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Restauranteurs’ Online Ordering Dilemma: Third Party or DIY?

Consumers appreciate speed and convenience, and that principle applies to food as much as it does to merchandise — even during a pandemic. It’s not surprising the restaurant industry saw online ordering and delivery grow 23% annually since 2013. In fact, online order tabs average 30% higher than telephone or over-the-counter tabs, most likely because customers can take their time deciding what to order.

And now that dining in is currently being supplanted by carryout, it wouldn’t be surprising to see online ordering exponentially exceed last year’s projections.

While there’s no longer any debate as to whether online ordering should be an option for restaurants, there are differing opinions regarding how restaurants should take orders online. The big question is: Should restaurants enable online ordering from DIY (do it yourself) SaaS (software as a service) or mobile apps? Or should they 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 a business owner draws 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 like Grubhub, Uber Eats, and DoorDash assess fees for their services. Here’s an article that compares and breaks down the costs for each third-party provider’s marketing, payment processing, and delivery service fees.

DIY SaaS ordering systems like 9Fold, ChowNow, OLO, and RestoLabs allow restaurants to set up fully functional ordering platforms that can be integrated with their business architectures for a fraction of the cost of third-party providers.

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.

However, while paying 30% fees to third-party ordering and delivery sites may be worth it initially to gain a wider reach and expand your restaurant’s customer base, not paying a 30% commission per transaction is an excellent reason to look into a DIY online ordering system.

Data

Another significant difference between using a third-party ordering platform vs. an online ordering solution integrated with your restaurant’s network is access to and ownership of data. As new regulations emerge restricting what online services can do with data, it’s not certain whether restaurants will be able to access and analyze data on their customers using third-party platforms. Restaurants with non-third-party systems can collect customer data, which is vital for marketing, increasing operational efficiency, and higher profitability in the long run.

Customer Satisfaction

A huge factor in deciding 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 part of the experience depends on the service customers receive through the third-party portal and delivery service. If the service provider you’re using messes up an order or causes a subpar customer experience, you can be sure your restaurant will be blamed (and your reputation harmed). Even if it’s clear to the customer that their order was fulfilled by another party, it was still your restaurant that chose to use that provider, so you must “be okay” with them.

Decide Case-by-Case

Experienced restaurant solution providers know that not every solution is the right fit for every client. Online ordering is no exception. In today’s climate, the most successful restaurants will likely be the ones following the lead of successful retailers by giving customers lots of options and letting them decide which one is best. That said, if you can combine a robust loyalty program and easy-to-use online navigation, checkout and payment, there’s no reason you can’t convince customers to choose the option you’d most prefer they use.

Mauricio Chacon is Group Product Manager for Epson’s North America Point-of-Sale (POS) solutions division. He leads product marketing, business strategy, and product launches for the group. Prior to Epson, Mauricio spent 13 years at Belkin International as Director of Product Management leading the Worldwide Business Products Division. Over the course of his career, he has introduced a variety hardware solutions for B2B IT, Retail, Hospitality, OEM, and Government verticals.

 


 

This article was orginally published in Hospitality Technology and has been republished with their permission. Please direct all licensing questions to Anna Wolfe at awolfe@ensembleiq.com.

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