3 Options of Ordering for Food Delivery

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Online White Label, Offline, and Online Lead Generation

There are three main ordering options. Below I will break it down and explain the advantages and disadvantages of each one. Here are the categories: Lead Generation, White Label or Restaurant Website, and Offline or Call-In.

Online White Label

I genuinely believe this should be a mandatory online ordering system for every restaurant. Why? It’s how diners connect directly with your brand. They will order directly through your website, custom mobile app, or social media pages (Facebook or Instagram). You can capture the data and use it on marketing campaigns to promote brand loyalty and generate repeat business.

Advantages:

  • Promote brand loyalty – the consumers can order directly from your ordering channels. They can search for your brand without scrolling through several other restaurants on a lead generation website (marketplace).

  • Higher profitability – avoid marketing commission on repeat business. With little upfront investment, you can drive more business to your website and phone lines without paying a commission every time a consumer orders directly from your restaurant.

  • Access to consumer data – you own the consumer data. Take action and use the consumer behavior insights and email addresses to communicate directly with your customers. Send promotions that will motivate them to order through your website.

  • Flexibility to change service providers – if your clients order directly from your domain then you can change online ordering provider without losing any volume of delivery and take-out business. You will have more control over the overall parameters of the operation (promotions, pricing, service coverage, delivery, etc.).

Disadvantages:

  • Doesn’t always provide “one-stop shopping” – these services often require the restaurant to provide their own customer service or delivery. That’s not true for all e-commerce apps in the market. Some online ordering companies offer live customer service for consumers & restaurants, and partnerships with local delivery companies.

  • Some services lack integrations – often the restaurants will want integrations with POS and third-party delivery companies. Though the industry has been making efforts to fill this gap, there only a couple companies already providing integration solutions.

  • Requires marketing efforts – desired brands usually get a significant amount of organic delivery, but if your restaurant is not gaining enough traction, then you will have to execute marketing campaigns to promote your brand. A few e-commerce apps have powerful tools and services that can assist you with this subject.

Offline Ordering

These type of transactions consist of orders taken by phone, email or in-person (often for catering as well), which are then processed by credit card (through the POS) or paid by cash (for small orders) during the drop-off.

Though offline ordering has become less popular over the years, it is still a significant part of the food delivery market. It is estimated to account for $22.7 billion of total delivery sales (48% of U.S. food delivery market) in 2018. By 2022 it is forecasted to represent 27% of the entire delivery market.

Advantages:

  • Customer loyalty – consumers that call your restaurant directly are hardly strangers. They are more likely to be customers which have already dined in or picked up food from your restaurant before. Often they search your restaurant by the name and don’t use marketplace apps. Who does not like loyal/repeat business?

  • Higher average tickets - the ticket amounts for orders placed offline tend to be at least 33% higher on average compared to lead generation. Most clients ordering catering prefer to order directly from the restaurant or a specialized catering lead generation company. Due to the level of responsibility and details, the customers prefer to speak with someone of trust.   

  • Higher profit margins & personalized ordering experience  - a well-trained cashier or catering manager will always have a chance to up sell a delivery order. Wouldn't you want to tell your customers about the catering specials not available online, advise on portions, details of new menu items and remind the diner to order drinks, appetizers, and desserts? What about the fact you wouldn’t have to pay commissions to lead generation websites? I think that is awesome. An excellent opportunity to maintain higher profitability and strengthen the relationship with your customers.

  • An alternative source - survey your customers. Have you identified people who don’t like to place orders online? If you have, then offline ordering might be a reliable source of business.  Recent surveys have indicated that at least 33% of the U.S. consumers have not used online food delivery systems and are not interested in switching from the phone orders.

Disadvantages:

  • Labor intensive - accepting orders over the phone means answering it every time it rings. Unanswered calls, busy lines, or long hold times can jeopardize the consumer experience and consequently your brand. You have the cost of labor associated with this ordering source differently than online ordering.

  • Chargebacks - recently credit card companies have been implementing rules and systems to avoid credit card fraud. It happens more often when the restaurants take the credit card number over the phone and type into the POS. Restaurants using in-house drivers can avoid chargebacks by adopting a system that allows drivers to swipe the credit card upon the drop-off. Unfortunately, that’s is not a reality when using third-party delivery companies. If you choose this option, I recommend informing your clients that they must present the credit card and photo identification upon receiving the food.

  • Miscommunications - the conversation between the consumer and your staff can be hectic at times. Especially in larger cities with a more substantial cultural diversity. Accents, menu items which can be hard to spell (ethnic food), the loud buzz from a busy dining room can turn the ordering experience into a nightmare for the customer and your staff. The most common issues here are incorrect addresses, phone numbers, phone tagging, invalid credit card information, and wrong order.

Online Lead Generation

These online ordering companies are great at pursuing direct relationships with the diners. They profit from commissions, as well as service fees they charge the restaurant or consumer directly. Many restaurants pay an average of 15% commission in exchange for the volume of sales and brand exposure to the diners shopping for delivery through the lead generation app.

They have a significant marketing budget, which enables them to promote user engagement and loyalty to their brand. Often this is what accounts for their success in generating leads for their restaurant partners.

Advantages:

  • Easiest and fastest way to expose your brand to the masses.

  • Immediate sales traction with a large number of orders for individual diners.

  • Customer service and delivery can be integrated.

  • Often, well-established restaurant brands can negotiate deals with small operational costs. Usually, these deals come with a mandatory “order online” buttons on the restaurant’s website and a low-cost delivery to the consumer but, there is a catch! See below.

Disadvantages:

  • Control of data- the lead generation companies have control over diners’ data and can utilize that information to promote other restaurant brands; the restaurant does not get access to this information. The lead generation industry’s average cost to gain a new diner is about $80, so gathering consumer data from your website instead can be a great deal for them. Allowing a lead generation ordering button on your domain can cost you in the long run.

  • Customer service- the customer service experience provided by the lead generation companies often does not meet the restaurant’s service standards, especially if they mandate that your restaurant use their delivery service (some restaurants opt to use in-house delivery drivers or local companies that offer delivery only instead).
    Often the lines are extremely busy or the only option for customer is online in which case you might not get an immediate answer for a live problem.

  • Low profitability- the restaurants pay commission for every repeat customer, so you might have to pay higher commissions to get more brand exposure and sales volume through their website. You are not in control.

  • Smaller average tickets- the overall average is about $30. That means more work for less money.

    Would like further clarification or referral to some of our e-commerce partners? Don’t hesitate to contact our sales team.

    Follow our post Components of Restaurant Delivery to find out more about Customer Service and Delivery options.