Are you sizzling or fizzling?
The restaurant business has never been for the faint of heart (or stomach), but in this era of Twitter, Uber, and every “Uber for _____” app under the sun, it’s enough to make even veteran restaurateurs’ stomachs churn--and not from the Romaine lettuce!
But one advantage of running a restaurant in the smartphone era is the ease in which you can obtain boiling pots of tasty data that can tell you if you’re doing something right and wrong, and what that "something" is.
One of the most important data points to track is your Average Order Value (AOV), which is the average total bill for your customers. A higher AOV means diners are ordering more items in one sitting, and every restaurateur worth their (literal) salt knows that it’s loads more cost-effective — and therefore, more profitable — to get your existing customers to order more than it is to get new customers to order anything at all.
Another advantage of all this access to data? It’s much easier to compare how you’re doing, relative to your competitors. And because my company’s online ordering platform collects all this data, we have been able to set AOV benchmarks — both for individual food types, and for the restaurant sector as a whole, savory pie.
The 2018 Online Ordering Benchmarks
Taken together, this averages out to an AOV of $32.73 across all categories.
But what does this all mean? What do these numbers tell us?
Several things, which may or may not be relevant to you, depending on your restaurant. Here are a few things that jumped out at us:
People Can’t Get Enough Asian Food
And not just “Asian” as an umbrella category; even broken down by region, Asian restaurants — think Thai, Indian, and Japanese — all commanded the highest AOV, from $40.37 for Sushi to $45.40 for Pad Thai.
People Aren’t Eating Their Veggies
Some things never change from childhood; men and boys will always love their toys, girls and women will always get the last word in, and adults and children alike will never eat enough greens.
The benchmark AOV for salads is just $20.40, while smoothies — another concoction designed to make plants more palatable — average out to a paltry $13.95. So while our food options have dramatically expanded since the caveman era, our food preferencesseem to have dragged their feet a bit.
But They ARE Eating Carbs
Doughnuts pulled in an AOV of $31.51, which is an insane amount to spend on just doughnuts (Homer Simpson would be proud). Pizza, that essential Friday night staple, came in close behind at $30.62. Bagels, another tried and true carb bonanza, came in at $21.34. Not too shabby!
How to Blow Past the Benchmark
If you’ve looked at these benchmarks with a combination of envy, terror, and shame, you can then proceed in one of two ways:
- Rationalize your lower-than-average AOV by invoking skewed averages, different markets, or any other conceivable reason your restaurant isn’t really behind the curve, in spite of the evidence in front of your eyes, or...
- Find ways to increase your AOV to at least meet, if not surpass, the AOV for your category.
Fortunately, there is one fix that’s proven to significantly increase your AOV: offer your customers online ordering.
I mean, doesn’t it make sense?
Combine people’s propensity to both overspend on the Internet and overeat when they’re hungry, and of course they’re going to buy more food when ordering online. Add a dash of instant gratification, and it’s easy to see why online ordering has become so ubiquitous it’s become almost required in the industry.
And the numbers bear it out — restaurants that use online ordering almost universally find that their online order values increase compared to offline orders. This is true regardless of restaurant category or cuisine.
In fact, Domino’s — which practically invented restaurant delivery as we currently know it — has seen 24 straight quarters of constant sales growth in the United States. And online ordering has been key to that growth.
Don’t take my word for it; none other than Domino’s CEO Patrick Doyle has said that “technology has clearly been a big part of what’s been driving the business over the last five years.”
Now, I know what you’re thinking. “But Roddy,” you type in the comment box, “I’m not Domino’s, I’m a neighborhood artisanal baker. I don’t have hundreds of thousands of dollars to blow on building a new online ordering system.”
I hear you. In this business, who can even think about creating such a system from scratch? But here’s the sweetener in the latte: you don’t have to. There are apps that can do it for you.
Take Total Loyalty Solutions, which you can read all about by clicking here, for example. Don’t worry, I’m not doing the hard sell here. But I will say that our clients who upgraded to our new online ordering platform saw their online AOVs increase to $37.96 just this past March.
That’s more than the global average of $32.73, by the way. Just sayin’.
However you choose to go about doing so, just make sure you offer your customers the chance to order online, directly from you,through an in-house online ordering system. (and use caution when working with GrubHub, Seamless, and all those other online food aggregators out there — trust us on this one.
OK, My Customers Can Order Online. Now What?
If you already offer online ordering and your AOV is still not what you want it to be, fret not — there are plenty of neat tips and tricks to help you increase your online ordering values:
Promote Add-Ons at Checkout: This one’s easy: highlight premium items, or promote add-ons (sides, drinks, and desserts, for example) while your customers are checking out. You can use either pop-ups, or display them prominently on the checkout page itself.
Offer Online-Only Deals: Do you offer specials to your sit-in customers? How about your online customers? Offering online-exclusive specials is an easy way to encourage customers to order online. Combine this with some of the other tips on this list, and your AOV will soar in no time!
Give Discounts for Direct Online Orders: If you found out the nasty truth about food aggregators the hard way and are stuck paying high commissions to aggregate platforms like Grubhub for each order, don’t worry. You can fight back! By giving discounts to customers who order directly from your online ordering system, instead of through the aggregators, you’ll slowly but surely get your customers back.
Sell Bundles of Food: Fast food companies are insanely good at selling bundled meals — think McDonald’s Extra Value Meals, or Wendy’s 4 for $4 Meal — but that doesn’t mean you can’t have a bite of that burger! Bundle up and sell two or more items together, even if it’s just a sandwich and a drink —for a slight discount (much like you’d do a lunch special). Then watch it become one of your most popular offerings… especially if you sell it at a nice, round price point ($5 footlongs, anyone?).
Create Your Own: There are as many ways to mix and match items in a bundle as there are ways to mix ingredients in a meal. Bundle some of your customers’ favorites (or bundle a new dish with an old one, or bundle something else entirely), only offer it with direct online orders, and highlight additional items to add during checkout.
Then, by the time next year’s benchmarks are released, you’ll be much happier with where your AOV is. Bon appetit!
Total Loyalty Solutions is offering Modern Restaurant Management readers a special offer of one FREE month on any new service. To learn more, click here.