24 charges a fixed percent which results in 12.5% of a restaurant’s net online sales.
How Much Does Food Fetch Charge Restaurants
Food Fetch charges restaurants $60 per month plus a $150 setup fee with optional add-ons for a fee.
Additionally, ordering services like Grubhub charge higher commission rates as more orders are placed.
These commissions and fees mean that the more business a restaurant does online, the higher percentage of its sales go to the vendor, deflating how profitable a restaurant's online ordering can be.
There is typically a cost associated with online ordering through the POS system too, but not nearly to the scale required by external parties. When restaurants offer online ordering through their POS system, like online ordering with Toast, there are no setup or upfront fees, and restaurants aren’t typically required to pay any commissions. This allows restaurants to keep more of their revenue from each online sale rather than giving it away to third-party vendors in the form of commissions and miscellaneous fees.
2. Use POS Online Ordering Software to Collect More Customer Data
Data drives business. Whether you're running a restaurant, a retail shop, or a software company, the more information you have about your customers, the better.
Despite their ability to extend a restaurant's online reach, most online ordering vendors don't provide their restaurant clients access to the customer data that they collect as consumers place orders through their respective platforms. According to a Forbes report, GrubHub collects data on the behaviors of users placing more than 150,000 orders each day from nearly 29,000 restaurants. This wealth of information, however, isn't shared with restaurant clients. While GrubHub CEO Matt Maloney has acknowledged the huge potential of this customer information for restaurants, Maloney says that restaurants aren't willing to pay more for that data on top of the 13.5% commission rate. Without this data, there’s no way for restaurants to tell who their regular customers are, no way to customize their experience, and no way to reach out to them in the future.
If online ordering is run through the restaurant POS rather than a third-party vendor, restaurants can capture customers’ contact information and detailed order history the same way they do for in-store transactions. With this data, restaurants can run customized marketing campaigns and better understand their business overall. Whether it's sending an in-store promotion to all customers who have placed an order online to encourage restaurant traffic or offering special deals to your most valuable customers, customer data is much more powerful when it's stored in your POS system than when it's restricted in a third-party's database.
3. Profit on Returning Customers
Online ordering vendors are great for helping restaurants attract new customers who would not have found them otherwise. But after that initial transaction, restaurant operators are still paying commission for a guest’s second and third order. Even though the diner is obviously loyal to the restaurant, if they order the same way they did before, the vendor is still profiting. These customers are ordering from your restaurant because they enjoyed your food and service, yet the online ordering vendor is still taking a chunk of that earned business.
Even if you continue to use a third-party vendor to help attract new customers, it is a good idea to have an internal restaurant online ordering system as well so returning customers can order through your site directly and you’re spared the commission fees. Your staff works hard to delight customers and to bring them back to the restaurant. This way, your business is completely rewarded for that effort.
4. Easily Make Menu Changes
With a third-party vendor, the online ordering menu is hosted separately from the rest of the restaurant’s assets. It’s often difficult and expensive to set up and make changes to menu items. Some vendors limit the number of changes restaurants can make each month or charge an extra fee for each additional modification.
When online ordering is offered as an integrated component of a restaurant's internal POS system, online menu changes are as simple to make as they are in-store. Web pages can be made dynamic and, if you’re using a cloud-based system, changes can be immediately reflected online. With Toast, for example, when modifications are made to the in-house menu, they’re automatically synced online. Not only do restaurant operators save a great deal of time and money, but they’re also assured that customers in-store and online are seeing an accurate representation of the day’s menu options.
5. Control Your Brand
A restaurant’s brand is built on the quality of the food, service, and overall guest experience. Online ordering for restaurants is an extension of brand and values. The online ordering experience directly affects how your business is perceived; it’s an opportunity to be consistent and to delight customers beyond your restaurant's walls.
With third-party online ordering vendors, restaurant operators are essentially giving up control over their brand. Most vendors state in their terms of service that they have full license to market and position their clients as they see fit. Aside from a logo and a few photos, restaurant clients have very little say in the way that their restaurant is listed on their online ordering vendor's platform.
Restaurant Online Ordering Through Your POS System
By hosting online ordering within their POS, restaurant operators are more likely to have control over the experience - the look and feel of the process. The transactions function the same way as in-house operations and are easier to customize, change, and troubleshoot. Branding matters in business; externally hosted online ordering puts the power in the hands of the vendor.